pharmaceutical companies

Daiichi Sankyo acquires Ranbaxy in $4.6B deal

John Carroll — Wed, 11 Jun 2008 11:12:29 -0400

Ranbaxy's drive to become a research-based drug developer and major manufacturer has led it straight into the welcoming arms of Japan's Daiichi Sankyo, which announced it is buying a majority stake in the Indian pharma company. After Sankyo completes a buyout of the founding Singh family's stake in the company, Ranbaxy will become a subsidiary operation. The deal is valued at $4.6 billion and will create a combined company worth about $30 billion.

That move positions Daiichi Sankyo to become a major supplier of low-priced generics to Japan's aging population and accelerates a trend by Japanese pharma companies to enter emerging Asian markets, where they see much of their future growth. The acquisition stunned investors and analysts alike, who were caught off guard by a bold move from a conservative player in the industry.

- check out this release for more on the deal
- read the report from The Times

Ailing GlaxSmithKline to axe 350 R&D workers

John Carroll — Wed, 11 Jun 2008 11:11:45 -0400

In an effort to shake up an organization that has produced few major advances recently, GlaxoSmithKline announced plans to axe 350 jobs in its R&D operations. The cuts--part of a major restructuring announced last fall--will terminate staffers at three labs in the U.S., Italy and Germany. The cuts inside GSK reflect the new CEO's strategic move to look outside the company for innovations in drug technology. That's a move that has benefited biotech companies with a lineup of new, big-dollar collaboration deals.

"These changes are part of GSK's longer-term strategy to ensure that we invest in key areas of future growth and evolve our business to compete effectively in what is a rapidly changing and challenging environment for pharmaceutical companies," a spokesperson told the Wall Street Journal.

You can expect more changes ahead. Glaxo signaled that it's restructuring its research activities into smaller teams and changing its incentives to reward innovation or punish failure. One of those punishments evidently includes a pink slip.

- read the article in the Wall Street Journal

GSK outlines plans to become more ‘biotech-like’

John Carroll — Tue, 10 Jun 2008 11:53:09 -0400

Biotech is in. At least, that's the message from GlaxoSmithKline's Patrick Vallance, the pharma giant's head of drug discovery. In a speech in London on Monday Vallance made clear that Glaxo intends to become more "biotech-like" in advancing new therapies. That calls for smaller discovery teams which would be incentivized for creating value and ‘disincentivized' for value destruction.

Glaxo has been one of the most aggressive pharma companies in the industry when it comes to in-licensing new biotech therapies in development. The company has been setting up Centres of Excellence in Drug Discovery and is funding outside research through the Centre of Excellence in External Drug Discovery. But Glaxo has been talking up an entrepreneurial atmosphere for eight years even as pressure has built to advance new drugs to take the place of blockbusters losing patent protection.

That trend, no doubt, will make those ‘disincentives' ever more painful.

- read the report from the Financial Times

ALSO NOTED: GSK releases new Cervarix data; FDA mulls DTC ads; and much more...

Fri, 16 May 2008 06:59:50 -0400

> GlaxoSmithKline has released new Cervarix data that demonstrates the vaccine's ability to generate a high and sustained level of antibodies to neutralize the two most prevalent strains of cervical cancer for up to 6.4 years. Cervarix report

> The French pharma industry worries that up to 32,000 jobs are fodder for the axe, citing pricing pressures, generics, and globalization among the threats to drugmakers. Report

> Brace yourselves: An FDA advisory committee meets today to hash over the possibility of putting a side-effects hotline number in every DTC television commercial. Release

And Finally... The five key vaccine makers say they plan to produce a record 143 million doses of flu vaccine for the U.S. market next season, which should be enough to satisfy demand. Vaccine report

Deloitte sees 'fundamental shift' in drug dev. strategies

Tue, 13 May 2008 06:59:58 -0400

Deloitte sees a major shakeup going on in clinical research strategies at the large pharma companies. Instead of focusing on the development of a small portfolio of blockbuster meds, pharma pipelines are shifting to create a host of new therapies that will have higher efficacy in smaller groups--the genotype-basing approach that's been so much discussed in biotechnology. By targeting smaller populations with promises of greater efficacy, says the accounting firm, the pharma industry can still rely on bigger per-treatment revenues.

The shakeup in R&D strategies is coming after the industry marks only mixed results from outsourcing and other efforts aimed at improving efficiency. And it marks a period of high stress for the companies, as they transition from blockbusters to targeted meds. A "fundamental shift in the industry's operating environment is under way."

- check out the report from Seeking Alpha

Merck turns to Ranbaxy for $100M R&D effort

Mon, 12 May 2008 06:59:58 -0400

India's Ranbaxy has flexed its research muscles once again, this time signing a five-year pact with Merck to develop new anti-infectives. Ranbaxy, which received an undisclosed upfront payment, says it stands to earn more than $100 million from each new therapy developed in the five-year collaboration, which follows a similar deal it signed with GlaxoSmithKline. Ranbaxy researchers will advance therapies into Phase II, at which point Merck will take over the development program. Ranbaxy shares jumped more than five percent on the news.

This new deal signals an ongoing effort by big pharma companies to reduce their expenses by shifting development programs into China and India. Eli Lilly has also aggressively pursued an Asian strategy for its R&D work as well.

"We are going to start work on a minimum of two (drug candidates), and we can then add to it later," Ranbaxy CEO Malvinder Mohan Singh told Dow Jones.

- see this release on the deal
- read the report from Dow Jones

Biotech M&A has yet to reach its peak

Fri, 09 May 2008 06:59:56 -0400

In analyzing the PowerShares Dynamic Biotech & Genome ETF, a fund made up of primarily small- and medium-cap biotech stocks, Seeking Alpha notes that Big Pharma's appetite for biotech acquisitions is far from satisfied. Despite the fact that Pharma's interest in biotech reached an all-time high last year, the conditions are right for an even bigger run on biotech M&As in the near future. Pharma companies are trying to fill weak pipelines and have the money on hand to do it. Add to that the fact that many small biotechs can be bought for a bargain, and you have the perfect conditions for an M&A free-for-all.

Take, for instance, Takeda's recent $8.8 billion bid for Millennium. That deal, analysts say, could indicate a run of biotech buyouts. A run was also predicted last year with AstraZeneca's $15.6 billion MedImmune buyout, "[b]ut the wave hasn't come, even though Big Pharma is sitting on a pile of cash and struggling with weak pipelines." While there's no question Big Pharma is snapping up promising developers left and right, even more deals could be on the way.

- see the Seeking Alpha report

Traditional remedies offer opportunities, challenges

Thu, 08 May 2008 06:59:55 -0400

The Financial Times delves into the push to develop new therapeutics from traditional Chinese and Indian remedies. There have been successes, including the anti-malarial artemether, which was developed from a plant long used to treat fevers. But researchers note that there are some extraordinary challenges. Natural remedies often rely on a volatile mix of natural ingredients that can have a radically varied effect on different people.

"Traditional medicines can be very dangerous," says Paul Herrling, Novartis' chief of corporate research. "Practitioners had no concept of statistics or of long-term consequences such as treatments that may cause cancer when used over many years."

Novartis and Merck were the only two big pharma companies to stay in the field. And a slate of biotechs joined them, including Nicholas Piramal and Phytopharm. MerLion in Singapore has been active as well after acquiring some of GlaxoSmithKline's traditional assets.

- read the article in the Financial Times

FDA rejections signal tougher developers standards

Wed, 30 Apr 2008 06:59:58 -0400

Faced with back-to-back rejections of two would-be blockbuster drugs for cholesterol, analysts have been reading the tea leaves for what this could portend for developers. What they've come up with boils down to a tougher set of standards for cholesterol drugs and a much more skeptical view of me-too drugs. Regulators are increasingly interested in seeing data regarding superior benefits over existing meds. And that will take more time and money to produce.

"The party for all these 'me-too' drugs has been over for at least two years," WBB Securities analyst Steve Brozak told the AP. "It's just that these pharmaceutical companies are only now beginning to realize it."

It seems clear now that the FDA--in the wake of the Vytorin fiasco--will demand data on new cholesterol drugs demonstrating that they can improve outcomes rather than simply influence cholesterol levels.

- check out the AP report

Biotech's next big opportunity: Follow-ons?

Thu, 24 Apr 2008 06:59:56 -0400

Follow-on biologics are often cited as major long-term threat to the biotech industry, which so far has not had to face a future where generic therapies are allowed to slice and dice the market for approved therapies. But new analysis from the RPM Report notes that biotech companies--along with the Big Pharma companies--may be much better positioned than generic drug developers to capitalize on the market.

The rationale is that developing follow-on proteins will demand exactly the kind of expertise that the biotech industry has on staff. Teva, meanwhile, has been on a buying spree and may be the only big generic developer that can compete in this space. Of course, before anyone produces follow-ons in the U.S. market, lawmakers have to agree on new legislation. And some proposals are calling for lengthy periods of exclusivity for biologics.

- read the analysis in the RPM Report