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Yesterday, Sanofi-aventis (S-A) agreed to acquire a controlling stake in Indian vaccine maker, Shantha Biotechnics, for an undisclosed amount. And, recently, Abbott announced a definitive agreement to acquire the nutrition businesses of Wockhardt Limited, Carol Info Services Limited, and certain Wockhardt subsidiaries and group companies for consideration totaling approximately US$130 million in cash.

While these two recent acquisitions don’t appear to be particularly noteworthy, they speak volumes about growing Indian influence in biologics and, perhaps more importantly, in biosimilars. India, long known for its expertise in generic drug development and its ability to work with US-based companies, has expanded beyond generic pharmaceuticals into generic biologics aka biosimilars. Biosimilars have been on the Indian market for over a decade and by all accounts several Indian companies, most notably BioCon, might be able to steal biosimilar market share in Asia from the likes of Sandoz, Merck and Teva—companies expected to be major players in the emerging biosimilar market.

Both Shantha and Wockhardt possess substantial experience in biosimilar development and commercialization. To that end, Sanofi-aventis has publicly announced its desire to get into biotechnology and Abbot must expand its biotechnology pipeline beyond Humira to remain competitive. These acquisitions likely represent Sanofi’s and Abbott’s attempt to gain a foothold in the emerging Asian markets. Also, it gives both companies access to lower cost biologics R&D and manufacturing capabilities.

It will be interesting to see how things unfold over the next year or so!

Until next time...

Good Luck and Good Job Hunting!!!!!!!

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Pfizer is the largest pharmaceutical company in the world. It was able to garner that distinction by going on a decade-long buying spree that began in the mid 1990s. To date, Pfizer has acquired Warner Lambert, Pharmacia and a host of smaller specialty pharmaceutical and biotechnology companies. Despite these acquisitions, which yielded top selling blockbuster drugs like Lipitor and Celebrex, Pfizer’s stock has never performed up to analyst’s expectations. In fact, while it’s smaller and more nimble pharmaceutical competitor’s stock prices were soaring, Pfizer’s stock price was either flat or falling. While conventional wisdoms suggest that “bigger is always better” this has proven not to be the case when companies, like Pfizer, attempt to win greater market share through mergers and acquisition and also loss sight of their core business.

In my opinion, Pfizer’s acquisition of Warner Lambert in the mid 1990s was a well executed, strategic move—the transaction gave Pfizer rights to Lipitor, currently the world’s top selling prescription drug. At that time, Pfizer’s internal drug discovery pipeline was essentially running on empty and it needed a blockbuster to insure its future growth. Despite the benefits of the Warner Lambert deal, it took Pfizer many years and hundreds of millions of dollars to fully integrate the two companies into a fully functional one.

Several years later, Pfizer acquired Pharmacia to gain access to Celebrex, a Cox-2 inhibitor that had the potential of becoming a blockbuster drug to treat inflammation and chronic pain. Unfortunately, Pfizer’s ROI on Celebrex hit a sales-stopping road block when the safety of Cox-2 inhibitors was called into question after Merck withdraw its Cox-2 inhibitor, Vioxx from the market in 2005. While Pfizer directly benefited from Celebrex sales, it again took the company many years, at great expense, to fully integrate Pharmacia into Pfizer’s day-to-day operations.

During its decade long expansion, Pfizer’s internal drug discovery programs were largely ignored and had begun to fail largely because of management’s inexorable focus on acquiring blockbuster drugs rather than developing them internally. In the early 2000s, recognizing that blockbuster drugs were becoming harder to purchase, the company bet its financial future on a new cholesterol-lowering drug called torcetrapib (which, by the way, was developed by Pfizer scientists). The buzz surrounding torcetrapib—a potential blockbuster drug that was expected to replace Lipitor—reached a fever pitch in 2006 as Pfizer’s stock price soared. Unfortunately, Pfizer was forced to abandoned clinical development of torcetrapib in late 2006 because it exhibited potential life-threatening side effects in pivotal Phase 3 clinical trials This failure, coupled with the impending loss of  patent protection for several of its top selling drugs, most notably Lipitor, has placed Pfizer in its current precarious financial situation.

Like many of its competitors, Pfizer believes that biotechnology is the “next big thing” and its executives have publicly disclosed their intentions to get into “protein-based therapeutics.” While this strategy may represent a way for Pfizer to correct its current downward trajectory, the company, as a whole, lacks the requisite biopharmaceutical experience and expertise to commercially compete in this space. To obviate this, Pfizer has hinted that it would consider purchasing a large biotechnology company or a pharmaceutical company that has biotechnology products on the market.  Enter Wyeth—another pharmaceutical company that is trying to reinvent itself as a biopharmaceutical company. However, unlike Pfizer, Wyeth markets and sells two successful biotechnology products—Enbrel, a treatment for rheumatoid and psoriatic arthritis and Prevnar a blockbuster anti-pneumococcal vaccine. However, it is important to note that neither Enbrel nor Prevnar were developed at Wyeth. Further, while Wyeth has achieved commercial success with both Enbrel and Prevnar, several of its non-biotechnology drugs have recently hit regulatory snags and their future approval is uncertain.

On the surface, a Pfizer-Wyeth merger may make sense—both companies are struggling, Pfizer needs an entrée into biotech and Wyeth has marketed biotechnology products and biomanufacturing capability. However, a closer examination of the deal reveals some major flaws. First, Wyeth’s internal biotechnology discovery pipeline is sparse (although it does have a few, niche protein-based products in early stage clinical development). While Enbrel sales are increasing and consistently have topped $1 billion in annual sales in recent years, Wyeth only owns the non-US rights to Enbrel (Amgen owns the US rights). Second, Prevnar is coming off patent soon and GlaxoSmithKline (GSK) has developed a competing vaccine that is expected perform as well or better than Wyeth’s next generation version of Prevnar. Finally, Prevnar has been a huge money maker for Wyeth because there are currently no other approved pneumococcal vaccines on the market. The introduction of GSK’s competing vaccine will undoubtedly have a negative impact on the sale of Prevnar and its successor. If neither company has strong internal drug discovery pipelines and both lack sufficient expertise in biopharmaceutical product development, why are Pfizer and Wyeth actively engaged in M&A discussions?

For the past several months, rumors have been circulating that Pfizer might acquire Amgen. While a Pfizer-Amgen deal makes more sense to me that a Pfizer-Wyeth one, I don’t think that acquiring another large pharmaceutical company is in the best interests of Pfizer shareholders (they are still paying for the past two mergers!). That said, if Pfizer does acquire Wyeth, the combined entity will still hold the distinction of being the world’s largest pharmaceutical company—at least there is that!

Until next time...

Good Luck and Good Job Hunting (hope that a merger doesn’t take place—there will be layoffs!)

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Bristol-Myers Squibb announced today that it will purchase California-based Kosan Biosciences for approximately $190 million. Kosan has been developing two classes of oncology drugs known as heat shock protein 90 (Hsp90) and epothilones. One of Kosan's Hsp90 compounds is currently in Phase III clinical testing for the treatment of multiple myeloma.

Kosan’s epothilone program will complement existing BMS programs designed to develop novel chemotherapy-based oncology products. The Hsp90 clinical program will help to sure up BMS’s push to become a next generation biopharma company.

Kosan was originally founded as an antimicrobial drug development company based on a novel combinatorial drug development (polyketide) platform but eventually morphed into a cancer-focused business. In addition to Kosan’s pipeline, BMS will inherit a small GMP biomanufacturing facility.

The acquisition is good news for Kosan which has been struggling of late. Unlike most other companies, BMS usually retains the employees of companies that it acquires. That said, only time will tell.

Until next time…

Good Luck and Good Job Hunting!!!!!!! 

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Is it luck or good planning that has prompted many pharmaceutical and biotechnology companies to set up manufacturing and research operations in Ireland? In my opinion, the recent Irish pharma and biotech explosion has little to do with luck and everything to do with strategic vision, excellent planning and a well trained, inexpensive workforce.

Currently, 28 out of the 50 top pharmaceutical/biotechnology companies in the world have facilities in Ireland. Some of these companies are Merck, Wyeth, Genzyme, GlaxoSmithKline, Pfizer, Johnson and Johnson, Schering-Plough and Bristol-Myers Squibb. Seven out of 10 of the world’s top selling blockbuster drugs are now manufactured in Irish production facilities. 

Pharmaceutical companies were the first to set up shop in Ireland. However, biotechnology is growing rapidly and biomanufacturing is starting to over shadow traditional small molecule production. Companies including Wyeth, Centocor, Bristol-Myers Squibb, Organon Biosciences (now part of Schering Plough) and Allergan manufacture biologics and biotechnology products in Ireland. In fact, Ireland is home to the world’s largest biomanufacturing facility, Wyeth’s € 1.3 billion Grange Castle near Dublin.

So why pharma and biotech are companies flocking to Ireland? First, the Irish labor force is well trained, everyone speaks English (albeit with an Irish lilt) and wages are still low. Second, Ireland has the lowest corporate taxes in the entire European Union. Further, there are R&D tax credits and financial support for start ups.  For example, there is financial support to purchase consultancy and innovation vouchers worth €10,000, a substantial amount of money for any startup! Finally, and perhaps most importantly, the Irish government had the foresight to create a public/private enterprise known as the National Development Plan (2000-2006) that invested € 2.5 billion to create an Irish R&D infrastructure.

The Irish strategy–“built it and they will come”– has certainly paid off handsomely for Ireland. Another country that has embraced a similar strategy is Singapore–which through a public/private initiative has been building a vibrant life sciences and biotechnology industry since 1999. Both countries now compete for pharma and biotech business. For example, in late 2007, Merck decided to build a € 200 million vaccine facility at Carlow Town in Southeast Ireland. Novartis, on the other hand, opted for Singapore to build a new $180 million pharmaceutical tabletting facility along side of its API production plant.

Unlike Ireland, the American pharmaceutical and biopharmaceutical industries are in trouble and losing their competitive edge. Perhaps the US can learn a thing or two from the Irish to give its bioscience industry a much needed shot-in-the arm.

Until next year….

Good Luck and Good Job Hunting (try Ireland)!!!!!!!!!!

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This should not come as a big surprise (especially to the Amgen employees who already know that they will be losing their jobs) but Amgen announced today  that it will be cutting about 450 workers in its West Greenwich, Rhode Island biomanufacturing facility and laying off about 675 workers at its Thousand Oaks, California, headquarters. On Aug. 15, 2007, Amgen, which is the world's largest biotechnology company, announced plans to pare its staff by 12% to 14%, or roughly 2,220 to 2,600 workers, as part of a major restructuring plan.

Although somewhat troubling, this is the first time in 25 years that Amgen is restructuring and has been forced to downsize. Nevertheless, looking on the bright side for Amgen alumni, being formerly employed by the world's largest and most recognized biotechnology company is a not a bad thing when looking for a new job! 

Until next time….

Good Luck and Good Job Hunting……….

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