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After months of speculation and a nine month-long bidding war, Teva not Pfizer has emerged as the winner to purchase Ratiopharm; the financially-troubled, German generics manufacturer. Ratiopharm was Germany’s second largest generics manufacturer.

Teva Pharmaceutical Industries Ltd announced today that it has entered into a definitive agreement to acquire Ratiopharm, Germany's second largest generics producer (Novartis AG’s Hexal unit is first and Stada Arzneimittel AG is third) and the sixth largest generic drug company worldwide, for €3.625 billion ($ 5.0 billion). Teva expects to complete the transaction by year-end 2010.

The acquisition will position Teva as the leading generic pharmaceutical company in Europe. Ratiopharm's extensive product portfolio includes 500 molecules in over 10,000 presentation forms covering all major therapeutic areas marketed in 26 countries. Also, Ratiopharm has valuable know-how in biosimilars (a market that Teva has entered and is extremely bullish on) which consists number of products in advanced stages of development and a well-established sales and marketing team. The combined company will have 40,000 employees worldwide, of which 18,000 will be based in Europe. The purchase will bolster Teva’s visibility and standing in European markets.

Late last month, Ratiopharm board members implored Pfizer to enter a new bid, after it had rejected an earlier offer by the company. Apparently, the new bid was not sufficient to prevent Teva from acquiring the highly sought after generics manufacturer. Iceland-based generics manufacturer Actavis also put in a failed bid to acquire Ratiopharm.

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Abbott Laboratories yesterday announced that it will buy Facet Biotech Corp. for about $450 million in cash. Facet, along with its development partner Biogen Idec, had planned on moving a potential monoclonal antibody (MAb) treatment for multiple sclerosis called daclizumab into late stage clinical development in the second quarter of this year. The company is also developing several different cancer treatments with other pharmaceutical partners.

Abbott’s purchase of Facet signals Abbott Laboratories’ ongoing commitment to biotechnology or protein-based drugs. The company launched Humira (a fully human MAb treatment for rheumatoid arthritis and other inflammatory diseases) several years ago and it has managed to glean market share from older competitor’s products including Remicade (Johnson & Johnson) and Enbrel (Amgen/Pfizer) to become a blockbuster drug. MAbs are viewed by many as the “drugs of the future.” At present, there are over 350 MAb-based products in various stages of discovery and clinical development.

Earlier in the year, Biogen Idec offered to purchase Facet for $17.50 per share. Company executives and shareholders rejected the offer citing that they thought it was too low. Abbott offered $27 per share which represented a 67 percent premium to Facet’s closing stock price of $16.21 on Tuesday.  Both companies’ boards of directors have already approved the deal which is expected to close some time in the second quarter. It is not clear how the purchase will affect Facet employees but expect to see layoffs and a mass exodus by company executives.

Look for more cash purchases of biotech firms by pharmaceutical companies as debt continues to accrue and venture money remains scarce and difficult to come by.

Until next time...

Good Luck and Good Job Hunting!!!

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Merck of Germany announced on Sunday that it had agreed to purchase Millipore, an American supplier of laboratory products and reagents for biotechnology companies for $7.2 billion. The offer comes in the wake of the $6.0 billion offer made last week by Thermo Fisher Scientific one of the largest supplier in the world of laboratory reagents, supplies and equipment. While somewhat of an unconventional move for a healthcare company, Merck executives hailed the acquisition as a strategic move for customers, stakeholders and share holders of both companies.

In other news, Astellas Pharmaceuticals, Japan’s second largest pharmaceutical company said today that it tendered an offer to acquire all outstanding shares of Long Island, NY-based OSI Pharmaceuticals for $52.00 per share or approximately $3.5 billion in cash. OSI, which manufactures and sells Tarceva (erlontinib) a treatment for non-small cell lung and pancreatic cancer (which it co-markets by Genentech in the US and globally with Roche), has a strong oncology pipeline and is also developing treatments for diabetes and obesity. Despite early success with Tarceva, cash-starved OSI has been struggling of late. The acquisition of OSI provides Astellas with a strong pipeline and entrée into the growing US oncology market. OSI would also complement Astellas’ existing strength and franchises in urology and immunology.

While mergers and acquisitions were largely anticipated in the US biopharmaceutical sector over the past few years, the acquisition of American companies like Millipore and OSI Pharmaceuticals by foreign companies suggests that there may be chinks in the armor of once dominant US biotechnology companies. The economic crisis coupled with America’s waning innovation in the life sciences sector suggests that other US-based biopharmaceutical companies may be at risk. Although most foreign governments stumbled when attempting to develop the own internal biotechnology expertise, many cash-rich foreign companies recognize that purchasing US companies with marketed products offers them an opportunity to quickly and strategically gain a foothold in the ever-expanding biotechnology market.

Until next time....

Good Luck and Good Buying!!!!!!!!!

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Pfizer is one of three companies vying for the opportunity to . Teva Pharmaceutical Industries Ltd, the Swedish private equity fund EQT and Pfizer are the three finalists to purchase Ratiopharm GmbH which is valued at about €2.8-3 billion. The finalists will make their bids in early February. France’s Sanofi-Aventis SA Euronext and China’s Sinopharm Group Co. Ltd. withdrew from the tender in December

Ratiopharm is a private company owned by the Merckle family. Ludwig Merckle put the company up for sale last year, after his late father Adolf Merckle committed suicide in early 2009 after losing control over his business empire to lenders. If Teva acquires Ratiopharm, it will win a major foothold in the German healthcare market, considered a large and growing market. Teva, the world’s largest generic drug company, is currently not a big player in the German market.

 The rising development and retail costs of name brand prescription drugs and the future possibility of price controls in the US is forcing pharmaceutical companies to reconsider the value of generic drugs. Currently, generic prescriptions are rapidly outpacing those for branded products and the size of the US and international markets for both small and large molecule drugs (biosimilars) growing daily. Previously, most innovator companies didn’t think the profit margins nor returns on investment were sufficient to add generic molecules to their product portfolios. However, a few large pharmaceutical companies have already entered the generics fracas; most notably Sandoz (a division of Novartis) which manufactures both generic small molecule and biosimilar biotechnology products and more recently established Merck BioVentures which aims to compete in the follow-on biologics market. 

Many experts believe that it is only a mater of time before most big pharma companies like Pfizer realize that they have to be in both the branded and generic sides of the business. Don’t be surprised over the coming months if other pharma companies consider doing deals to acquire generic drug manufacturers. Diversification will be the mantra of the next decade or so!

Until next time...

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

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Late Thursday, after 8 months of difficult and often acrimonious negotiations, Genentech’s board finally caved and agreed to allow Roche to purchase the remaining 44% of the outstanding Genentech shares that it doesn’t already own. The price: $95 per share—less than the $112 per share that Genentech’s board and management team wanted —but better than the $86.50 per share that was tendered last fall.

While Roche contends that it will continue to run Genentech as an autonomously operating business unit, many Genentech employees are dubious. I suspect that many DNA (Genentech’s stock symbol) employees will embrace a “wait and see” attitude before any decisions are made about whether or not to stay at the “new company.” Roche’s greatest challenge will be integrating the two companies without ruining Genentech’s innovative culture and immediately sending its best scientists and management team out the door. Pharma and biotech corporate cultures are very different from one another and many biotech employees find it difficult to adapt to big pharma’s slow-moving and anachronistic approach to drug development. As previously reported, US business operations of both companies will be based at Genentech’s headquarters in South San Francisco, CA rather than in Nutley, NJ, where Roche’s American business is currently based. This is not good news for many of Roche’s Nutley employees. Roche has been trying unsuccessfully for years to jettison the Nutley site and it seems likely now. Don’t be surprised if you see a mass exodus at the Nutley site. All of Roche’s US products will be sold under the Genentech brand.

Roche’s purchase of Genentech, America’s oldest biotechnology company (started in 1976) and considered by many to be the crown jewel of the industry, truly signals the end of an era. Let’s hope that another “Genentech” (and others like it) emerge as the US biotechnology industry continues to evolve in the 21^st century.

Until next time...

Good Luck and Good Job Hunting!!!!!

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I believe in free enterprise and that publicly-traded companies ought to be able to buy one another if a deal makes sense. In any other financial market, Pfizer’s impending acquisition of Wyeth would be a noteworthy event but not extraordinary. However, we are living in unprecedented and uncertain financial times and Pfizer’s possible purchase of Wyeth has serious implications for American taxpayers.

As you may recall, the US government has pumped hundreds of billions of dollars into American banks so that they remain “solvent.” This was done to unfreeze credit markets and to purportedly provide relief, albeit indirectly, to American taxpayers many of whom are in financial trouble. However, the government’s infusion of TARP money didn’t unfreeze the credit markets and banks are still reluctant to lend to one another or to small business owners and consumers who need financing to keep their business and homes.

The Pfizer-Wyeth deal began about a year ago when Pfizer’s CEO floated the idea of a merger or acquisition. Negotiations between the two companies were on and off over the past year mostly because Pfizer and Wyeth couldn’t agree on an acceptable purchase price. The financial meltdown of last October changed all that and it became economically feasible for Pfizer to purchase Wyeth at a sharply discounted price.  However, one of the missing variables in the equation (that might kill the deal) was the availability of credit to complete the transaction. Because US banks are currently flush with TARP cash (because they stopped lending) and the Pfizer-Wyeth deal represents a safe deal with a substantial financial upside, it was not surprising that four of the largest US banks were willing to finance the deal.

According to the NY Times, “Pfizer’s bid is being financed by four banks that received bailout money: Goldman Sachs, JP Morgan Chase, Citigroup and Bank of America.” Ironically, last week the US government agreed to give Citigroup and Bank of America an additional TARP infusion to prevent them from “failing.” Amazingly, these very same banks (that have been teetering on the brink of insolvency for the past several months) can find the cash (taxpayer money) to finance Pfizer’s purchase of Wyeth. And, what can the American taxpayers expect to receive in return for investing in the deal—massive job layoffs— if Pfizer’s past purchases of Warner Lambert and Pharmacia are used as harbingers of things to come.

In better financial times, these layoffs would be noteworthy but not insurmountable jobs—there were always jobs at rival pharmaceutical companies and smaller biotechnology companies. However, over the past three years, the pharmaceutical industry has shed over 160,000 jobs and the biotechnology industry, the usual refuge for former pharma employees, has also layed off tens of thousands employees. Put simply, there is no longer a place for these highly skilled and experienced pharmaceutical employees to go to seek employment.

Wyeth shareholders and the banks will undoubtedly benefit financially from the impending deal. On the other hand, while Pfizer may garner some short term benefits from the Wyeth purchase, I think the ROI from the deal will be nominal over the long haul. Ironically, the people who stand to lose the most from the deal are the very same people who made the deal possible—the American taxpayers!  Imagine how you might feel if a deal made on your behalf using your hard-earned money resulted in your eventual unemployment!

Until next time…

Good Luck and Good Job Hunting!!!!!

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