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Yesterday I reported that Cangene, one of Canada’s oldest and largest biotechnology companies was reorganizing and laying off 120 employees. Today, the French drug maker Sanofi-Aventis announced that it would eliminate 100 jobs at its Montreal area (Laval) facility to allow for better integration of Genzyme, the Massachusetts-based biotechnology company that was acquired last year for more than $20 billion. About 1,700 employees work for Sanofi’s Canadian division.

Today’s layoff news comes only day after Johnson & Johnson announced that it would close its Montreal research center and layoff 126 employees. This is bad news for Montreal which emerged as one of Canada’s hot pharmaceutical and biotechnology zone in the early 2000s. 

The Canadian biotechnology sector is much smaller than its US counterpart but there are several high profile companies that have been able to establish themselves as players in the global biotechnology industry. Hopefully, these companies will be able to weather to the economically-challenging times that are currently plaguing the Canadian biotechnology industry.

Until next time...

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

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While China and India have gotten the most attention as emerging pharmaceutical markets, Latin American markets most notably Mexico and Brazil (okay, it is a South American country but it can be included in Latin America) have been quietly expanding as rapidly as the Indian and Chinese markets. To wit, Denmark-based, Novo Nordisk—the world’s largest insulin maker—recently announced that it will be beefing up its medical consultant (aka sales reps) presence in Latin America over the next two to three years. During this period, the company expects to increase its current headcount of 300 to 800 employees.

Novo currently holds a 50 percent share of the Latin American insulin market. The company currently generates annual sales in Latin America of approximately $360 million. But, its main rivals Sanofi Aventis and Eli Lilly & Co, which sell faster-acting insulins, are beginning to cut into Novo’s market share.  The solution: add more sales reps in the region. While this may be great news for Latin American sales reps, it is not good news for American sales reps. Unless, of course, these reps speak Spanish and are willing to relocate!

Until next time...

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

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I am not sure how I missed this announcement last week but Sanofi Aventis will invest $300 million in a vaccine (biologics) manufacturing facility in India. The investment is in addition to the $784 million that Sanofi paid two years ago to acquire the Indian biologics company Shanta Biotech.

Sanofi executives originally thought that the purchase of Shanta would give immediately give them biologics manufacturing capability in South Asia. This did not occur because of manufacturing problems with the existing Shanta facility.  Sanofi claims to have corrected the manufacturing issues and investment of an additional $300 million into the facility is to bolster both R&D and manufacturing capacity. The new manufacturing facility is consistent with Sanofi’s publicly announced strategy of earning as much as 40 percent of its profits in emerging markets by 2015.

Like China, emerging markets like India, Brazil and Russia will be squarely on big pharma’s radar for the foreseeable future.

Until next time...

Good Luck and Good Job Hunting (in India!)

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Despite the fact that no new jobs were added to the US economy in August, things were pretty quiet in the pharmaceutical layoff space. From what I was able to find, it appears that Alcon Laboratories will be moving about 100 jobs from Atlanta to Fort Worth Texas (I was recently in Fort Worth for the first time and I extend my sympathies to those Atlantans that may make the move). The consolidation is taking place because Novartis purchased Alcon in April and after acquisitions these sorts of things happen. Nestle, another Swiss company, had a majority ownership in Alcon. 

Interestingly, there appears to be some consolidation also taking place in the contract manufacturing space. Contract Pharma announced that it would close its Buffalo, NY manufacturing facility (purchased from Bristol Myers Squibb in 2005) and eliminate 128 jobs. Those employees who do not lose their jobs may have an opportunity to work in a nearby Ontario, Canada site. Likewise, UK-based United Drug, another CMO, will cut 150 jobs because of government-led regulatory decision to reduce health spending.

While none of these announcements were particularly noteworthy, Sanofi-Aventis’ announcement today that it will cut $2.9 billion in costs over the next few years was somewhat shocking but not unexpected. Most of the cuts will be in R&D and there will undoubtedly be massive downsizing and reorganization. 

According to a post on today’s Pharmalot blog “a presentation indicates that research and development costs are in the process of being cut by 12 percent from 2008 to about $1.1 billion, excluding Genzyme. And the total headcount over this same period is being reduced by about 22 percent, from roughly 13,000 positions to about 10,000 jobs by the end of this year, again excluding Genzyme.”

Today’s announcement of cut back is consistent with Sanofi’s business strategy over the past year or so which included plant closings and large sales rep layoffs Again, the Pharmalot blog reported “The upcoming round involves slashing about $700 million in expenses from Genzyme, the biotech that Sanofi purchased recently, as oncology units in the Boston area are combined.”

The cost cutting measures are in response to the impending loss of patent exclusivity for several of its blockbuster products most notably Plavix and unexpected attrition in the company’s late stage clinical development portfolio. This year sales of products facing patent expiry are expected to decline to $4.2 billion as compared with $10.6 billion in 2008. To cope with these difficulties, Sanofi has gone on a buying spree over the last couple of years spending $23 billion to acquire various companies with Genzyme being the crown jewel.

Meanwhile, Sanofi plans to file for approval of six new drugs this year and hopes that it can introduce 19 new drugs by 2015. I suspect that Sanofi’s aggressive M&A strategy may help the company reach that goal. That said, if I was a Sanofi or Genzyme employee, I would be dusting off the old resume right about now.

Until next time...

Good Luck and Good Job Hunting!!!!! 

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In the play Romeo and Juliet, William Shakespeare famously wrote:

"What’s in a name? that which we call a rose

By any other name would smell as sweet ..."

While I am not so sure about the “sweet part,”  French pharmaceutical giant Sanofi-Aventis believes that no matter what it calls itself it will still be the same old company. To that end, Sanofi-Aventis last Friday announced that it will officially shorten its name to simply “Sanofi.” 

Sanofi is one of the world’s largest pharmaceutical companies based on revenues. It was formed in 2004 in a merger between two French pharmaceutical companies, Sanofi-Synthelabo and Aventis. The reason for the name change; most people (me included) simply called it Sanofi rather than Sanofi-Aventis. And, perhaps more appropriately, the company wanted its name to be “recognizable and easy to pronounce” around the world.

In addition to the name change, the company also declared a dividend of 2.50 euro for its shareholders that will be paid either in cash or stock. The dividend payout will take effect by June 16, 2011

As you may recall, Sanofi purchased Genzyme last month in a $20.1 billion deal. Perhaps the name change was announced because Sanofi-Genzyme is much easier to pronounce and has a better “ring to it” than Sanofi-Aventis-Genzyme?

Until next time...

Good Luck and Good Job Hunting!!!

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While R&D scientists and sales representatives continue to struggle to find jobs in the US at pharmaceutical and biotechnology companies, the competition is fierce to hire and retain pharma employees in emerging markets like China and India. Earlier this week, I posted a piece on big pharma’s continuing expansion of its R&D activities in Asia and the growing need for US-trained PhDs in this region. However, it appears that hiring and retaining pharma sales reps is a bigger problem in China and India for big pharma companies like GlaxoSmithKline (GSK), Sanofi-Aventis (SA) and Pfizer.

According to a recent article in Bloomberg News about 20 percent of GSK’s sales forces in both countries quits each year in favor of better offers from its rivals including Pfizer and SA. One GSK executive quipped “There’s a huge war for talent. It’s hard to do anything about. If you have a good person, they could find someone else willing to pay twice as much.” This is in marked contrast with the US where almost 100,000 pharma sales reps may have lost jobs over the past five years.

Emerging Asia Pacific markets accounted for roughly 17 percent of GSK’s sales in 2010 as compared with 18 percent for Pfizer and 30 percent for SA. Sales revenues for most major pharmaceutical companies declined in both the US and Europe last year. There is no question that big pharma is turning to emerging markets as a means to maintain and increase sales of drugs after patents expire and generic competition cuts into revenue. Sales in emerging markets are predicted to reach about $400 billion by 2020 which is equivalent to the current size of the US and the five biggest European markets combined!

By its own admission, GSK was “fairly late” in their investments in China and may explain why the company may be experiencing trouble with competing for talent in that market. Employment opportunities in emerging markets will likely resemble those in the late 1990s in the US and Europe, when there was a dearth of talents life sciences professionals and companies were willing to pay large salaries (regardless of whether or not job candidates were qualified) to employees to maintain operations. This trend is driving up labor costs in China and interestingly, China is beginning to outsource work to Vietnam, Malaysia and Singapore where labor and raw materials costs are less expensive.

Until next time....

Good Luck and Good Job Hunting (Go East Young Man and Woman)

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It seems like hostile takeover bids in the life sciences industry may be de rigueur (how can anyone forget the Sanofi-Aventis/Genzyme hostile takeover saga that dragged on for almost a year). Interestingly, there have been 219 acquisitions of U.S. pharmaceutical companies in the past 12 months, with an average disclosed price of $153.7 million and an average premium of 44 percent!

Late yesterday, Valeant Pharmaceuticals announced plans for a hostile takeover bid for Cephalon, a 24 year old Pennsylvania-based biopharmaceutical company with eight products on the US market and more than 100 products worldwide. The takeover bid became “hostile” after Cephalon’s management team rejected earlier proposals.

Cephalon’s main focus is on nervous system disorders, pain and cancers. It is one of the world’s top 10 and most profitable biopharmaceutical companies. The company had revenues of $2.81 billion last year from sales of its narcolepsy treatment Provigil ($1.2 billion) and its leukemia treatment Treanda ($393 million). Also, according to the Cephalon website, there are several oncology products (lung, melanoma and solid tumors) in its development pipeline. In 2010 Cephalon announced seven acquisitions many of which were intended to bolster its oncology expertise.

Valeant Pharmaceuticals International, long a struggling speciality pharma company, merged with Biovail Corporation late last year and re-emerged as a re-invented company with substantial financial resources at its disposal. Prior to the Biovail merger, Valeant had a long history of acquiring smaller companies to bolster its R&D capability and its flagging drug development pipeline. The new company specializes in neurology and dermatology and has a diverse product portfolio that consists of branded pharmaceuticals, branded generics and over-the-counter medicines. In 2009, its revenues were $1.65 billion and 2010 revenues (to be released) are likely to exceed $2.0 billion. 

According to Bloomberg News, Valeant has offered to buy Cephalon for $5.7 billion in cash. Under terms of the offer, Valeant would pay $73 a share in cash; a 24 percent premium on Cephalon’s Tuesday closing stock price or a 29 percent premium to company’s 30 day trading average. Not surprisingly Cephalon executives summarily rejected the offer as “too low.” Several financial analysts concur with Cephalon and contend that the $73 per share cash offer undervalues the company’s true worth. Valeant and Cephalon are main competitors in the oncology and neurology markets.

Unlike the Sanofi/Genzyme bid, where it was clear at the outset to most observers that Sanofi would ultimately prevail, it isn’t clear whether or not Valeant will be successful in its attempt for Cephalon. While Cephalon has had its share of trouble with FDA over the past few years (for a variety of infractions including off-label marketing of Provigil), the company is in much better shape than Genzyme and the current management team has more resources at its disposable to ward off Valeant’s hostile takeover bid.

The downside of a Valeant-Cephalon merger would be job loss for many current Cephalon employees. This is because Valeant’s bid for Cephalon appears to be a “pipeline grab” rather than an R&D play. Typically, these types of acquisitions result in reorganization and downsizing of personnel because of duplication of effort. Only time will tell if Valeant will prevail.

Stay tuned for more late breaking news!

Until next time...

Good Luck and Good Job Hunting!!!

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The French drug maker Sanofi-Aventis continues to reorganize and slash jobs in anticipation of its acquisition of Genzyme. Today the company disclosed that it would shed another 700 jobs from its European operations. The job cuts come amid the company’s reorganization of its units in Austria, Germany, Switzerland, Portugal Spain, Holland, the Czech Republic and the United Kingdom (basically the entire EU).  The goal is to consolidate and reorganize the 30 European subsidiaries into only 10.

In other news, the Japanese drug maker Eisai announced that it plans on cutting 600 jobs or 20 percent of its US workforce. This announcement comes only one week after the company disclosed that it would trim 900 jobs in the next five years from European and Japanese operations. Impending generic competition for Eisai blockbuster treatment for Alzheimer’s disease, Aricept, is largely responsible for the layoffs. Like most other big pharmaceutical companies there aren’t enough drugs in development pipelines to offset the loss of revenue from generic encroachment on blockbuster brands.

Until next time...

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

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Reuters reported today that Sanofi Aventis has reached an agreement in principle to purchase Genzyme for $19 billion in cash and future payments based on the performance of Lemtrada, Genzyme’s experimental treatment for multiple sclerosis.                     

The $19 billion dollar deal translates into $74 per share in cash plus a contingent value right for Lemada that Genzyme investors will receive. Interestingly, the $74 per share stock price is the original amount that Genzyme’s board asked for when the saga to purchase the company began last August. Go figure.....

The deal is the second biggest in biotech history (second to Roche’s acquisition of Genentech) two years ago. I don’t know about you but I am glad that the deal is almost done and we don’t have to hear about it anymore. That said, I hope that Sanofi gets what it paid for! And, if I were a Genzyme employee (especially Henry Termeer, Genzyme's embattled CEO) I would dust off the old resume or CV as quickly as possible. 

Until next time...

Good Luck and Good Job Hunting!!!!!

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According to a "mention" today on the Pharmalot blog, a French newspaper reportedly learned that Sanofi-Aventis may be spending up to $1 billion this year to acquire up to four ophthalmology companies. Although the companies were not identified, three of the companies that Sanofi is eying (pun intended) are located in the US and the fourth is reportedly in Israel.

An aging global population coupled with the diabetes epidemic plaguing the US and several other Western countries suggest that ophthalmology drugs may be a good bet for the future. This, coupled with the impending acquisition of Genzyme suggests that Sanofi-Aventis is trying to create somewhat of a soft landing for the company after patent expiry in early 2012 of Plavix, its major money maker.

Until next time...

Good Luck and Good Job Hunting!!!!!

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After seven months of public bickering over an appropriate sale price, the NY Time reports today that Sanofi Aventis may have hammered out a deal that would enable the French drug maker to acquire the world’s largest orphan drug manufacturer Genzyme for $19 billion. According to the report, Sanofi will acquire Genzyme for a $74 per share which is up from it previous offer of $69 per share.

Most analysts and the Genzyme management team felt that the previous $69 per share offer was too low and that the tipping price would be in the mid 70s. This made sense even to outsiders like me because Eli Lilly purchased ImClone, a company with only one approved product on the market, for $70 per share several years ago. Genzyme has multiple FDA-approved products with a strong late stage drug development pipeline. Not surprisingly, Sanofi tendered a low initial stock price purchase offer to give itself flexibility when it decided to enter into serious negotiations.

Despite the long drawn out and tiresome melodrama, the deal is a good one for Sanofi, a company that desperately needs to bolster its biotechnology pipeline and also for Genzyme which has been rocked by biomanufacturing and quality problems for the past couple of years.

Now that this deal is imminent, does anyone have an idea about which biotechnology company may be the next takeover target?

Until next time..

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

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It is no secret that Sanofi-Aventis is facing a steep “patent cliff” in 2013 when some of its top selling drugs, most notably Plavix, will lose patent protection. Some analysts contend that the company can lose as much as a quarter of its annual revenue because of generic encroachment on blockbuster brands. Sanofi is narrowing its business to three areas -- diabetes, heart problems, and cancer -- and is seeking partnerships and acquisitions.

This past June, Sanofi inked a $398 million deal with US-based Ascenta Therapeutics to gain access to two experimental cancer drugs that are in preclinical development. Later that month, the company purchased TargeGen a privately held US biopharmaceutical company focusing on oncology R&D. Two months later, Sanofi announced that it had entered into a partnership with the Belfer Institute of Applied Cancer Science (part of the Dana Farber Cancer Institute) to gain access to additional experimental cancer treatments.

Today, Sanofi announced that it had reached an agreement with Germany-based  Merck KGaA to jointly study experimental cancer treatments. Both companies Merck will conduct early stage human trials of Merck’s MSC1936369B and Sanofi’s SAR245409 and SAR245408 experimental drugs. Under the terms of the agreement, each company will carry out an early-stage dosing test of the drug candidates. Sanofi will be granted a license to study the safety and effectiveness of the Merck compound when used with SAR245408. Merck will be given a license to work with Sanofi’s other medicine to study its use in combination with its experimental compound. Financial terms of the deal were not disclosed.

Yesterday, Sanofi announced that it had signed an agreement with Oxford University to conduct multi-phase clinical and translational research in oncology with INDOX, a network of cancer research centres established across India in partnership with the university's Institute of Cancer Medicine five years ago. According to the terms of the agreement Sanofi-Aventis has agreed to provide financial support to Oxford University in managing the INDOX network of eight cancer research centres across India. 

Based on this spate of activity over the past six months it would appear that Sanofi is executing its new long term strategic plan. Stay tuned for more news!

Until next time...

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

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The era of blockbuster drugs was officially declared over several years ago by many pharmaceutical analysts and pundits. Nevertheless, as the old adage goes “it’s difficult to treat old dogs’ new tricks!” After all, the blockbuster drug model has been the major driver of pharmaceutical and biotechnology markets for close to 50 years. Consequently, big pharma and biotech companies haven’t truly abandoned the possibility of finding potential new blockbusters. And, it appears that the blockbuster heir apparent may be drugs to treat rare aka orphan disease indications. 

At first blush, this strategy may not make a lot of sense. This is because rare diseases afflict only small numbers of patients (at least in the US and other Western nations). However, what may be considered a rare disease in Europe or the US may actually be less rare in countries with large populations like China and India. Further, while current rare diseases patient populations may be small, the cost of the drugs developed to treat them is extremely high. In some instances, the annual cost per patient can exceed several hundred thousand dollars. If you do the math, it becomes apparent that developing rare disease treatments or so-called niche busters can actually be very big business. 

The rare diseases business model has been perfected by Genzyme and many big pharma companies are trying to emulate it. To that end, big pharma’s push into rare diseases continues to gather momentum. So far this year Sanofi-Aventis has made an $18.5bn move for Genzyme, while Pfizer and GlaxoSmithKline have both created rare disease business units.

According to Glaxo’s estimates, 7,000 rare diseases have been identified and collectively this affects 6-8% of the world’s population; in the US and Europe alone rare diseases affect 25 million people. In addition mortality rates are very high, often at a very young age, and less than 10% of these diseases are treated with approved drugs.

To date, over 7,000 rare diseases have been identified. Companies involved in the new rare diseases treatment race have whittled the list down to roughly 200-250 disorders that represent a clear path for clinical, regulatory and commercial success. The criteria used to select these indications include identifying rare disorders with: 1) a relatively high prevalence rate, 20 an early age of onset, 3) a large unmet medical need and 3) a known molecular target. The indications have been broadly classified into four distinct groups:  metabolic disorders, autoimmune/inflammation, central nervous system and blood disorders.

While Genzyme identified, developed and commercialized its rare diseases treatments, it is likely that big pharma companies like Pfizer, Glaxo, and Merck will either in-license potential new treatments or acquire companies with platform technologies or drugs in various stages of clinical development. For example, Merck’s acquisition of Glycofi several years ago has allowed the company to enter into the rare diseases and biosimilar markets.

One of the major problems with extant rare diseases treatment is their excessive and oppressive costs. One can only hope that the increased competition in the rare diseases space will help to lower drug prices and make them more affordable for patients who suffer from these devastating and life-threatening disorders.

For more insights in to the orphan drug disease market, check out an article that I wrote for Life Science Leader this month

Until next time...

Good Luck and Good Job Hunting!!!!!

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Late last Friday, Sanofi-Aventis announced that it was restructuring it US pharmaceutical business to meet the demands of a more challenging American healthcare market. The company said that it will streamline U.S. Pharmaceutical Operations and reduce its workforce by an estimated 25 percent. This translates into eliminating approximately 1,700 positions. Decisions about the breadth and scope of the cuts will be finalized by mid-December.

Of the 13,000 US employees, 6,900 work in the Pharmaceutical Operations division. Other Sanofi-Aventis affiliates in the United States include its R&D group, Sanofi Pasteur Vaccines, BiPar and Chattem: its consumer healthcare business.

According to Gregory Irace, President of Sanofi-Aventis and CEO of Sanofi-Aventis US/.Canada Pharmaceutical Operations,

“Given the serious challenges facing our organization and the healthcare industry, it is important to act decisively now so that our organization has greater stability moving forward and that our resources are allocated to our strategic growth priorities. These changes will foster a renewed focus on the strong growth and pipeline opportunities that will drive our vision of being a diversified healthcare leader.” Sanofi faces a serious “patent cliff” in the very near future; mainly because its top selling anti-clotting drug Plavix is slated to lose patent protection in 2011. Also, the company lacks expertise in biotechnology: the discipline that most big pharma companies is going to drive future growth in the industry."

The lack of biotechnology prowess is largely responsible for Sanofi’s attempt to purchase Genzyme, one of the largest and profitable biotechnology companies in the world.

Last week, Sanofi confirmed that its bid for Genzyme had become hostile because its management team and board of directors failed to seriously consider a bid tendered at $69 per share or $18.5 billion. Genzyme’s management team and board of directors immediately rejected the hostile bid (as it did in the past when the offer was “friendly”). The hostile bid allows Sanofi-Aventis to bypass Genzyme’s Board and appeal directly to its shareholders to consider the offer.

Restructuring of its US pharmaceutical operations, may be a sign that Sanofi-Aventis is attempting to cut costs to finance the all cash deal.

I suspect that Sanofi-Aventis will prevail in its bid for Genzyme; but it will have to sweeten the offer to appease activist investor Carl Icahn who is likely seeking an offer in excess of $75 per share.

If I were a betting man, I would put my money on Icahn—a brilliant financial strategist who frequently gets what he wants

Stay tuned for more late-breaking Sanofi-Aventis/Genzyme news!

Until next time...

Good Luck and Good Job Hunting

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Yesterday, Genzyme announced it would cut about 1,000 jobs worldwide as part of a restructuring plan. In addition, company spokespersons indicated that the company may outsource some of the eliminated permanent position and impose a hiring freeze. As part of its restructuring plan, the company plans on eliminating about 10 percent of its 12,800-employee workforce by 2012. It is unclear how many of the 4,500 US employees will lose their jobs.

In addition to the job cuts, the company announced that it had agreed to sell its diagnostic testing unit (reproductive and genetic testing) to Laboratory Corp of America for $925 million in cash. Henri Termeer, Genzyme’s beleaguered CEO also announced that the company’s other two units, molecular diagnostics and pharmaceutical ingredient manufacturing on also on the block and will be sold.

While Termeer insists that the job cuts and sale of non-core business units has nothing to do with Sanofi-Aventis’ attempt to purchase the company, many analysts believe that these measures are being taken to induce Sanofi to sweeten its $69 per share takeover bid. The additional monies garnered from the layoffs and division sales, will allow Genzyme to strengthen its stock position and bolster its cash reserves to defend against a possible hostile takeover attempt by Sanofi. 

The demise of Genzyme, once one of the most highly regarded and ethical biotechnology company in the world is directly linked to manufacturing problems at its Boston-based facility. The ongoing and protracted quality problems at the plant resulted in a consent decree by the US FDA and penalties totaling about $175 million. As most quality experts will tell you, systemic quality control and assurance issues generally stem from a lack of commitment to quality by senior management; in this case Termeer! 

Despite repeated request for his resignation, Termeer, who has run Genzyme for the past 25 years or so, has steadfastly refused to relinquish his post. Instead of stepping down to save the company, Termeer has chosen to “take the ship” down with him; the sure sign of an out-of-touch CEO who apparently was willing to sacrifice the reputation and worth of a company for entirely self-serving reasons.

Until next time...

Good Luck and Good Job Hunting

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For those of you who can’t tear yourselves away from the ongoing, nail-biting Sanofi Aventis-Genzyme saga, the head of GlaxoSmithKline (GSK) R&D, Moncef Slaoui told a French newspaper that GSK will not “step in as a rival bidder for the US biotech Genzyme.”

Slaoui made his remarks at the christenings of a GSK research center in France. “An offer by GlaxoSmithKline for Genzyme does not make sense. It is too expensive” he said. Also, GSK already has a foothold in the orphan disease market through its partnership with JCR Pharmaceuticals. 

As negotiations between Sanofi and Genzyme began to stall over the $69 per share offer tendered by Sanofi, some analysts had predicted that a so-called white knight may enter the bidding war to drive the stock share price higher to the $75 per share wanted by Genzyme.

Today’s announcement by GSK likely produced a collective sigh of relief from Sanofi shareholders. Personally, I think Sanofi would be crazy to let this one get away; the deal is exactly what Sanofi needs to begin to compete in the lucrative biologics market. Until now, Sanofi’s focus has been almost exclusively on small molecule development.

Until next time..

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

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The Boston Globe reported today that this morning Henri Termeer, the embattled CEO of Cambridge, MA based Genzyme acknowledged for the first time that company was indeed up for sale. However, he was quick to point out that the $69 per share or $18.8 billion takeover bid from Sanofi Aventis was insufficient.

Over the past few days, Sanofi Aventis’ CEO Christopher A. Viehbacher turned up the heat on Termeer; forcing him to possibly take Sanofi’s latest offer directly to Genzyme shareholders. While Termeer acknowledged that the company was for sale, he hinted that other companies may join the bidding war to get the $75 per share price that the Genzyme board is seeking. 

The Sanofi Aventis-Genzyme situation is beginning to resemble the Bristol Myers Squibb (BMS)-ImClone standoff of two years ago. As you may recall, Jim Cornelius—BMS CEO at the time—publicly and repeatedly offered a “low-ball” price ($62 per share) to purchase ImClone despite admonishments from Carl Icahn, ImClone’s Chairman. As negotiations stalled, Icahn told Cornelius that there were other suitors who were willing to pay a higher price to acquire ImClone. Surprisingly, rather than continuing to negotiate in good faith, Cornelius decided to call Icahn’s “bluff.” In less than a week, Eli Lilly purchased ImClone for $70 per share ($6.5 billion); the price that Ichan had previously and publicly asked for to purchase the company.

Many of you already know that Icahn holds a substantial minority Genzyme stock position and is represented by two current Genzyme board members. That said, if I were Sanofi’s Viehbacher, I would proceed with extreme caution in future negotiations. Like him or not, Icahn is a financial genius and second-to-none negotiating M&A deals. 

Maybe Viehbacher ought to contact Cornelius for advice? Oh yeah...Cornelius retired as CEO earlier this year but he is still Chairman of the BMS Board of Directors. Maybe it is worth a call?

Stay tuned for new developments as the saga continues.

Until next time...

Good Luck and Good Job Hunting!!!!!

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As predicted by many industry insiders and Wall Street analysts, the Genzyme board may be  holding out for at least a $75 per share offer from Sanofi-Aventis.  Previously, Sanofi-Aventis offered Genzyme $69 per share despite clear signals from Genzyme's board and its shareholder that the proffered offer was inadequate.

The Genzyme board is likely under extreme pressure to hold out for the $75 per share price because that is the price being sought by its powerful and influential minority shareholders Carl Icahn and Ralph Whitworth.

Carl Icahn, no stranger to corporate buyouts, is a master at getting the price that he wants for the companies that he sells. He previously sold ImClone to Eli Lilly for $70 per share after Jim Cornelius, Bristol-Myers Squibb’s former CEO, refused to offer more than $64 per share of ImClone stock.

Conventional wisdom suggests that Sanofi will likely buy Genzyme for at least $75 per share if not more!

Stay tuned for updates!

Until next time..

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

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Can things get any worse at Genzyme? First there were the manufacturing problems that result in plummeting stock share prices and a proxy battle by Carl Icahn and company. Next up was a $175 million consent decree judgment levied by the US Food and Drug Administration for the manufacturing problems. Then came the $18 billion takeover bid from Sanofi Aventis. Now, patients affected by shortages of the drugs Fabrazyme three patients have petitioned the US Department of Health and Human Services (HHS) to disregard Genzyme’s patent for the medicine to overcome the drug shortages.

Because of the manufacturing problems, Genzyme rationed its supplies of Fabrazyme to one-third of the normal dose for Fabry disease patients. Some of these patients reported increased pain and no newly diagnosed patients could receive the drug. Meanwhile, Shire Pharmaceuticals has been trying to obtain FDA approval of its Fabry disease treatment, Replagal which is approved in Europe.

The patients who petitioned HHS contend that HHS can override the patents because the National Institutes of Health paid for research at the Mount Sinai School of Medicine, which exclusively licensed Fabrazyme to Genzyme. The goal of the action is to induce another company to produce the drug in case Genzyme is unable to deliver adequate quantities to new and existing patients. Provisions in the Bayh-Dole Act suggest that this action may not be unreasonable if ‘a licensee cannot reasonably meet the public health and safety needs of the American public.’

Stay tuned for the next installment of the continuing Genzyme saga!

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The New York Times reported today that French drug maker Sanofi Aventis has made a bid to purchase beleaguered orphan drug manufacturer Genzyme. According to the report, Sanofi approached Genzyme about two weeks ago about a possible sale. Sanofi is currently waiting for a response from Genzyme. If Genzyme rebuffs the takeover bid, persons close to the deal said that Sanofi may possibly try to acquire Genzyme via a hostile takeover bid.

Sanofi is facing revenue losses because many of its blockbuster products including the anti-clotting agents Plavix and Lovenox will or have lost patent protection. Plavix's patent expiry will occur in 2001 whereas Lovenox has already lost patent protection ( yesterday the FDA approved a generic version of the drug). Further, Sanofi, unlike most major pharmaceutical companies, is glaringly deficient in biotechnology products and has long been known to be seeking a quick entry into the biotech market. To that end, the Genzyme bid makes complete strategic sense to bolster sales and secure Sanofi's future.

Genzyme is the fifth largest biotechnology company in the world. Sales of it orphan drugs to treat Gaucher’s, Fabry and Pompe disease annually exceed $3.0 billion in sales even though they are used to treat small numbers of patients (<20,000).

Genzyme’s value has plummeted in the past year because of manufacturing problems and is currently operating under a US Food and Drug Administration consent decree after being fined $175 million by the agency. Many shareholders have called for the dismissal of Henri Termeer, Genzyme’s CEO for the past 25 years. To date, Termeer has refused to step down even though Genzyme’s stock continues to under perform. News of a possible takeover caused Genzyme’s stock price to soar; gaining more than 15 per cent on Friday to $62.50.

I believe that Sanofi is approaching Genzyme at the right time. Recently, Genzyme reached an agreement with Carl Icahn, who owns a substantially amount of stock, to prevent a proxy battle to reshape Genzyme’s board and oust Termeer. Also, another major shareholder, Ralph Whitworth, is unhappy with recent events at the company. Sanofi’s acquisition of Genzyme would provide a quick entry into the biotechnology and orphan drug markets and also appease shareholders like Icahn and Whitworth if the deal is rich enough. Also, Sanofi’s manufacturing experience would help Genzyme overcome its problems in that area.

Stay tuned for updates.

Until next time...

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

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According to a post on Pharmalot, a great blog run by the intrepid Ed Silverman, Sanofi-Aventis is laying off 400 employees; most of the them sales representative. The layoffs are in response to impending generic competition for several of the company’s older medications— the Ambien CR sleeping pill and Aplenzin antidepressant and declining sales of Actonel an osteoporosis medication. And, based on statements made by a company executive who manages the company’s therapeutic portfolio this may only be the tip of the iceberg as revenues from brand drugs continue to decline over the next few years.

Until next time..

Good Luck and Good Job Hunting!!!!!

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Astra Zeneca announced today that it has agreed to market 18 of Torrent Pharmaceuticals Ltd.’s branded generic drugs in 9 emerging markets, marking the U.K. drugmaker’s first generic-drug partnership.

Unlike some its competitors, Astra Zeneca is very vulnerable to generic competition as many of its best selling products such as Nexium for ulcers, the antipsychotic Seroquel and Crestor for cholesterol. are near patent expiry. Industry analysts expect the company to lose as much as 25% of its sales revenue to generic encroachment by 2014.

The company joins a growing list of big pharma companies including Pfizer, Sanofi-Aventis and GlaxoSmithKline that view generics as a viable replacement for revenues lost to generic competition for it top selling brands.

Last year, GlaxoSmithKline entered into joint ventures with the generic manufacturers Dr. Reddy’s Laboratories (India) and Aspen Pharmacare Ltd (South Africa). Also, the company paid $246.5 million for Bristol-Myers Squibb’s Pakistan and Egypt drug units and acquired UCB’s drug portfolio in Africa, the Middle East, Asia Pacific and Latin America for $702 million; clearing signaling its intention to more aggressively pursue emerging global markets.

Likewise, Sanofi-Aventis bought Zentiva NV of the Czech Republic, Helvepharm AG of Switzerland, Medley SA of Brazil and Laboratorios Kendrick SA of Mexico to bolster its branded generics portfolio. The company also took control of the Indian vaccine and biologics manufacturer Shantha Biotechnics which suggest that Sanofi may be looking to biotech in the future.

Finally, Pfizer continues its pursuit of the financially-troubled German, generics giant Ratiopharm. Actavis of Iceland and the Israeli generics manufacturer Teva have also put in bids to purchase Ratiopharm. However, there are signs that Ratiopharm's board would prefer to be purchased by Pfizer rather than Teva or Actavis.

Look for other big pharma companies to enter into deals with or purchase branded or conventional generics manufacturers.

Until next time...

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

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Earlier this week, an article appeared in the NY Times Business section heralding the entry of several large pharmaceutical companies into the branded generics industry. For those of you who may not know, generic drugs are lower cost versions of brand name prescription drugs that have lost patent protection. Generic prescription drugs are usually much cheaper than their brand name counterparts but generally deliver the same therapeutic effects as the branded product. In most cases, so-called “commodity generic drugs” are not branded and sold to consumers by their chemical names. A good example of a commodity generic drug is the anti-depressant sertraline HCl; which Pfizer sells under the brand name Zoloft. Pfizer still manufactures and sells Zoloft but Zoloft lost patent protection several years ago and a generic version of the active ingredient, sertraline HCl, is now available to consumers. Because sertraline HCl is much cheaper than Zoloft, pharmacists almost always substitute prescriptions for Zoloft with sertraline HCl. This is perfectly acceptable because sertraline HCl was approved by the US Food and Drug administration with an AB rating which means that sertraline HCl is biologically equivalent to Zoloft.

Unlike commoditized (no-name) generics, branded generics are off-patent prescription drugs that are sold to consumers—as the name implies—under a brand name. Typically, because these products are “branded” and actively marketed by manufacturers they are sold at higher prices than equivalent no-name generics. This is because consumers are generally willing to pay more for drugs that are manufactured by well known and trusted companies as compared with no-name generics which are usually produced by lesser known or unidentified manufacturers.

Branded generics are not a new or novel concept. They were previously championed by a number of generics manufacturers, most notably Barr Laboratories, which was recently purchased by the Israeli generics giant TEVA. In the past, when pharma embraced the blockbuster drug business model, drug manufacturers built in revenues— that eventually would be lost through patent expiry—into the price of their top selling drugs. This allows drug companies to maximize ROI early in a drug’s life cycle years before patent expiry Studies have shown that branded prescription drugs can lose as much as 90% of their original value two years after the introduction of generic equivalents. Consequently, because of drastically diminishing financial returns after patent expiry, it didn’t make economic sense to continue to promote and support a brand that was facing generic competition. Put simply, the company made its money on the drug and it is time to move on. 

However, the emergence in recent years of an affluent middle class in developing markets like China, India, Brazil, Eastern Europe and elsewhere is causing branded pharmaceutical companies to reconsider their generics strategy. In these markets, many people frequently pay out of pocket for their medicines but cannot afford to pay for the expensive brand name drugs. Also, in some emerging markets, where the threat of low quality or counterfeit prescription drugs may be high, consumers who can afford to purchase medicines are willing to pay more for drugs manufactured by well known and respected companies. Finally, IMS Health estimates that close to $89 billion in US drug sales alone will be lost to generic competition over the next five years or so.

In the absence of any new blockbuster drugs on the horizon, many big pharma companies have been scrambling to acquire or enter into relationship with established regional generic manufacturers. For example, GlaxoSmithKline recently bought a stake in Aspen a South African generics manufacturer and entered into an agreement with India-based Dr. Reddy’s laboratory to sell generic products in Asia and other emerging markets. Likewise, in the last year, Pfizer created an off-patent generics division (products are sold under Greenstone label which is a wholly owned subsidiary of Pfizer) and signed agreements with three Indian companies to sell their products in the US and other markets. These deals added about 200 products to Pfizer’s new generics portfolio. Further, Pfizer recently announced that the Greenstone brand has become the world’s seventh largest generics seller. In addition, Pfizer is expected to make a formal bid to purchase the financially-troubled German generics manufacturer Ratiopharm; one of Germany’s largest purveyor of generic drugs.

Not to be outdone by the competition, the French drug maker Sanofi-Aventis recently purchased Brazil-based Medley, a dominant player in the South American branded generics industry and Laboratorios Kendrik, a Mexican generics producer. Last year, the company also purchased Zentiva, a leading Czech generic manufacturer signally the company’s intention to move into financially-lucrative Eastern European markets.

Watson, one of the largest American generics manufacturers (which primarily operates in the US) recently purchased Arrow, a generic producer that operates in 20 different countries. Finally, Novartis, recognizing a business opportunity before most of its competitors, entered the generic market in 2003 following creation of Sandoz, a division of Novartis that manufactures and sells small molecule generic drugs and branded biosimilar products. Recently, Novartis purchased the German branded generics manufacturer Hexal, making it the world’s second largest generic drug manufacturer after Teva.

The entry of pharmaceutical companies into the generics business is allowing these companies to pursue a two-tiered business strategy in certain markets which is designed to preserve the long term value of their branded franchises. For example, companies can continue to sell their expensive name-brand drugs to the wealthy (or those that can afford them) and concurrently sell the more moderately priced branded generics which includes and over the counter products to the broader market. 

While some may lament the end of the blockbuster drug era, rising healthcare costs and generic competition is forcing big pharma to continue to explore novel and innovative strategies to reinvent itself.

Until next time...

Good Luck and Good Job Hunting (try the generic industry; business is booming)

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Sanofi Aventis asked it entire sales force to remain at home the Monday after Thanksgiving to wait for a phone call to see whether or not they still had jobs. Nice way for the affected employees to spend Thanksgiving, eh?

Sanofi-Aventis is laying off an unspecified number of US sales reps, as the firm restructures because of generic exposure on some of its lead products including its blockbuster anti-clotting drug Plavix. The layoffs are part of a transformation that began last year, shortly after new CEO Chris Viehbacher took charge at the company. At the time, Sanofi-Aventis announced plans to cut 10% or less of its 6,500 US reps. According to a post at BNET, the company currently employs about 5,600 reps. Those laid off will get three weeks’ base pay per year of service, up to a maximum of 78 weeks’ base pay.

A company spokesperson said “Sanofi-Aventis U.S. is continuing to evolve in order to deliver greater value to our customers in a rapidly changing business climate. This includes changes to our sales force to better correspond with market dynamics and customer needs. As a part of our continuing transformation, we have identified areas where we will prioritize sales support and others where reductions are necessary.”

Sanofi joins a growing number of pharmaceutical companies that made it something of a tradition to layoff employees immediately before or during the holiday season. I guess company executives believe that the blow may be less devastating if the ex-employees get to spend more time with their families during the holidays. Unlike most corporate executives who are paid millions when they are fired, many laid off pharmaceutical companies will have a tough time finding new employment opportunities in the rapidly shrinking US pharmaceutical job market. At last count, about 59,000 pharmaceutical employees lost their jobs in 2009. Don’t be surprised if more pharmaceutical layoffs are announced in the coming weeks.

Until next time...

Good Luck and Good Job Hunting??????

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Reuters reports that French drug maker Sanofi-Aventis (S-A) beat analysts second-quarter earning forecasts and that next year’s earnings will likely benefit from increased demand for its new H1NI swine flu vaccine. The company is the largest flu vaccine manufacturer in the world. Yet, despite surging profits, S-A continues to restructure and cut jobs in an effort maintain its stock share price. —and an “impeccable source”— that US managers are in France discussing cuts to American operations. The cuts are expected to be announced during the first week of August. More bad news for the US economy and  tens of thousands of American pharmaceutical employees who have already lost their jobs.

Until next time

Good Luck and Good Job Hunting????????

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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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In the wake of last week’s Pfizer-Wyeth M&A feeding frenzy, I suspect that most analysts were hoping that this week would be a little quieter. Unfortunately for many pharmaceutical company employees, this week may be shaping up to be almost as nerve-wracking as last week!and declared that it was on the hunt for a merger or acquisition partner. A ll of the usual suspects have been cited as possibilities. They include: Bristol Myers Squibb (Plavix, Erbitux, Orencia Abilify) , Amgen (EPO, Aranesp, Neupogen, Neulasta and Enbrel), Biogen-Idec (Avonex, Tsyabri and Rituxan) (Actavis (generics) Ratiopharm (generics) and Crucell (vaccines). The hands on favorite and most likely target would be Bristol Myers Squibb because the two companies co-market Plavix, their top selling drug that is due to lose patent protection in the next year or so. That said, in this environment anything can happen. 

In other news, GlaxoSmithKline announced that it will be cutting 6,000 jobs later this week when the company puts out financial results. The company began reorganizing itself in 2007 and will continue to do over the next few years to deal with generic encroachment on several of its top selling drugs. Glaxo employs about 100,000 people worldwide. Analysts suspect that many of the job cuts will occur in the UK and that sales rep may be hit the hardest in this latest round of layoffs.

Until next time…

 Good Luck and Good Job Hunting!!!!!

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The Pharmalot blog reported today that Bristol-Myers Squibb will be laying off 5% of its workforce (~ 34 employees) by year’s end at its manufacturing facility near Syracuse, NY. And, Sanofi-Aventis announced that it will be giving pink slips to about 10% of its sales force —about 650 reps—before the end of the year.

To make matters worse, Merck released its annual revenue projections for 2009 today which suggest that its earnings and revenue will not meet Wall Street expectations. Merck recently “cleaned house” and eliminated thousands of scientific and mid-management jobs. The list of pharmaceutical companies that have downsized in 2008 includes Merck, BMS, GlaxoSmithKline, Novartis, Schering Plough, Boehringer Ingelheim, Wyeth and Sanofi-Aventis. I probably missed a few but who is counting?

Until next time….

Good Luck and Hold On to Your Job (if you can)

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A little over a year ago, Bristol-Myers Squibb (BMS) launched its “productivity transformation initiative” (PTI) designed to “transform” the company into a next generation biopharma leader. As most of you may already know, PTI is corporate speak for layoffs and downsizing.

The PTI was largely in response to impending loss of patent protection in 2011 of its blockbuster Plavix, an anti-thrombosis drug that BMS co-markets with Sanofi Aventis. While BMS has a deep and innovative drug pipeline, the likelihood that the company will be able to replace Plavix revenues with one of its investigational drugs is remote.

To make matters worse, late last week, one of Plavix’s likely successors, an investigational anti-clotting drug called apixaban (being co-developed with Pfizer) failed to meet its primary clinical endpoints in a pivotal Phase III clinical trial called Advance 1 which was designed to evaluate the drug for prevention of venous thromboembolism in patients undergoing total knee replacement.  The 3,195-patient study compared apixaban, an oral Factor Xa inhibitor given at a dose of 2.5 mg, twice daily, to twice-daily 30mg injections of Sanofi-Aventis’ Lovenox (enoxaparin). This late stage clinical failure prompted the company to announce that it would no longer seek approval of apixaban in 2009 as previously planned.

Early this week, BMS ratcheted up the PTI and imposed a total hiring freeze for all permanent employees, consultants and leased workers (contractors). Previously, vacated permanent or temporary positions could be refilled if appropriate, qualified job candidates were identified. Finally, the company announced today that it would permanently ground its corporate fleet of jets that was operating out of Mercer County Airport in Trenton, NJ. According to an article in my local paper, the Trenton Times, BMS plans to sell four aircraft and layoff about 32 employees, mostly pilots and mechanics. 

Despite all of the other PTI initiatives implemented to date, the decision to sell all of its corporate jets sends a clear signal to stakeholders that BMS truly “means business”! I guess Jim Cornelius and other BMS executives will have to book commercial flights or take Amtrak to out-of-town meetings for the foreseeable future. That said, I doubt that Jim and others will be driving or taking the train to meetings in New York City or Washington—the corporate helicopter fleet is still operating!!!!!

Until next time….

Good Luck and Good Job Hunting (forget BMS)!!!!!!!

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Earlier this week, Roche announced that it wanted to buy the remaining portion of Genentech that it doesn’t already own. On Friday, one of Europe’s largest pharmaceutical companies, Sanofi-Aventis, announced that it was buying the UK-based vaccine manufacturer Acambis for $547 billion.

Like Roche and Genentech, Sanofi-Aventis was already partnered with Acambis and by purchasing Acambis, Sanofi gains a smallpox vaccine that was contracted by the US government for $425 million. Sanofi is the world’s largest manufacturer of influenza vaccines and last month announced plans to open a $157 million manufacturing facility in France, citing projections that demand for vaccines will double by 2016. In case you didn’t know, vaccines, once the scourge of the pharmaceutical industry, are now the hottest”pharmaceutical” products on the market!

Because of growing demand and lucrative margins for biologics and biotechnology products, many big pharma companies are attempting (through acquisitions and mergers) to quickly enter the biologics and biotechnology markets. These days, small molecules are passé and biotech is the next big thing (where have all the pharma execs been for the past 20 years).  

Europe has long wanted to dominate the biotechnology market. This has not been possible because of the US’s large lead in the space. However, all this can change because of a weak dollar and a surging Euro! Rather than attempt to create their own biotechnology companies, large cash-rich, European pharma companies can simply buy profitable US biotechnology companies with strong product pipelines.

I suspect that the weak dollar and failing US economy contributed to Roche’s decision to buy Genentech and Teva to buy Barr Pharmaceuticals last week. I would not be surprised if there are more acquisitions of American biotechnology and pharma companies in the very near future. I think that it may be time for Amgen and Bristol-Myers Squibb employees to begin to brush up on their French or German.

Until next time….

Good Luck and Good Job Hunting (in Europe)!!!!!!!!

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According to a post over at Pharmalot, BMS may be positioning itself for sale or readying itself as a potential M&A target.   

Although BMS has been rumored for years to be a takeover target, the impending loss of revenues generated by its anticlotting drug Plavix (co-marketed with Sanofi-Aventis) due to patent expiry in 2011 is wreaking havoc at the company.  As much as 50% of BMS’s revenue is generated by the Plavix franchise. The impending loss of Plavix suggests that thing must drastically change at the company in order for it to remain independent.

Time will sell….I mean tell....!!!!!

Until next time….

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

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I have been following the pharmaceutical business for the past 20 years or so and without fail; Bristol-Myers Squibb has been rumored to be a takeover target. Well, here we go again!

 that floated the possibility that BMS is a prime takeover target again. Like many other financial pundits, Zachs believes that a takeover by Sanofi-Aventis makes the most sense. As many of you may know, BMS and Sanofi-Aventis co-own the multibillion dollar Plavix franchise (which will lose patent protection in 2011).

Rumors of a BMS takeover started in 1988 and they have always proved to be false. In my opinion, BMS has one of the stronger biologics pipeline in the pharmaceutical industry. Further, BMS is spending an enormous amount of time and resources to vigorously reinvent itself as a “next generation biopharma” company (whatever that means). The impending loss of Plavix revenues does put some pressure on the company’s ability to remain independent, but BMS has weathered many storms in the past (and lived to talk about them). That said, it is anybody’s guess whether the current rumors are real or imagined.

Until next time…

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

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