Tough times ahead for big pharma?
Currently it’s the financial industry that is in trouble. Will the pharmaceutical industry be next? This could well be according to business analysts, in a recent report in the Financial Times.
The reasons for the bad prognosis are expiration of patents coinciding with shrinking pipelines and increasing competition from generics. Furthermore, the counterstrategy of mergers and acquisition isn’t seems to be working as expected.
Meanwhile, drug regulations are getting tighter. Alternative medicine, dietary supplements, and homeopathic medications are conquering the market while biotechnology and stem cell research are not delivering the promised blockbuster therapies everybody is hoping for.
In 2007, Roche outperformed for the first time its Swiss archival Novartis in earnings. However, even Roche delivered lower than expected results in the first quarter of 2008 due to decreasing demand for Tamiflu.
Other drug companies are expecting tough times as the patent of their blockblusters are about to expire. GSK’s Lamictal goes off patent this year and Pfizer’s Lipitor in 2010. Other best-selling drugs whose patents are due to expire are Johnson & Johnson’s Risperdal, Astra Zeneca’s Seroquel and GSK’s Avandia, according to FT.
The Acquisitions Continue: Roche buys Piramed
Roche is increasing its stakes in biotechnology research by buying 100% of Piramed, a UK-based biotech company. This small, privately-owned company is the rising star on developing therapies targeting P13 kinase (P13-K) pathway which plays “an important role in disease progression and in resistance to chemotherapeutics in cancer cells.” [1]
With the acquisition, Roche also acquires Piramed`s two major P13-K projects on oncology and inflammatory medicine. This solidifies the collaboration between Piramed and Genentech (partly owned by Roche) on these research programs.
This is not the first time that big pharma takes over small but promising biotech firms. Pfizer bought Angiosyn in 2005. Merck acquired Sirna in 2006. Sanofi Aventis joined forces with Regeneron last year.
According to analysts [2], such mergers and acquitions are not necessary favorable in the long run. Small companies are saved from financial troubles at the expense of the larger firms which tend to suffer from slow growth and postmerger integration problems – problems which can divert cash from R&D and further slow down the pipeline.
References:
1. Roche Media News, 15 April 2005
2. Danzon et al. Mergers and acquisitions in the pharmaceutical and biotech industries. NBER Working Paper No. 10536, May 2004
Sanofi-Aventis Joins Forces with Regeneron
The French pharmaceutical giant Sanofi-aventis is joining the biotech bandwagon. Initially thought to be a slowmover in the biotech field, it is now stepping up its drug development program and is particularly concentrating on the development of therapeutic antibodies.
In order to attain these goals, Sanofi-aventis has decided to increase its stake in the biotech company Regeneron from 4% to 19%. As part of the payment, Sanofi-aventis will fund a big part of research costs in the next five years. Research will focus on the development of fully human monoclonal antibodies [1, 2].
Part of the colloboration portfolio are two promising drugs, namely:
- Antibody to Interleukin-6 receptor (IL-6R), indicated for rheumatoid arthritis, currently undergoing Phase I clinical trials.
- Antibody to Delta-like ligand-4 (Dll4), indicated for tumors, to enter clinical development in 2008.
From this collaboration, Sanofi-aventis aims to develop about 20 drug candidates annually and targets about 30 new drug submissions by the end of 2010 [1,2].
[1] 29 Nov 2007, Sanofi-aventis press release
[2] 29 Nov 2007, Regeneron press release