The Big Red Biotech Blog

Pfizer Puts Animal Health and Nutrition Units on the Block

Pfizer said today that it is now officially looking to sell or spin off its animal health and nutritional units as part of CEO Ian Read's strategy to focus on its core pharmaceutical business.  It remains to be seen whether this move will help Pfizer transform the core into more of a "growth business" as is the stated desire.

Analysts have questioned whether the core business is capable of this type of growth -- with some opining that Pfizer's R&D cuts have hampered any ability it may have had to generate growth spurring new products. Pfizer does seem to be hedging its bets by hanging on to its Consumer's Health business which had previously also been slated to go -- saying it has " a strong connection" to the company's core biopharmaceutical businesses and strong connections in emerging markets.

Analysts also say the Pfizer could spin off Animal Health (projected CAGR 7.2%) and Nutrionals (projected CAGR 8%) now and sell at a later date.  BMS followed this strategy with its Mead Johnson business and realized above market returns.  See Pharmalot and WSJ Health blog.

 

 

Posted by Bruce Lehr July 7th 2011.

 

Merial and Intervet Opt for "No Deal" on Planned Merger

Sanofi's Merial and Merck's Intervet have called off their planned merger.  The two companies said the regulatory issues relaed to antitrust considerations were too much.  If combined, the business would have represented $5 billion in sales but analysts say the two would have had to divest about $500 million in assets -- particularly in the poultry vaccine area.

Down On The Pharm: Implications of the Merial/Intervet "No Deal".

Both companies are able to walk away without penalty and each will assume their own expenses related to due diligence - no harm, no fowl so to speak.

The lack of a deal may result in other buyers coming forward for some or all of the assets.  Seven of the top 12 publicly traded big pharma companies have some animal health businesses.  Several big pharma companies appear to have chosen a diversification strategy to even out dips from their pharma business often related to patent expirations.  Pfizer has indicated a willingness to sell off its Fort Dodge Animal Health business as its CEO has indicated a desire to focus its assets and attention on th epharma business alone. FDAH generated $3.58 billion in 2010 sales. 

Potential buyers for FDAH might include Eli Lilly, Bayer and Novartis according to industry watchers.  All five big pharma companies who reported on their animal health business lat year reported growth, including Sanofi (2.6%), Bayer and Lilly (15%), and Pfizer (29%).  Pfizer's big increase was due to assets acquired in its Wyeth purchase though and don't represent organic growth. Nevertheless, their should be suitors if either Sanofi or Merck are looking to sell their assets.

 

 

 

 

Posted by Bruce Lehr March 26th 2011.

 

Pfizer to Diversify into Animal Diagnostics with Synbiotics Purchase

A Reuter's report has Pfizer purchasing Synbiotics Corp for 30.6 cents per share to its shareholders.  Pfizer is known to be looking to diversify its business portfolio as is faces one of the steeper patent cliffs in the ethical pharma industry and lacks the pipeline to replace the revenues from drugs like Lipitor as patents expire. 

Pfizer reportedly had been interested in acquiring assets in the animal health industry earlier this year from Merck and Sanofi - specifically in the companion animal segment.  The Synbiotic deal would presumably provide synergies with diagnostic products for companion animals. The diagnostics segment is reportedly growing at about 8% annually or twice that of the overall animal health market.

So now Pfizer will have companion diagnostics for companion animals.

 

 

 

 

 

Posted by Bruce Lehr December 29th 2010.

Merck & Sanofi New Pet Project? Sell AH Unit for $1 B

According to a Bloomberg story, Merck and Sanofi will put their animal health unit up for sale and expect to reap at least $1 B in the transaction. Reported suitors include Pfizer, Bayer, Boehringer Ingelheim, Lilly and Novartis. Last week, it was noted here that Big Pharma is increasingly interested in the animal health area as another sales and profit generator.  This is seen as an area that can help out those companies with flagging human health pipelines and facing the patent cliff in the next few years. Companies like the ones on the suitors list.

The companion pet market in particular is seen a bigger draw for investors in animal health. The market is less price sensitive than that of agricultural animals and pet owners have shown their willingness to spend on the health of their pets. The market reached $19 B in 2008 and is reportedly growing steadily at 5% annually - a trend that is expected to continue for at least the next five years.

 

 

 

 

 

 

Posted by Bruce Lehr October 2nd 2010.

 

 

Big Pharma Bullish on Animal Health

According to the WSJ Health blog, big pharma executives at Merck, Sanofi, Lilly and now Pfizer are counting on animal health revenues to fill in for some of these company's revenue shortfalls in the human pharma market.

The market for animal health drugs was $19 B last year and expected to grow at a steady annual rate of 5%.  This formerly neglected and lackluster segment is seen as important to the success of these firms near term futures.

Pfizer is banking on its ability to grow faster than the market. Pfizer is positioning itself as more than a mere seller of drugs and vaccines. “Pfizer wants to provide full solutions,” said Juan Alaix head of Pfizer's animal health unit. For instance, Pfizer has begun selling a tool for farmers determine how much feed each of their animals require, which could help them cut expenses. 

A novel approach to an old market.

 

Posted by Bruce Lehr September 20th 2010.

Chemistry World Interview - Raw Materials & Supply Chain Integrity

I actually got interviewed in an article just published online with Chemistry World, a publication of the Royal Society of Chemistry.  It is a piece detailing some of the recent problems seen with pharmaceuticals resulting in recalls or low product availability.  Most of these resulted from issues with raw materials and in some cases may have been compounded by the manufacuring and quality system lapses too.

My comments have to do with the integrity of the supply chain and the need to really interrogate the whole system - including stepping up with enhanced understanding of your raw materials and their suppliers.  This is in line with my Raw Materials Detective series and our the SAFC Raw Material Characterization initiative.

 

 

Posted by Bruce Lehr June 23rd 2010.  

Genzyme's Termeer on Road to Perdition?

Genzyme's CEO Henri Termeer is going on a road trip to see his top 30 shareholders over the next 30 days. You might ask why - but if so - have probably been living in a cave for the past 12 months.  Just in case you have, let's recount some of the events and circumstances that have inspired this trip.

In June 2009, Genzyme was forced to close its Allston, MA manufacturing plant due to viral contamination in one of its bioreactors. Not just any contamination, a problem with its leading product Cerezyme costing them more than $500 M in sales. Oops!

No sooner were they up again (Nov 09), they were whacked again by what has been delicately termed as "trash" in some of their vials of product produced in the same plant. Double oops!

The FDA, not having nearly the sense of humor I do, instituted an enforcement action on the Allston plant and fined the company $175 M dollars in March 2010.  They also brought in a 3rd party group to oversee the production there for "an extended period". 

Then the Haverhill facility was hit by a fire in December costing the company another $7.5 M in equipment damages. The manufacturing issues have compromised Genzyme's ability to keep abreast of demand with their drugs for Gaucher's and Fabry's disease. The WSJ health blog has reported on these shortages and even reported case of one Fabry's patient who died of complications waiting on medication - although GZ disputes that the lack of medication was a direct cause.  Genzyme is expected to only be able to satisfy 30% of its Fabry needs in Qtr 3 this year.  The company may face another $300 M plus fine from FDA as a result next year. 

Needless to say, Termeer has fired several senior manufacturing people, brought in new blood, and moved others around to bring manufacturing under better control.  It has a new president of global manufacturing and a new senior vice president of global quality (not a moment too soon but maybe a few moments too late).  It will also be outsourcing some of its manufacturing operations.

Carl Icahn, one of the largest shareholders, has been involved in an active proxy challenge to seat his own board with the intention of forcing Termeer out.  Icahn is not alone in his criticism of Termeer among shareholders. Icahn is not a newby when it comes to forcing out executives in firms where he holds significant sway and he has plenty to work with here.

Think it can't get any worse can it?  Think again. Several groups of investors have lodged complaints with the SEC that several unnamed senior executives and board members took advantage of insider information to illegally sell some of their personal shares before bad news was announced to the public. Genzyme's board has appointed three independent directors to investigate the allegations (received in 9 letters since last August).  The company has also lined up independent counsel for the investigation.

In an attempt to shore things up a bit, Termeer announced that the company will buy back $2 B in its own stock. They will use debt financing to buy back the 1st billion this year and buy the 2nd billion in the following year.  Genzyme will also look to sell off up to 3 of its "non-core" business units in its genetics testing business, diagnostics products business, and its pharmaceutical intermediates business.

Several analysts have been less than "whelmed" and Genzyme stock has been downgraded to "underperform" by observers like Zacks.

This all brings us back to Henri's road trip.  Termeer will be out to convince these top 30 shareholders to let him keep his job.  No doubt, Icahn will be making a similar trip with the aim of seeing that he loses that job. The annual meeting is on June 16th. I'm sure Termeer is hoping to fare better with Icahn, than Paul Newman did with Tom Hanks.

Posted by Bruce Lehr March 14th 2010.

Lilly Buys Pfizer's Animal Health Business in EU

As reported in the PR Hub, Lilly's PR blog site, Lilly has acquired Pfizer's animal health business in the EU - including vaccines.  These products were formerly marketed by Pfizer's and Wyeth's Fort Dodge division. Lilly will pick up the Sligo manufacturing site in Ireland and current employees will be offered positions with Lilly's Elanco.

This transaction was completed at the request of the European Commission as a condition to allow the Pfizer-Wyeth deal to close. Financial terms of the deal were not disclosed.

Posted by Bruce Lehr March 8th, 2010