The Big Red Biotech Blog

Number of Life Science Venture Capital Firms Drying Up

A couple good posts on the state of venture investing in the Life Sciences sector are here.  The first from Pharmalot summarizes a recent PricewaterhouseCoopers and National Venture Capital Association report that shows that life science VC investing fell 9% in dollars and 6% in numbers of deals in Q2 2012 with $1.4 B invested. This is the fourth consecutive quarter of decline. The biotech portion of life sciences received only $697 M across 90 deals which represents the lowest quarterly output since 2003. Yikes!

Where Have All The Venture Capital Dollars Gone? // Pharmalot.

The second post comes to us from the Life Sci VC blog.  It tells a tale of woe with regard to the number of firms actively participating in life science VC investing. From the blog's data, it appears that about half the venture firms investing in VC in 2007 have gone by the boards in that sector in 2012. See data plotting number of firms participating in all biotech financings and in first financings in particular.  Both have fallen by about 50% in the past 5 years.

Conclusion is times are tough in Life Science VC which should come as no surprise to those following the area. Hopefully, the result of this will be that natural selection will favor the best projects receiving the future funding more preferentially -- which in turn could increase the returns for investors and spur more investment.

Posted by Bruce Lehr Jul 24th 2012.

Bayer Challenges Compulsory License In India

To no one's surprise Bayer has gone back to court to challenge the India Patents Office decision to award a compulsory license to the generic manufacturer Natco to make Bayer's patented anti cancer drug Nexavar.  The IPO invoked compulsory license rules citing Bayer's high selling price ($5500 per patient/month) as preventing most India patients from using the drug. Natco will sell its version for $175 or a 97% decrease.

Bayer Challenges Compulsory License In India // Pharmalot.

“We will rigorously continue to defend our intellectual property rights which are a prerequisite for bringing innovative medicines to patients,” a Bayer spokesman writes us. “The challenges faced by the Indian healthcare system have little or nothing to do with patents on pharmaceutical products as all products on India’s essential drug list are not patented.  Rather, the order of the Patent Controller of India damages the international patent system and endangers pharmaceutical research."

“This is the trivial argument Big Pharma has been making for years to cover the impact of its monopoly pricing policies,” writes Brook Baker, a professor in the Program on Human Rights and the Global Economy at the Northeastern University School of Law, and a member of Health Gap, Global Access Project. “Of course, there are other barriers to access, but does Bayer want to seriously argue that medicine priced 60 times more than the newly announced Cipla price doesn’t adversely impact access?"

Bayer unmoved, appears ready for an all out legal fight, you could say "they are going to the Madras" on this one.

 

Posted by Bruce Lehr May 7th 2012

First Drug With $1 Million Price?

Here's an article from Matthew Herper's column in Forbes that discusses whether the first drug that costs more than $1 million annually is already on the market -- and we just don't realize it yet.  Interesting to ponder for sure -- and perhaps horrifying.

I wonder if this is a reason that many people back the concept of biosimilars down the road.  Seems clear [to me] that governments won't sustain this type of pricing for long.

Posted by Bruce Lehr May 1st 2012.

Berwick: Cost Effectiveness is Permanent Condition

Here is an Xconomy post from yesterday that highlights remarks made by Dr. Donald Berwick, the former administrator of the Center for Medicare and Medicaid Services.  He spoke last week in California at an invitation-only conference of healthcare executives and investors sponsored by the private equity firm Health Evolution Partners. He spoke about our health care system and health care reform. 

Dr. Berwick said that it would be a tragedy for America should the Supreme Court strike down the Obama Administration’s Affordable Care Act. Yet his primary theme was that it was getting very late in the game to slow the aggregate cost of health care as the baby boomers come into retirement. Citing his recent article in JAMA, Berwick noted that the sum of the lowest available estimates indicate that in excess of 20 percent of total health care expenditures is wasted. Berwick suspects we are really wasting one of every three dollars that we spend. This seems consistent with the oft-cited disparity between total US health care spending and outcomes in this country. 

The urgency of cost control is now such that, he said, there will be big reductions. The only question is whether we will do it in a good way or a bad way.  As to the future impact of all this on innovative life sciences companies, Berwick sounded an unmistakable warning. “If your products are expensive, it will be challenging; if yours is a firm focused on controlling costs, then your time has come.” In other words, biotech and medical device companies had better develop their case for cost effectiveness as their products enter into clinical development, because mere efficacy and safety may not get you paid in this brave new world.

What do you think his position would be relative to Abbott's strategy below to challenge the validity of biosimilars?

Posted by Bruce Lehr May 1st 2012.

 

 

Big Pharma Revenue Holes: How Low Can You Go?

Derek Lowe reminds us that some of the Big Pharma companies out there have BIG BIG BIG revenue holes to fill between now and 2020.  Take a look at both Lilly and AZ's challenges ahead. Though Pfizer ain't far behind itself. Looks like AZ's whether by his choice or the board's go out while the getting's good.

See here for yourself!  The graph shows Big Pharma's expected revenues through 2020 on its existing product portfolio.  Lilly and AZ?  All we can say is "OUCH".

Posted by Bruce Lehr Apr 30th 2012.

New Drugs -- If You Can't Make 'Em, Buy 'Em

That seems to be the current motto of many big pharma companies and describes their relationship to biotechs.  But if you go that route, you will pay handsomely.  Fierce Biotech reports (via Bloomberg) that pharma companies are forking over on average a 71% premium in picking up new biotechs (worth > $500 M) for their pipelines.  This is reportdly the highest premium since 2000. 

So if you read the previous post about "bad culture" in Big Pharma, another cost (beyond poor R&D productivity) seems to be having to pay the piper when it comes to buying from the biotechs. Cutting the R&D budget likely won't help rectify that -- although it may help fund it a bit. 

Supply and demand is taking over and the acquisition prices will keep rising as a result in the short term.

Posted by Bruce Lehr Apr 25th 2012.

Pharma R&D Follies

Here's a couple of links to blog posts outlining possible reasons that Big Pharma R&D is experiencing such a low return in bringing new products to market --- especially over the last 10 years.  One factor that is discussed is -- CULTURE (see Life Sci VC and In the Pipeline). 

The basic premise?  

Fundamentally, I think the bulk of the last decade’s productivity decline is attributable to a culture problem. The Big Pharma culture has been homogenized, purified, sterilized, whipped, stirred, filtered, etc and lost its ability to ferment the good stuff required to innovate. This isn’t covered in most reviews of the productivity challenge facing our industry, because its nearly impossible to quantify, but it’s well known and a huge issue.

These effects are variously attributed to a multitude of large cross functional committes, with all their associated bureacracy, making all the decisions very s-l-o-w-l-y......, risk aversion (i.e. ass covering) and unwillingness to kill bad projects before they've dragged on past their due date, and mega-mergers or internal reorgs that constantly stall projects while all the new players and pieces get assembled and reassembled. All of this plays havoc on continuity, quick decision making, empowerment of development teams, nimbleness, innovation, blah blah blah --basically all the positive characteristics organizations say they are striving for.

But the basic conclusion, for now, is that Big Pharma's culture is its own worst enemy when it comes to R&D productivity.  There seems to be a need to simplify and empower teams if you really want to see any results in an acceptable time frame.

The stakes are high too. If you doubt that, just look at this article from Fierce Biotech that details the R&D spending of the Top 10 Big Pharma -- which is topping $70 B per annum now.  Then look at the productivity of many of these same organizations as judged by new drug introductions in the last 10 years........not very pretty.

Posted by Bruce Lehr Apr 25th 2012.

 

Lilly Can't Save Its Way to Prosperity Says CEO

Lilly's John Lechleiter says the company can't solve its upcoming revenue woes, due to expiring patents on some of its biggest sellers, by cutting staff and otherwise saving costs. He says that Lilly has no plans to follow companies like Pfizer in cutting $1B from operations in 2012.

Eli Lilly CEO Says Cost Cutting Won’t Solve Drug Sales Loss - Bloomberg .

Lechleiter continues to state his mantra that Lilly has to develop its way of its problem by bringing winners from its pipeline to market.  The next candidate is solanezumab -- a putative Alzheimer's treatment in phase III -- one that some analysts indicate could be worth as much as $9 B in peak sales.  But, he is also quick to point out that solanezumab is high risk and it is NOT a make or break proposition for Lilly.  Nevertheless, the pressure is on to bring home some winners soon from Lilly's pipeline.

AZ's chief, David Brennan, on the other hand is following a plan of reduced spending on internal R&D and is hoping to boost that company's flagging pipeline in the near term by acquiring smaller bolt on acquisitions (can anybody say "string of pearls"). They've also struck a recent deal with Amgen to help take some of the latter's Mab drugs through the pipeline.  However, AZ still needs more to right its ship -- given its patent cliff and dreadful recent record in developing drugs in its own R&D groups. Can they find enough "bolt-ons" to buy their way out of trouble appears to be the salient question?  See Fierce Biotech.

Will either strategy work?  Both appear to be tenuous at best.

Posted by Bruce Lehr Apr 13 2012.  

 

Biosimilars— Big Pharma Whistling Past Graveyards?

This from the PharmTech blog.  I want to focus on cooments by the first speaker in the post, Neil Mahoney, President & CEO of Global Pharma Alliance. His talk indicated that it would be much more difficult to produce a biosimilar than for a generic small molecule - which is clearly true -- but he also cited a cost of $100-$200 M to develop a follow on biologic.  Wow!

PharmTech Talk » Biosimilars—It’s the Differences That Really Matter.

I think that figure has to be looked at with skepticism and if true would only apply to a US market.  But we have a GLOBAL pharma industry now.  Estimates from Dr. Reddy's lab indicate that a western company could expect to spend $50-$100 M to develop a biosimilar (half the figure cited above) -- but also than an Indian company could expect to do this for only $10-$20 M.  Additionally, India can be expected to offer the products at 25-40% less.

Dr. Mahoney also trots out data that says the initial biosimilars lanched in Europe did not exactly take the market by storn in terms of share -- also true. But to suggest that this trend will hold up going forward is folly I think.  The first round of biosimilars were drugs like EPO which were not nearly as costly to use as the next round of mAbs to treat things like RA or cancer.  Given the current health crisis, and government austerity programs, I cannot doubt that there will be incentives in place to encourage development and approval of biosimilars throughout the world -- yes -- even in the US.  Moreover, as more of the mainline pharma companies like Pfizer, Merck, Novartis (Sandoz) etc start pushing biosimilars, I expect the adoption rates to increase and the price erosion to accelerate. 

While biosimilars will require more investment and skill than small molecule generics, I don't think that is insurmountable.  Economics and healthcare policy will drive their existence.  It is only a matter of time in miy mind and that time will be quicker than a lot of naysayers believe.  I think any thought to the contrary is wishful thinking and amounts to "whistling past the graveyard".

 

Posted by Bruce Lehr Mar 16th 2012.

Ireland Hitting Patent Cliff Too

We hear a lot about various companies in the pharma industry who are nearing their own patent cliff -- where some of their highest selling drugs are reachign the end of their patent life and where they don't have a lot new in their pipeline to replace the revenue that will be lost.  That's a theme that's been discussed ad nauseum for several year now.

But have you ever thought of a country having a patent cliff?  That's something that Ireland may be facing as 5 of the top drugs manufactured in the country are coming off patent altogether or losing protection in the US.  See PharmaGossip.

The drugs in question include (drum roll):

• Pfizer's Lipitor & Enbrel
• Takeda's Actos
• Merck's Singulair
• Lilly's Zyprexa

All are about to experience big revenue drops -- CLUNK!

Posted by Bruce Lehr Feb 27th 2012

 

 

BioTech Funding Update

There were a couple of interesting articles on various aspects of biotech funding out there today.  Firstly, Pharmalot related that VC funding for biotechs was actually up 16% in 2011 over 2010 despite all articles about it being unavailable. Q4 was actually up 90% YOY from 2010 and 160 deals closed in 2011 compared to 153 in 2010. What is apparently true are there are a lot more early stage spin-outs from Universities and all of these can't (aren't) be funded with current mechanisms.  The question is do they all deserve funding?  Probably not.  Bottom line, biotechs received $3.5 B in funding in 2011 with an average round raking in $21.8 M versus $19.7 M in 2010. So much for a no funding perception.

Secondly, Life Sci VC blog talks about the milestone payouts that are actually being achieved in these M&A deals with relatively small upfronts and big backend milestone payout schedules. Data for this analysis is hard to come by by the blog's author (Bruce Booth) has estimated the results on 35 deals where public info (or his network) was available for period 2005-2009. The deals represented in $4.3 B in upfront payments with milestones promising up to another $7.0B.  The results?

• At least 24% ($1.7 B) in milestones have paid out
• Approximately 40% ($2.8 B) may still pay out in part or total -- though some milestones may have already been missed
• And 37% of milestones are dead as the projects have been killed. That results in $2.6 B worth of no pay out
• Only 3 of the milestones were actually paid for product approvals (Salmedix, Ovation and Gloucester).

The data is incomplete and the author is asking those in the know to help build a better picture through crowd sourcing.  Until then, the amount being paid on backend milestones in biotech M&A deals will remain somewhat murky.

Posted by Bruce Lehr Feb 23rd 2012.

 

 

 

 

Gilead Still Liking Its $11B Hep C Deal?

Can this be the beginning of an $11 B hepatitis C mistake? Gilead, after shelling out that much for Pharmasset and its purported GS-7977 wonder drug, has experienced its first set back after the purchase. This morning Gilead announced the 6 of 10 patients with the genotype 1 form of the disease had viral relapses within 4 weeks of ending treatment. So much for permanent cures on oral doses without the use of interferon.

Gilead And Its $11B Hep C Deal: So Far, Bad News // Pharmalot.

The effect seen in the market today?  Shares of Achillion and Idenix Pharmaceuticals shot up as they are developing rival treatments for hep C.  Both are looked at as takeover candidates.  Shares of Gilead dropped 15%.  Hep C buyers might take note when putting together their bids for the former two companies.  As Sanofi's CEO Viehbacher noted earlier in the week, the price premiums of these companies in the Hep C market seem overblown.

They used to say nobody gets fired for buying IBM.  How about buyers of Pharmasset?

Posted by Bruce Lehr Feb 17th 2012.

The Costly Myths about Pharmaceutical R&D

I love this back and forth debate about how much drugs cost to bring to market -- focusing ostensibly on the R&D costs.  Problem is -- apparently -- no one can agree on where R&D costs start and finish.  Nor can they agree on which drugs are coming to market.  Is it NMEs?  Is it variations on existing drugs? Both? Neither?

The Costly Myths about Pharmaceutical R&D - Health News Watchdog .

We also get to argue about whether discovery is included or not.  Whether the cost of capital should be considered or not.  Whether the government or public subsidizes the process, to what degree, and whether that should be deducted from the costs in the analysis.  We can't even agree whether we're including biotechs or not in our analyses.

That's how we end up with an estimate of the cost of developing a new drug falling somewhere between $56 M and $11.9 B.  We might be able to just barely slide a piece of paper through that crack.  More like dozens and dozens of reams.

Posted by Bruce Lehr Feb 17th 2012.

Which Pharma Spent The Most R&D On Each Drug?

Pharmalot just published (via Forbes) an analysis of Big Pharma R&D spending for period 1997-2011.  The data was provided by InnoThink Center For Research In Biomedical Innovation and Thomson Reuters Fundamentals via FactSet Research Systems.

Which Pharma Spent The Most R&D On Each Drug? // Pharmalot.

From this, one could calculate the dollars spent on R&D/new drug approved for each company concerned.  The link above provides a Table of the results for 12 Big Pharma (biotech).  Amgen, it turns out spent the least at $3.7 B per new drug (11) approved during this period.  AstraZeneca, it turns out spent the most at $11.8 B per new drug (5) approved during this period - OUCH!  This coupled with products reaching the patent cliff helps explain why the latter is experiencing really tough times now and cut over 30,000 jobs during the period.

Even $3.7 B per drug at Amgen seems like an astronomical amount of money.  It's no wonder the industry it trying to rethink its business and R&D model.  Clearly something better change when you are spending$3.7 B to $11.8 B PER DRUG.

One can't help but think to some degree this "ranking" over the period has a little to do with luck as well given some of the vaguaries in the approval process and perhaps timing of some projects relative to submission dates in this period.  I'm not certain you can state one company has any better development model than any other based on this data.  You can say Amgen made out slightly better than its peers for the period -- but who's to say that will hold up over the next period?  We're going to have to track some of these "new models" at companies like Novartis, GSK and Sanofi to see if they really see improvements.

Posted by Bruce Lehr Feb 10th 2012.

SEE some more commentary on this subject from In the Pipeline.

Supporting Orphans Can Be Expensive

 

This post is courtesy of PharmaGossip. It details the 11 most expensive drugs in the USA for an annual prescription.  Not surprisingly, these are all Orphan drugs and mostly biologicals -- aimed at serious genetics diseases that effect relatively small populations.

 

The 11 Most Expensive Medicines in America - Medical Billing and Coding Certification .

Without further adieu, I will just list the top 10 drugs in descending order from most to "least" expensive.  See the article for more information on what conditions these drugs treat.

1. Soliris $409.5 K
2. Elaprase $375 K
3. Naglazyme $365 K
4. Cinryze $350 K
5. Folotyn $300 K
6. ACTH $300 K
7. Myozyme $300 K
8. Arcalyst $250 K
9. Ceredase/Cerezyme $200 K
10. Fabrazyme $200 K
11. Aldurazyme $200

As I indicated, all of these conditions are extremely serious.  The drugs make life or death differences in many cases and certainly make huge impacts on quality of life for many patients. I'm sure the patients are glad to have the drugs regardless of costs.

It is also evident why Orphan Drugs have become attractive to a struggling pharma industry as relatively big sales and good profits can be made from drugs that treat fairly small patient populations.  It was an impetus that caused Sanofi to buy Genzyme (makers of #7, 9, and 10 on the list).  It also sells Aldurazyme in partnership with BioMarin (who also makes Nalazyme). You can see that Genzyme has built a very lucrative Orphan franchise.

Based on competitors comments, this field is likely to become more crowded in the coming decade not less.

NOTE: Fierce Biotech reminds us that Vertex's CF drug Kalydeco ($294 K ) approved this week cracks what is now the top 12.

Posted by Bruce Lehr Feb 7th 2012.

 

 

Is the US Facing a Pharmaceutical Manufacturing Gap?

Here's a post from PharmTech Talk discussing recent testimony by FDA's Margaret Hamburg before the House Committee on Energy and Commerce as it considered extending PDUFA (for the fifth time). 

Is the US Facing a Pharmaceutical Manufacturing Gap?.

Hamburg cited numbers to show that the FDA had approved more new druigs for launch first (70% of last year's 35 new drugs) than other agencies in the world.  In fact, 75% of the new drug approved in US and EMA between 2006 and 2010 hit the US first.

PharmTech noted that the US is the largest drug market at 36% of the world's total in 2010, while the top 5 EU markets accounted for another 17%, and the BRIC countries another 18%.  But the question arose, does the US manufacture enough given its market position and importance?  It turns out that 40% of the drugs consumed in the US are made outside the US, and 80% of the APIs used within are made ex-US. 

The writer questions should the US support its internal manufacturing of drugs more?  I would say, Yes, but with particular regard to supporting biomanufacturing.  A lot of the drugs and APIs cited above are small molecules that have moved to generic status and have therefore graduated to lower cost (at least currently) areas of manufacturing outside the US.  While it may be nice to retain some of that volume, I think it is more critical to keep the bio-drugs as a major focus in the US. 

I think US government policy should look for ways to continue to support biotechnology in both discovery and manufacturing to help maintain our leadership position. 

Posted by Bruce Lehr Feb 6th 2012.

 

13 Pharma, WHO & Gates To Tackle Tropical Diseases

The Gates Foundation announced that it is teaming with 13 of the largest pharma companies to find treatments for 10 neglected tropical diseases by the self-imposd deadline of 2020.  The Gates Foundation itself is pledging $363 M of the total $785 M earmarked for the project.  

Pharma, WHO & Gates To Tackle Tropical Diseases // Pharmalot.

Participating companies include, many of the world's heavy weight in drug development, many of whom have had at least some efforts for some time in going after these diseases.

• Bayer - Chagas disease
• Abbott, J&J, Pfizer, Sanofi, GSK, Eisai - lymphatic filariasis
• MSD - river blindness
• Sanofi, Bayer - sleeping sickness
• Gilead - visceral leishmaniasis
• GSK, J&J - soil helminthes
• Novartis - leprosy
• Pfizer - blinding trachoma
• Merck KGaA - schistosomiasis

Additionally, Abbott, AstraZeneca, Bayer, BMS, Eisai, GSK, J&J, MSD, Novartis, Pfizer, and Sanofi are working with the Drugs for Neglected Diseases Initiative (DNDI) to provide access to proprietary compound libraries to develop new drugs.  

"As an industry, we have the capabilies and the know-how and resources that can improve the state of the world, especially the developing world," said Paul Stoffels, worlwdie chair of the J&J pharmaceuticals business. 

Of course, others weren't quite as optimistic. Medecins Sans Frontieres (aka Doctors without Borders) argues that more research is needed and that these companies only spend a pittance on tropical diseases each year at $18.3 M -- compared to their oft cited figure of $1.3 B on a single approved drug.  See Fierce Biotech and the press release.

As Nike would say, "Just Do It".

Posted by Bruce Lehr Jan 30th 2012.

Does Big Pharma Have More Dollars Than Sense?

On the heels of BMS acquisition of a Phase 1 hepatitis C therapy through its $2.5 B acquisition of Inhibitex, some industry naysayers question whether the risk is worth it at such an early stage and such a high price (Gilead's $11 B buy of Pharmasset can also be thrown into the discussion). It looks like the competitive bidding embodied by "auction fever" may be taking over as some company's scramble to fill in their revenue holes.

Pharma Pays A Premium For Its Shopping Spree // Pharmalot.

Analysts note that Pharma in general pays a 44% premium in their takeover efforts with biopharma -- as compared to 26 percent in other industries. That may seem eye popping to some but is nothing compared to the 89% premium that Gilead's purchase represents and BMS upped the bar to a 163% premium for Inhibitex. 

Investors and analysts can now hold their breath for several years to see if these deals pay off or not -- there will always be plenty of ammunition available for second guessing if it doesn't work out.

Posted by Bruce Lehr Jan 11th 2012.

 

Do FDA Approvals Even Guarantee Success?

Much has been made about the welcomed increase in the number of FDA approved new drugs in 2011 -- up to 30 this year.  Time for a hip-hip-hurrah no doubt. See Fierce Biotech.

I'm not so sure though if you worked for Dendreon (Provenge) or Human Genome Sciences (Benlysta).  Both companies -- when the afterglow of approval waned -- experienced slower than forecasted sales.  The result was that Dendreon's stock price plummeted more than 60% overnight when its Q3 earnings were released. The Company was forced to layoff more than 500 (mostly manufacturing) employees shortly thereafter. See Pharmalot and Seeking Alpha.

Much the same story has occured with HGS.  It's sales have lagged -- only $25 million in Q4.  It's stock price has suffered.  It is now going to layoff more than 150 of its staff.  So much for the first lupus drug in 50 years showing a quick sales takeoff. See Fierce Biotech.

Analysts and investors still remain cautiously optimistic that both treatments will catch on -- but the jury is out -- and it shows that the FDA is NOT the only obstacle to filling the coffers with geld when it comes to new drug approvals. You still have to pass muster with the subscribers and reimbursement community too.

Posted by Bruce Lehr Jan 10th 2012.

Revenue Challenged Big Pharma Reveal Hopes to Cope

Both Merck and Eli Lilly were in the news today as two companies extremely revenue challenged due to expiring drug patents on top sellers with replacments not ready for prime time to pick up the slack.

Merck CEO, Ken Frazier, maintained that he was pushing his licensing group to pick up the pace to help fill in pipeline gaps -- and indicated he thought this was the future of the industry. He said Merck would be looking for early stage deals and in particular was interested plumbing the hepatitis C arena for new opportunities.  Merck is banking on its big bankroll in helping it see its was through this pipeline dip. See Fierce Biotech.

Lilly CEO, John Lechleiter, was more reduced to grasping at his pipeline to save him.  Lilly announced today that it expected to see a $3 B revenue drop from loss of patent protection on Zyprexa as the generics moved in.  Lechleiter continues to eschew big mergers and is banking on the 12 late-stage drugs Lilly has in its pipeline.  This did not prevent a price hit to its stock today however.  One big pipeline test that looms is for Lilly's Alzheimer's drug, solanezumab -- that's trial results should be shared in Q3.  There is a lot riding on this and one wonders what might happen to Lechleiter's plan (or even Lechleiter) should some of these key dozen projects go down. See Fierce Biotech.

One must remember though that Hope is not a Strategy.

Posted by Bruce Lehr Jan 5th 2012.

 

Dendreon Under-promises and Over-delivers in Q4

Temperence sometimes has its rewards. Dendreon suffered through a poor sales year in 2011 of its own making that hammered the company's stock.  But in Q4, Dendreon achieved Provenge sales ($82 M) that were considerably higher than its guidance. As such, their stock price is being rewarded today -- despite a considerable shortfall of $228 M in revenue for 2011 versus its beginning of year forecast of $350-$400 M.

But by giving the market an expectation of $66 M or so in Q4 Provenge revenue but achieving $82 M instead, its price ramped up $1.98 per share to $9.58 or more than 26 percent.  Better to be under-promisers and over-deliverers than the converse when it comes to speaking with the Market -- as the Market has once again affirmed. 

Of course, that doesn't help the 500 workers laid off in September, but it may remind Dendreon CEO Mitch Gold of a valuable lesson.  See Xconomy.

 

Posted by Bruce Lehr Jan 5th 2012.

Drugmakers Go From Abundance To Scarcity

A new report from Oliver Wyman puts numbers to the dismal trend seen in Big Pharma R&D from 2005-2010 as compared to "boom" years of 1996-2004.  The down period was named the "drought" years and some of the more disturbing statistics appear below:

Drugmakers Go From Abundance To Scarcity // Pharmalot.

• R&D spending doubled to an average of $125 billion during the drought period, from $65 billion in better times. And the ROI dropped like a stone to an average of $75 million in sales during a product's fifth year for every $1 billion spent on R&D, down dramatically from $275 million in better days.


• The development drought also led to a declining economic value of approved drugs, to an average $430 million from $515 million. 


• Drug approval itself plunged about 40% in the dry years, amounting to 22 FDA approvals per year on average, versus 36 in the better years.


• Drugs produced an average of $9.4 billion in fifth-year sales in the dry period, half of the $18.3 billion during the more productive years. Fewer blockbusters and fewer new drugs overall contributed.


• In all, 17 of the 20 companies faced productivity declines, though Novo Nordisk, Bristol-Myers Squibb and Johnson & Johnson did better than most.  Dips in high levels of productivity hit everyone though.

What to do about it?

The paper's authors recommend raising standards for product innovation and working more closely with payers as they face pressures to hold down costs. They also want companies to treat new compounds as rare (don't take development success for granted), with focused investments that don't rely as much on speed to market, .i.e. actually create better products and understand more about their mechanism of action in treating disease.

Another recommendation: Play to win. This means using strategies like closely assessing the competition (to create novel products), seeking alternative financing and joint R&D efforts with other parties (including rival drug makers), and making everyone focus more on business development. (See Fierce Biotech).

Posted by Bruce Lehr Dec 4th 2011.

 

Rise of Asian biopharm creates investment targets for Quintiles

Quintiles says it plans to invest more in Asia as the biopharm industry continues to develop rapidly over there.  

Rise of Asian biopharm creates investment targets for Quintiles.

Anand Tharmaratnam, head of Asia markets at Quintiles, said that global biopharm companies accounted for 90 percent of Quintiles clients in Asia only 3 years ago, whereas the ratio of global to local clients is now closer to 50:50 today. That's a dramatic shift in only 3 years.

Tharmaratnam attributes the rapid growth to government support and return of highly qualified staff (with an entrepreneurial bent) from the US.  Korea, Singapore and Taiwan in particular were singled out as biopharm hotbeds.  The rapid growth in India and China has also stimulated global pharma companies to locate more and more operations there to open up these potentially lucrative markets. 

Anyone think the US needs a policy to further promote US Biotech growth and industry health to maintain our current leadership position?  Or can we just watch Asia grow at our expense?

Posted by Bruce Lehr Dec 1st 2011.

Lipitor Wars Begin with Ranbaxy and Teva pact

 All the previous posts on Pfizer's marketing plans for Lipitor are spurred on by Ranbaxy (in partnership with Teva) gaining FDA approval for manufacturing the generic version at its US plant in New Jersey.

Ranbaxy forms pact with Teva to launch generic Lipitor in US.

As part of its partnership agreement, Ranbaxy will pay a portion of its sales to Teva during the 180-day exclusivity period. Watson pharmaceuticals will also be selling the officially "approved" version of Lipitor in an agreement with Pfizer during this same period.  At the end of the 180 days, up to 6 competitors are expected to be fighting for share in this lucrative market space.

 

Posted by Bruce Lehr Dec 1st 2011.

Senators Unleash Lipitor-rent of Letters to Question Pfizer Plan

Three US Senators have written Pfizer over concerns that its unusual program with health plans and pharmacy benefits managers to block generic versions of its best-selling Lipitor cholesterol pill moves will increase costs for government health plans and others.   

Senators Probe Pfizer Plan To Block Generic Lipitor // Pharmalot.

Pfizer's move, aimed at retaining hundreds of millions of dollars in Lipitor sales over the next several months, has angered the Senators. “Consumers and taxpayers foot the bill when drug benefit companies and insurers manipulate the marketplace to prevent access to generic drugs for millions of Americans,” says Herb Kohl, a Wisconsin Democrat who heads the Special Senate Committee on the Aging - in his usual inflammatory rhetoric about such things.

In their letter to Pfizer Ceo Ian Read, the Senators reiterate concerns expressed by some pharmacies that the pharmacy benefits managers may pocket discounts offered by Pfizer, but Medicare and employers will pay the full freight.  The PBMs deny that this will occur.

A Pfizer spokesman adds: “The Senators’ letter is based upon an earlier article that contained incomplete and incorrect information about our Lipitor programs. We want the public to understand the facts. Our intent is to offer Lipitor to payers and patients at or below the cost of a generic during the 180-day period. As a result, patients receive Lipitor at co-pays comparable to generics.

As Pfizer says, "Trust us".  It's not like we've paid billions in fines for off label marketing, price fixing or other unethical marketing programs in the past is it?

 

 

Posted by Bruce Lehr Dec 1st 2011.