No, not everybody’s favourite inside trading hedge fund. The fine that really made us gasp this week was the $2.2bn penalty levied against Johnson & Johnson for promoting unapproved uses of anti-psychotic drugs in children, the elderly, and disabled.
From the FT: Read more
Chart from Michael Saunders at Citi (click to enlarge):
What that shows is a pretty dramatic fall in Read more
Pascal Soriot doesn’t start as AstraZeneca’s new CEO until Monday, yet everyone seems to know what he should do first: go shopping.
The problems soon to be faced by the former Genentech CEO are well known. AstraZeneca is heading towards the steepest of patent cliffs and has so far failed to find anything in the R&D labs that might cushion its fall. Drugs losing US patent protection by 2015 account for a more than a fifth of its sales, rising to nearly a third of sales by 2019. Recent launches of diabetes and heart disease pills have fallen short and what’s in the late-stage pipeline (arthritis, constipation and gout, since you ask) is considered quite likely to fail. Read more
Remember Friday afternoon RAW? Well, this is most definitely Friday afternoon RAW. Please read the disclaimer carefully.
AstraZeneca pledged to buy back $4.5bn of its shares this year as the Anglo-Swedish pharmaceutical group warned of growing pressure on its revenues and unveiled plans to cut 7,300 jobs, the FT reports. The company posted full-year revenues down 2 per cent at constant exchange rates to $33.3bn on the back of nearly $2bn in sales lost to generic competition and $1bn because of government prices. The Wall Street Journal says the company faces a number of crucial patent expiries between 2012 and 2015, including patents for drugs such as Seroquel and Nexium, as well as a loss of patent protection from 2016 onwards for its best-selling drug, Crestor. “While the further expected losses of market exclusivity make for a challenging 2012 outlook, we remain committed to a long-term, focused, R&D-based strategy, and today we have announced further steps to drive productivity in all areas to improve returns on our investment in innovation,” Chief Executive David Brennan said.
The chief executive of Teva Pharmaceutical Industries Ltd, Shlomo Yanai, is set to retire in May, the WSJ reports. Jeremy Levin, a former senior executive at Bristol-Myers Squibb Co, is set to take the helm of the world’s largest generic drug maker. Teva’s shares suffered a decline of 23 per cent in 2011, a year which saw sluggish sales in the US and an absence of big new-product launches. Dr Levin is a veteran of the brand-name pharmaceutical industry, having also worked at Novartis AG, leading business development and strategic alliances. His move to Teva is seen as part of the company’s drive to expand its portfolio beyond generic drugs.
Carlyle Group and Hellman & Friedman have teamed up to buy Pharmaceutical Product Development for $3.9bn in cash, amid rising private equity group interest in healthcare, says the FT. PPD is a contract research organisation for pharmaceutical, biotech and medical device companies. As these sectors have cut their R&D, they have outsourced more of it to companies such as PPD, which had $1.47bn in net revenue last year. The deal represents a 30 per cent premium above PPD’s closing share price last Friday and the company’s stock price jumped 25.6 per cent to $32.22 in early trading on Monday. Lauren Migliore, analyst at Morningstar, said private equity groups had been circling the contract research organisation sector because such companies would be in greater demand as drugmakers looked to replenish their pipelines as patents neared expiry.
Merck has rejected claims made by Michele Bachmann, a Republican presidential candidate, who said that the US drug company’s HPV vaccine could cause “mental retardation”, the FT reports. The remarks came as Ms Bachmann was levelling criticism at rival Rick Perry, the Texas governor she is running against for the Republican nomination, who once used an executive order to mandate HPV vaccination of girls in his state. “We are confident in the safety profile of Gardasil,” said Pam Eisele, a Merck spokeswoman. “Leading health organisations throughout the world have reviewed all the safety information available and continue to recommend its use.” Gardasil was approved by the US Food and Drug Administration in 2006 as a vaccine for human papillomavirus, a sexually transmitted disease that is the primary cause of cervical cancer. The US Centers for Disease Control states that Gardasil has been used around the world for several years and is “very safe”.
Google has reached a $500m settlement with US prosecutors to resolve a criminal investigation into its accepting advertisements from companies selling unlicensed pharmaceuticals, the FT reports. The payment is one of the largest forfeitures imposed in the US, according to federal authorities, and is a severe dent to the comany’s reputation. The internet search company was aware as long ago as 2003 that it was illegal in most cases for pharmacies based in Canada to ship prescription drugs into the US, according to an agreement between prosecutors and Google that was made public on Wednesday, but continued to accept the adverts on its AdWords search advertising system, and advised pharmacies on how to make messages more effective, until it learnt of the criminal inquiry in 2009, the agreement added. The $500m payment represents the revenues Google made from selling the adverts and the estimated revenues generated by the pharmacies from their sales to US consumers.
Pfizer, the US pharmaceutical group, said it is examining shedding its animal health and nutrition units as part of its efforts to streamline its activities, while retaining its generics business. The FT reports the move comes after the company earlier this year said it was reviewing its mix of businesses, at a time of investor criticism over poor returns. With $5.5bn in combined revenues, the two businesses constitute a small slice of Pfizer’s $68bn sales, thwarting some investors’ hopes that it would opt for more radical surgery. Pfizer has resolved to hold on to its established products division, which sits within its biopharmaceutical business with revenues of $10bn last year. It has hired JPMorgan to explore alternatives for animal health, while Centerview and Morgan Stanley will work on the nutrition business. The transactions could take up to 24 months, the company said.
Takeda, Japan’s largest drugmaker, has agreed to buy Nycomed of Switzerland for €9.6bn ($13.7bn), in the country’s second-largest outbound deal on record, in a move to bolster its European and emerging market operations, the FT reports. The acquisition excludes Nycomed’s US dermatology unit, leaving annual revenue for the company at over $2.8bn, the two drugmakers said in an announcement on Thursday. Takeda will partly fund the deal through bank loans of between Y600bn-Y700bn ($92m- $107m). The purchase highlights Takeda’s push to expand overseas and particularly in emerging markets, where it has yet to gain a strong foothold. It also gives it some more access to the generics market, an area where the Japanese government is pushing for broader use as it faces rising medical costs.
Japan’s Takeda Pharmaceutical is eyeing a $12bn takeover of Swiss drugmaker Nycomed too give it a foothold in emerging markets and Europe, Reuters reports. Talks are in an advanced stage with several banks approached to provide financing, Bloomberg says. The size of the acquisition would make it the second-biggest takeover by a Japanese company ever, following Japan Tobacco’s $19bn purchase of a British rival, and Takeda’s largest since acquiring US specialist Millennium Pharmaceuticals for $9bn. Japanese pharmaceuticals have rushed to acquisitions as they seek to make up for expiring patents on products.
The Department of Justice has filed criminal charges against a chemist working for the Food and Drug Administration over an alleged $2.27m scheme to trade on confidential information about drug approvals, says the FT. The criminal complaint, charged Cheng Yi Liang and his son, Andrew, with securities fraud, wire fraud and conspiracy charges relating to trades in shares of several pharmaceutical companies. The charges have hit the FDA in its most sensitive area, the WSJ observes. Pharmaceutical firms have long worried about the amount of secret corporate information shared with drug approval officials.
Canada’s Valeant, the acquisitive speciality pharmaceutical company, is turning its sights on US drugmaker Cephalon, with a $5.7bn hostile offer to acquire the biotech company, reports the FT. The $73-a-share bid represents a 24 per cent premium over Tuesday’s closing price and 29 per cent over Cephalon shares’ 30-day trading average, Reuters says. The offer comes after a month of failed takeover discussions with the Cephalon board, Valeant said, adding that it would begin talking to the company’s shareholders next week, and that the offer may be raised if due diligence is allowed. Cephalon sees its patent on a leading product run out in 2012, leading Valeant to argue it can wring value out of the company by cutting spending, the WSJ reports.
Sanofi-Aventis has ended a nine-month pursuit of US biotech company Genzyme with a $20.1bn deal worth $74 a share, Bloomberg says. The French drugmaker will now be able to add rare disease treatments to a portfolio hit by the rise of generic drugs. The deal also gives Genzyme’s shareholders tradeable contingent value rights based on whether the company produces enough versions of two drugs and whether the FDA approves a new multiple sclerosis product, Reuters reports. The deal will also provide an exit for Genzyme investors, the FT says. The company has suffered setbacks partly triggered by manufacturing problems and supply shortfalls, despite its profitable niche in ‘orphan’ diseases.
Eli Lilly is seeking to raise up to $750m through three funds that will share drug development costs and potential benefits with venture capitalists and external researchers, reports the FT. The US pharmaceutical giant will put up to $50m into each of three mirror funds containing up to 20 experimental medicines from different therapeutic areas. Eli Lilly will provide up to half the experimental drugs to be tested by standalone virtual drug companies and have first right of refusal on fair market terms. John Lechleiter, CEO, told the FT that venture capitalists would provide funding, while Eli Lilly’s contribution and that of external developers would come in the form of the value of the experimental drugs.
Merck, the German pharmaceuticals company, is considering the sale of its consumer health business and has begun to overhaul its approach to clinical drug development as part of a shake-up designed to boost its lacklustre share price, reports the FT. Karl-Ludwig Kley, chairman of the executive board, highlighted the changes in an FT interview as his reshuffled executive team begins work on a “road map” to improve performance that he said would be unveiled this autumn. He dismissed any sale of Merck’s liquid crystal business and said recent top appointments, including Matthias Zachert as chief financial officer, underscored the push to boost sales and margin growth through what he called his “existing good strategy”.
GlaxoSmithKline has unveiled a record-breaking £2.2bn ($3.5bn) charge to settle product liability lawsuits and regulatory fines linked to past sales practices by the UK-based pharmaceutical company in the US, the FT reports. The fourth-quarter provision, which the company said would be reduced to £1.8bn after tax deductions, outstrips the previous largest settlement imposed on a pharmaceuticals company, when Pfizer paid $2.3bn to US regulators last year. GSK’s latest charge comes amid a series of escalating legal actions launched against drug companies in the US by regulators and patients over allegations of aggressive marketing and side-effects caused by medicines.
British pharma giant GlaxoSmithKline will pay $750m to settle claims over manufacturing failures at a plant in Puerto Rico, the FT says. US regulators said that the settlemtn was the fourth-largest fine they had ever imposed on a drug company, in relation to the production and sale of “adulterated” drugs. More than that — the penalty involves a record whistleblower settlement in the first case of its kind, reports the NYT. A GSK manager who exposed the Puerto Rico failures will collect $96m from the federal government.
French drugmaker Sanofi-Aventis has formally begun a hostile takeover for biotech firm Genzyme, using a $18.5bn bid to break months of negotiations, Bloomberg reports. The company cited Genzyme executives’ ‘unwillingness to engage in constructive discussions’ and said it had met with investors who held over 50 per cent of Genzyme stock, the WSJ adds. Sanofi’s offer is the largest hostile bid in pharmaceuticals since its own creation in 2004. But the company — which has since expanded with a set of audacious acquisitions — is struggling to avoid expiries on drug patents, the FT reports.
Johnson & Johnson is looking to buy up Dutch biotech company Crucell in a $2.3bn deal, Reuters says. The move offers a 58 per cent premium on the closing price for Crucell on Thursday — which, while not the most expensive offer that could have been made, should be enough to see off any challengers from Europe, analysts reckon. J&J already had a strong (17.9 per cent) stake in Crucell — and is keen to secure its vaccines business, the WSJ reports.
Genzyme’s chief executive on Monday said he was open to selling the US biotech company at a “fair value” but that the $69-a-share offer from French group Sanofi- Aventis was not enough, reports Bloomberg. Genzyme’s board has not asked bankers to reach out to other bidders “but that’s quite obviously a logical situation to develop,” said CEO Henri Termeer. Sanofi on Aug 29 made public its offer for Genzyme worth about $18.5bn. Lex warns that Genzyme “cannot afford to be choosy”, but, asks DealBook, what is the ‘right’ price?
Sanofi-Aventis has stepped up its pursuit of Genzyme by outlining publicly its interest in a takeover deal as it inched closer to making a hostile offer for the US biotech company, the FT reports. Sanofi’s price values the target, which makes “orphan drugs” to treat rare genetic diseases, at about $18.5bn excluding debt, but the French drugmaker has been frustrated by Genzyme’s declining to engage in private negotiations. Even so, Sanofi has to make this deal as it faces the problem common to all Big Pharma firms over the next few years, says the WSJ — a ‘patent cliff’ of drugs going generic, piquing interest in entrepreneurial firms like Genzyme that bring new science to the table. Sanofi’s $69 per share offer still ranks below Genzyme shareholders preferred price of $75 a share, suggesting the fight could quickly go hostile, Reuters reports.
The Department of Justice is scrutinising payments by leading pharmaceuticals companies for hospitality, consultants, licensing agreements and charitable donations in markets around the world as part of a wide-ranging corruption probe, the FT reports. GlaxoSmithKline, Pfizer, Bristol-Myers Squibb and Eli Lilly, among others, have disclosed being contacted by the DoJ and SEC in connection with the investigation, which comes after lawyer warnings that investigators would soon turn their focus on international corruption in the sector.
The US Department of Justice is examining payments by top pharmaceuticals companies for hospitality, consultants, licensing agreements and charitable donations around the world as part of a sweeping corruption probe, reports the FT. GlaxoSmithKline, Pfizer, Bristol-Myers Squibb, Eli Lilly and Merck, among others, have confirmed they were contacted by DoJ and SEC officials in connection with the probe. Investigators are examining whether pharma companies ignored a “systematic risk” inherent in the global drugs business and ignored obligations under local and US anti-bribery laws, said a lawyer familiar with the probe. Reuters reports that shares in SciClone plunged 41% on news it was under investigation.
French drug-maker Sanofi-Aventis remains ready to make a takeover bid for US biotech firm Genzyme after revealing plans to pursue companies with a market capitalisation of up to $20bn, the FT reports. Sanofi’s board has authorised managers to make a formal offer of up to $70 a share, Reuters adds. The company may make a ‘bear hug’ expression of interest within days, after a month of informal negotiations with Genzyme failed to produce a transaction.
Swiss pharmaceutical firm Roche could lose out on $1bn in annual revenue if US regulators follow a panel recommendation to revoke approval for its blockbuster Avastin drug for use in breast cancer, reports Bloomberg. Advisers to the Food and Drug Administration voted 12-1 on Tuesday to rescind Avastin’s clearance in breast cancer after finding the drug didn’t work better than other medicines alone when paired with chemotherapies. Shares in Roche fell five per cent in early European trade on the news.
Pfizer, the world’s largest pharmaceuticals group, on Tuesday confirmed it would cut 6,000 jobs, or 18% of its production staff, as part of a global restructuring triggered by last year’s takeover of Wyeth, the FT reported. The cuts come as large drugs companies move to slash costs amid growing price pressures, aggressive competition by manufacturers of generics and a dearth of new drugs to replace those with expiring patents.
Pfizer has admitted it paid $35m over a six month period to 4,500 doctors who worked with the company on the development and marketing of new drugs, and helped “educate” other doctors on their use, the FT reports. The drugmaker made the disclosure as part of a government settlement after it pleaded guilty last year to illegally promoting more than a dozen of its own drugs.