NEWS

WPhN NEWS

by Charles Horth

STRATEGIC ISSUES

Quo Vadis O Pharma? Two views on the fututure of Big Pharma. For directions, ask a PwC ...

According to a recently published PricewaterhouseCoopers report, entitled ‘Pharma 2020: The Vision – Which Path Will You Take?’ the global pharmaceutical market will more than double in value to $1.3 trillion by 2020. PwC puts this down to increasing worldwide demand for medicines as the population continues to expand, with people living longer while also becoming more obese, and chronic conditions, including infectious diseases, rise.

If that scenario sounds like a gravy train destination for the moribund pharma industry, however, there’s a lot of track maintenance work needed to repair the rickety R&D railroad. According to the report, pharma’s business model is unsustainable – and needs to change radically in the way it operates before it can capitalise on future growth opportunities. At the 2020 whistle-stop, China, India, Brazil, Indonesia, Mexico, Russia and Turkey could be selling on the global platform one-fifth of the world’s pharmaceuticals, 60% more than in 2004. In the developing world, chronic medical conditions such as hypertension and diabetes will increase to resemble those of the developed world.

More contentiously, if eco soothsayers are proved right, global warming could have a major impact on the world’s health, helping to spread diseases such as malaria and cholera, while increasing the prevalence of respiratory illnesses, for example asthma and bronchitis. “The pharma industry will not be in a strong position to capitalise on opportunities unless R&D productivity improves,” predicts Steve Arlington, global pharmaceutical research and development advisory leader at PricewaterhouseCoopers and principal author of the report. “The core challenge is a lack of innovation,” he argues, adding that, “the industry is investing twice as much in R&D as it was a decade ago to produce two-fifths of the new medicines it then produced.”

Dr Arlington offers his prescription: “Over the next decade, the industry must shift its investment focus more toward research and less on sales and marketing. Pharma’s traditional strategy of placing big bets on a few small molecules, marketing them heavily into primary care with the aspiration of achieving blockbuster sales, will no longer suffice,” he prognoses, adding that, “it must focus on the development of medicines that prevent, treat or cure. These must demonstrate tangible benefits and tackle unmet medical needs. Governments and payers must play their part and ensure the industry is rewarded for these efforts.”

... or walk the Tufts way

In the face of challenges such as rising R&D costs, increasingly strict regulatory requirements, and safety concerns, drug developers have reasons to be cheerful, according to the results of a study by the Tufts Center for the Study of Drug Development.

Underpinning this optimism is the use of new technologies to control costs and reduce late-stage development failures, reliance on global outsourcing to speed development and reduce costs, and greater co-ordination between US and European regulators. Tufts CSDD Director Kenneth I. Kaitin agrees that long term, the viability of drug developers depends on improving R&D productivity and had addressed this challenge commenting that, “they’re about to see their efforts pay off in terms of improved success rates and greater numbers of new medicinal products reaching the marketplace.”

Kaitin cites a 52% increase in the number of new drugs entering clinical testing among the top 10 companies in the first part of this decade, adding that, “new product development at small/mid-tier pharma and biopharma companies is making up for the product gap by large pharma firms. Most notably, drug companies are improving their management of risk, especially by actively lowering late-stage attrition rates through greater use of IT and other development practices.”

The Tufts CSDD’s Outlook 2007 report included other positive trends such as improving drug discovery by examining pre-competitive data to identify and validate new targets, small/mid-tier pharma adopting outsourcing and other clinical practices used by big pharma to control costs and manage risk, and for biotech firms, increasing biodefense and pandemic disease related R&D.

Regulatory trends include the FDA modifying its regulation of off-label prescription use by evaluating current studies or by requesting new ones before deciding whether to further regulate off-label use. The report also cited that within two to three years, approximately 65% of FDA-regulated clinical trials for top pharma companies will be conducted abroad. Additionally, the EMEA will focus on new legislation for integrating drug regulatory agencies of new EU members into a comprehensive European system.

ICON snaps up European CRA staffing firm DOCS

$40m cash deal to access clinical research staffing in eight countries ICON, international development CRO based in Dublin, surprised the clinical research community with its acquisition of DOCS International, the European clinical research staffing organisation, in a cash deal worth about $40 million. DOCS, focused on training and supplying both contract and permanent clinical research personnel to its healthcare (pharma and biopharma) customers operates in eight countries.

ICON intends to leverage DOCS International’s strategic presence in European clinical research staffing for its future expansion. DOCS, with its HQ in The Netherlands, will be integrated with Icon ’s existing US staffing business, ICON Contracting Solutions, to form a global business unit.

CORPORATE ACTIVITY, DEALS and ALIANCES

AZ acquires MedImmune

Cash deal for $15.6bn creates integrated biopharmaceuticals business AstraZeneca (AZ) has acquired MedImmune, Inc. in a cash deal worth $15.6 billion, about 11 times MedImmune’s 2006 revenues. This acquisition adds to AZ’s presence in the growing biological medicines and vaccines areas of medicines research allowing it to address drug targets through three key technological approaches: small molecules, biologics and vaccines. The combination of MedImmune with AZ’s subsidiary, Cambridge Antibody Technology (CAT), creates a fully integrated biologics and vaccines business within the AZ Group with additional R&D, regulatory, manufacturing and global sales and marketing reach.

MedImmune founder and president, Wayne T. Hockmeyer Ph.D., retires as president of MedImmune Ventures, Inc. He also steps down as Chairman upon AZ’s completing its acquisition. MedImmune’s revenues of $1.3 billion in 2006 from products included FluMist nasal spray flu vaccine, Synagis for infectious respiratory disease and Ethyol for reducing chemotherapy side effects. MedImmune has two late-stage products in development – the next-generation Synagis and a refrigerated formulation of FluMist. With the Medimmune acquisition, AZ’s share of biologics in the development pipeline increases from 7% to 27%.

AZ’s Q1 revenues of $7 billion were up 13% on the back of sales of its five key products: Nexium, Seroquel, Crestor, Arimidex and Symbicort, up 17% to $3.6 billion. Expenses for R&D at $1.2 billion in the quarter were up 36%.

For AZ, Silence is golden

Three-year R&D pact for respiratory therapeutics

AstraZeneca is collaborating with Silence Therapeutics to discover and develop proprietary siRNA molecules against up to five specific targets provided by AZ. This will generate up to $400 million for Silence in initial access fees, clinical development and commercial milestone payments plus royalties on product sales. The deal, primarily in the respiratory field, includes an option allowing for targets that could extend the collaboration into other disease areas of interest to AZ. Silence will license its proprietary siRNA technology to AZ in return for an initial access fee of $15 million, which includes an equity investment of $10 million. The companies will collaborate in the early phase of identification and optimisation of novel siRNA molecules, while AZ takes full responsibility for clinical development and commercialisation.

DSM unit acquires Pentapharm

Deal enhances DSM’s Personal Care portfolio

DSM subsidiary, DSM Nutritional Products L td, has acquired privately owned Pentapharm Holding L td., developer and producer of active ingredients and system solutions for the cosmetics industry. In pharmaceutical and diagnostics markets, Pentapharm also offers specialised products for human blood coagulation disorders. The company posted sales of approximately $50 million last year. The acquisition adds highly specialised actives based on innovative technologies to DSM’s Personal Care portfolio of vitamins and sun-filters.

Novartis and Intercell in vaccine research pact

Alliance leverages the potential of Intercell’s vaccine candidates with the R&D, manufacturing and commercialisation expertise of Novartis

Novartis and Intercell AG have formed a strategic alliance for the development of vaccines. The alliance combines Novartis’ research, development, manufacturing and commercialisation capabilities with Intercell’s research skills and pipeline. Intercell’s portfolio includes more than 10 projects which Novartis may choose for further development. The alliance will focus on the development of vaccines derived from Intercell’s Antigen Identification Program (AIP). Novartis has opt-in rights to all future vaccine candidates discovered by Intercell during the collaboration.

Novartis sells baby foods business for $5.5 billion

Novartis sells Gerber to Nestlé, “to focus on pharmaceuticals”

Novartis has agreed to sell its Gerber baby food business to Nestlé for $5.5 billion in cash, so completing the company’s divestiture programme and allowing it to focus on healthcare with pharmaceuticals at the core. Dr Daniel Vasella, Chairman and CEO of Novartis, considers the sale as “the right move for Gerber, as it will become a priority business in a leading global nutrition company.”

Novartis flu vaccine approval

EU green light for non-chicken egg flu vaccine – “potential blockbuster”

Optaflu, developed by Novartis, is the first flu vaccine that does not rely on chicken eggs for producing viral antigen components, and is seen as, “the first major innovation in influenza vaccine manufacturing for over 50 years.” The new cell culture technology means Optaflu can be manufactured more quickly than other vaccines, opening up the potential to respond to an outbreak swiftly. Worldwide occurrence of avian flu A/H5N1 – highly contagious in chickens – raises the possibility of a pandemic emerging when egg supplies are lower than usual. WHO ranks H5N1 pandemic risk at three on a scale of one to six. Optaflu is a potential blockbuster. Jorg Reinhardt, CEO of Novartis Vaccines and Diagnostics, explains the cell culture alternative to egg-derived vaccines “provides for a more flexible and reliable production process, so as to meet the ongoing need for seasonal influenza vaccines and the potential need for influenza vaccines in the event of a pandemic.”

Facing stiff competition from its rivals, Roche’s Tamiflu and GlaxoSmithKline’s Relenza, Optaflu may be available in Germany and Austria by the winter of 2007-2008 and in remaining EU countries a year later. Optaflu is approved in all 27 European Union states, Iceland and Norway, while US regulatory approval will be sought in 2008.

Arise Catalent and go forth reborn ...

It’s official. Cardinal PTS becomes Catalent Pharma Solutions

Catalent Pharma Solutions, formerly Cardinal Health Pharmaceutical Technologies and Services, has launched as an independent company after completing The Blackstone Group’s $3.3 billion acquisition of the business from Cardinal Health in April 2007. The name “Catalent” combines ideas inherent in the words “catalyst” and “talent”.

Catalent inherits the legacy of dosage form innovation, having commercialised softgel capsule technology and L iqui-Gel formulations, created the “fast dissolve” oral tablet category with Zydis, and introduced the vegetable-based capsule VegiCaps Soft. The company is also recognised for its child-resistant, senior- friendly and compliance-enhancing packaging designs. John L owry, President and CEO of Catalent Pharma Solutions, perceives Catalent as providing customers with technologies, services and reliable solutions, “enabling them to focus on their own core competencies.”

Blackstone Group acquires Klöckner

Deal worth $1.8bn for packaging films specialist

The Blackstone Group, the private equity firm that recently acquired Cardinal PTS, has acquired packaging films specialist Klöckner Pentaplast Group for $1.8 billion. The management of the Klöckner Pentaplast Group will remain in place. Tom Goeke, the group’s CEO acknowledges that “The Blackstone Group is committed to the company’s strategic goals. With their backing, we will continue to pursue the expansion of Klöckner Pentaplast.”

GLOBAL NEWS : ASIA PACIFIC

India’s Pharmaceutical Market

Crystal ball-gazing the next five years

The Indian pharmaceutical market, valued at $4,750m (2005) and increasing by over 8% annually, is perceived as an industry with production of generics as its core competency coupled with relatively immature capabilities in R&D. Since the 1990s, however, Indian companies have invested with a view to expanding their drug R&D capabilities. Two developments in particular have helped India’s pharma players to diversify revenue streams, thereby enabling companies to drive up market growth: their willingness to accept international patent laws, and increased business activity in contract manufacturing.

Aptuit & Laurus launch new service company in India

Aptuit to invest $100 million for expansion

Aptuit, Inc. and L aurus L abs L td. have formed a new contract drug development company with state-of-the-art facilities in Hyderabad. Aptuit L aurus combines Aptuit’s worldwide capabilities in drug development with L aurus’ R&D and manufacturing expertise. The combined company will provide pharma companies with integrated, end-to-end services, technologies and manufacturing capabilities across the entire drug development cycle. It will be based at the new 160,000 sq. ft L aurus R&D facility in Hyderabad, with more than 200 scientists, while there are additional facilities in Vishakhapatnam and Bangalore.

Aptuit L aurus will kick-start its services to clients in early-stage drug discovery, medicinal chemistry, lead optimisation, process development, scale-up and process optimisation, safety and hazard assessment, formulation development and analytical chemistry. These services will be based at L aurus’ large-scale manufacturing plant, which is currently under construction in Vishakhapatnam, and Aptuit’s existing informatics development and support group of 100 employees in Bangalore.

Aptuit is to invest about $100 million over the next four years to expand Aptuit L aurus’ development, manufacturing and informatics capabilities with the addition of a complete suite of development services including: medicinal chemistry, preclinical, solid-state chemistry, consulting, clinical packaging and logistics, Phase I – IIa research and large-scale dosage form manufacturing. Dr Satyanarayana Chava, founder and chief executive officer of L aurus Labs will serve as chief executive officer of Aptuit Laurus, bringing more than 20 years of industry experience into the partnership. Satyanarayana founded Laurus with two colleagues in 2005.

Parexel opens Hyderabad office

Parexel “deepening its long-term commitment in India”

P arexel International has opened a new site in Hyderabad, India offering a wide range of clinical research and data management services to its customers. The new site, in an important biotechnology hub, is a natural progression from a joint venture that Parexel entered into with Synchron, an Indiabased CRO, to form Parexel International Synchron Private L imited, providing Phases II – IV clinical research services. Experts with extensive knowledge of India’s regulatory process will be based at the new office.

SGS passes FDA inspection in India

“Major achievement for Indian QC testing laboratory”

SGS India L td.’s Chennai facility has passed its first FDA pre-approval and a GMP inspection of the firm’s QC testing laboratory in Chennai. The SGS Chennai site began pharmaceutical testing in 1995 when it received local GMP government approval. Manfred Weiler, global business manager at SGS L ife Science Services, acknowledged “continuous efforts to improve and harmonise quality systems and processes throughout the SGS network of 14 QC laboratories in North America, Europe and Asia.”

The Chennai facility, with 40 staff occupying 2,400 sq mt of lab space, provides testing services in GMP and GLP: raw material and finished product testing, microbiological testing, stability testing, toxicology, biotechnology and medical device testing.

Ranbaxy & GSK in new R&D pact

Deal worth more than $100m in milestone payments to Ranbaxy for products marketed by GSK

Ranbaxy L aboratories L td. and GlaxoSmithKline, have signed a new, multiyear R&D agreement expanding their strategic alliance, established in 2003, to now include GSK’s interests in anti-infectives, metabolic, respiratory and oncology products. In the original deal, Ranbaxy provided optimisation chemistry to progress NCE leads for candidate selection. Now, Ranbaxy will take these leads further into completion of clinical proof of concept. GSK will then progress clinical development for each programme to commercialisation. Ranbaxy could receive more than $100 million in milestone payments for products subsequently launched by GSK, as well as royalties on sales. Ranbaxy will retain the right to co-commercialize the products in India.

Dr Reddy’s opens its first European R&D base

Indian generics supplier aims to be an R&D-based company

As a key part of its strategy to become an innovator of branded ethicals alongside its generics business, Dr Reddy’s L aboratories is establishing a European R&D base, which it has set up at a site in Slough, UK, the location of its new European HQ. Slough becomes another component of Dr Reddy’s existing research operations in Atlanta in the US and Hyderabad in India.

The Indian generics firm has also appointed a new global drug development chief, Dr Rajinder Kumar, who was recently appointed president of research, development and commercialisation. A graduate of the University of Dundee in the UK and fellow of the Royal Society of Medicine, Dr Kunar has experience on both the “big pharma” and the “generics” sides of the industry. Dr Reddy’s L aboratories ranks as India’s second-largest pharma company with revenues up from $563 million (2005) to $1.5 billion (2006) as a result of acquisitions, for example Betapharm in Germany, and aggressive patent challenges to some of big pharma’s best selling producs.The company’s European portfolio includes low-cost versions of Prozac, L osec and Risperdal. Its current research programme focuses on diabetes, cancer, cardiovascular diseases and bacterial infections with seven NCEs in development, five of which have entered the clinic.

GSK invests in new Shanghai R&D facility

$40 million will create global centre for CNS research

GlaxoSmithKline plans to spend $40 million on a new facility in Shanghai, China and is expected to become one of its largest research centres globally. According to a report in China Daily, GSK aims to recruit up to 100 top international scientists annually for 10 years attracting attention to the importance of its pharmaceutical R&D operations. The Shanghai site is expected to focus on neurodegenerative disorders, for example, Alzheimer’s disease, Parkinson’s and multiple sclerosis.

GLOBAL NEWS : NORTH AMERICA

Senate initiative for FDA approval of biogenerics

Pathway for FDA to approve low cost biopharmaceuticals

Suppliers of generic drugs could win the right to market generic versions of biopharmaceutical medicines if legislation to be introduced in the US Senate creates a route for the FDA to approve generic treatments made using biotechnology. Competition from lower-cost biogenerics could slash prices by one third. Generics players target medicines whose patents have already expired or are about to expire. Barr Pharmaceuticals and Teva Pharmaceutical Industries are among the companies that have already made significant investments in acquisitions and facilities outside the US for the technology in order to produce “generic” versions of biopharmaceuticals.

The Senate proposal would require generics companies to conduct animal studies and at least one clinical trial in humans, unless the FDA decides that these steps are not necessary. The FDA could also decide if a generic product could be substituted by a pharmacist for a prescribed branded product. European regulators allow approval of generic biopharmaceuticals known as biosimilars. Such products are not recognized as identical to their original versions. Novartis recently gained support from a European panel to sell biogeneric versions of Johnson & Johnson’s Eprex, marketed in the US as Procrit and as Amgen’s Epogen for the treatment of anaemia.

MedImmune and Sanofi Pasteur win bird flu vaccine contracts

US manufacturing contracts awarded in readiness for pandemic influenza

MedImmune, Inc., has won a $55.1 million contract from the US Department of Health and Human Services (HHS) to modify its US vaccine manufacturing facilities for pandemic influenza vaccines using its live, attenuated, needlefree technology. The company will contribute about $14 million of the total costs of retrofitting its vaccine manufacturing facilities in the US. FluMist, MedImmune’s flu vaccine, is manufactured, blended, filled, packaged, stored and distributed at the company’s operations in CA, PA, KY and in the UK. MedImmune will upgrade and expand its equipment and processes at its US facilities and provide manufacturing operations to help the US government to respond rapidly to vaccine manufacturing needs in the event of a pandemic.

Sanofi Pasteur has been awarded a $77.4 million contract by HHS to modify its flu manufacturing facility while Sanofi Pasteur will contribute about $25 million to the project. The contract covers the costs of design, modification and maintenance of the facilities to be ready to respond to pandemic flu vaccine requests by the HHS.

Modifications will begin once the company’s new flu vaccine manufacturing facility is licensed by the FDA and operational. The existing facility will be phased out and decommissioned. This will boost Sanofi Pasteur’s flu vaccine capacity from its current 50 million doses of vaccine for the US market to nearly 150 million doses.

Rentschler opens US office

Improved support for North American business clients

Rentschler Biotechnologie GmbH has opened a US-based sales office in New Providence, NJ. As a well-established, full-service biopharmaceutical CMO, Rentschler is expanding its sales efforts to improve support for its North American clients. Rentschler’s manufacturing and fill & finish services at the company’s facilities in L aupheim, Germany, are carried out in accordance with international GxP standards.

The company is expanding the capacities of its technological and operative sites, allowing the production of material for both clinical studies and commercial scale. Additional fermenter suites have strengthened the company’s biotechnology business in custom manufacturing services from cell line development to large-scale cGMP production, registration of drugs and fill & finish.

Quintiles consolidating and expanding

$30 million investment will create 400 more jobs

Quintiles Transnational Corp. is to invest $19m on top of a $11m incentive package to expand and consolidate its Global Central L aboratories (GCL) in Smyrna, GA, and its Clinical Development Services (CDS) office in Atlanta within a single 201,366 sq ft structure in nearby Marietta, GA. The new site will more than double the combined space previously occupied by GCL and CDS, allowing for about 400 more job vacancies to be filled by 2011.

Following the addition of labs in China and India and expansion of the Quintiles site in Scotland, the GCL expansion will accommodate the growth of Quintiles’ business. Dennis Gillings, CBE, Chairman and CEO of Quintiles Transnational, who sees increasing demand for its CDS and laboratory services driving the need to expand, comments: “We’re taking this opportunity to bring our Atlanta units together to improve co-ordination and efficiency for our customers.”

Novartis increasing flu vaccine delivery for US

Fluvirin supply up 30% before next flu season

Novartis Vaccines is to increase the supply of its Fluvirin vaccine to the US by 30% for the flu season in 2007-2008 by producing about 40 million doses. Half of these are planned for delivery in September, with the balance due to be delivered by the end of October. Seasonal flu causes more than 200,000 hospitalisations and kills about 36,000 people each year in the USA where annual medical expenses from influenza may range from $3-$5 billion while indirect costs, including lost work days, for a severe flu epidemic can be from $12-$14 billion.

News Editor

Charles Horth, PhD

I’m delighted to join the team at World Pharma Network to feature a regular snapshot of recent, newsworthy happenings in our industry. My career of over 40 years in the lifescience industry covering pharma, biotech and nutrition, from R&D through to commericalisation has given me an insight that lends itself to a new magazine with a worldwide angle.

Apart from producing expert reports for pharmaceutical customers, I have contributed over 40 scientific articles for publication in peer-reviewed journals and magazines, organised a series of conferences for the global outsourcing services community, was managing editor of a Bio/Pharma online publication for VerticalNet Europe, editor of Life Science Today magazine, contributed articles for Advances in Life Science, PMPS magazine and PTE and GCPj. Here, at WPhN, your comments, suggestions and contributions are always welcome.

 

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