EDITOR’S COMMENT

WPhN NEWS

Charles Horth

INDUSTRY NEWS – UK, Europe and US

UK’s Pharma Industry Welcomes Darzi Report

The ABPI “warmly welcomed” a recent report by Lord Darzi on the future of the NHS. It highlighted in particular Lord Darzi’s stated desire to see the UK, “as a world leader in pharmaceutical and medical technology research and development.”

While acknowledging the needs of patients to gain access to the best innovative treatments and services, the ABPI, representing UK’s pharmaceutical industry, observed that discussion on the “value” of treatments often focuses on cost while understating the full health, societal and economic value. “A product is only cost-effective if it is being used,” said Dr Richard Barker, Director General of the ABPI.

“If Lord Darzi’s recommendations are to be fulfilled,” Barker added that it was, “essential for the UK environment to remain stable and welcoming for innovative industries that have made Britain a global leader in worldclass research.”

The ABPI drew attention to the report’s emphasis on effective change needing to be led locally, driven by clinicians and others working in partnership across the NHS.

Call for NICE “to have same power as
licensing authorities”

Successful role of PPRS defended.

UK MPs have been told that the National Institute for Health and Clinical Excellence (NICE) should have the same powers as the UK licensing authority, as their respective decisions are of equal importance. MPs also heard evidence from Office of Health Economics about the Pharmaceutical Price Regulation Scheme’s success in containing product pricing. According to a report by The PharmaTimes on 12th October, the fact that NICE cannot demand to see all the evidence relating to a medicine, in the same way that the regulator can, “is a source of frustration.” Karl Claxton, Professor of economics at York University and a member of NICE’s appraisal committee, told the House of Commons Health Select Committee’s continuing inquiry into NICE that while NICE can ask manufacturers to conduct data analyses on their products, NICE cannot then have these checked independently.

A further source of frustration, added Professor Claxton, is that NICE is only able to issue guidance relating to a product’s licensed indications, even when the medicine is routinely used throughout the National Health Service for unlicensed indications. It cannot make statements about unlicensed use – to do so would undermine the licensing authority. Therefore, there is a danger of NICE guidance being irrelevant to much of NHS practice, he warned. Criticising the quality and relevance of clinical trial data, which are currently submitted by manufacturers to NICE in support of their products, Claxton proposed a move away from the Pharmaceutical Price Regulation Scheme’s profit and price controls towards a value-based pricing (VBP) system, as suggested in the Office of Fair Trading’s report on the PPRS, thereby providing incentives for companies to make the necessary improvements.

Price regulation vs value for money

Adrian Towse, director of the UK industry-backed Office of Health Economics, giving evidence to MPs, saw the main challenge identified by the OFT report – assuring value for money for the NHS – as the function of NICE, not the PPRS. Price does not necessarily reflect a product’s value. The aim of the PPRS, which he asserted had been very successful, is to keep the UK medicines bill under control for the government so that aggregate prices, and company profits, are not too high. Towse saw a NICE assessment as “incredibly important” for the worldwide success of a drug. The UK accounts for about 4% of global demand for pharmaceuticals, while other countries, representing a further 25% of world sales, set their own prices with reference to the UK. Nothing in the OFT report would help speed the uptake of new medicines. The industry was uneasy with the idea of their products’ prices being set by the government. That would be an area of uncertainty never before seen in the UK, Towse warned.

About NICE

NICE is considered as among the foremost bodies for cost effectiveness assessment in major pharmaceutical markets. As NICE has had an increasing impact on the availability of new drugs in England and Wales, it has also generated considerable attention globally. NICE plays a key role in the UK healthcare system although it does not currently assess all new drug approvals. The impact of NICE is felt outside the UK as organisations and individual physicians in other countries also monitor its conclusions. Cancer drugs have accounted for the largest number of NICE’s completed assessments.

Roche’s $3bn cash bid for Ventana stalls

Seeks to build position as fully-integrated personalised healthcare company with tissue-based cancer diagnostics

Roche, which made a cash bid of $75 per share to acquire Ventana Medical Systems Inc., a leader in the fast-growing histopathology (tissue-based diagnostics) segment in June 2007 has yet to get a meaningful response from Ventana after extending its offer from 26 July to 23 August 2007. The offer price values Ventana at a 44% premium to its closing price of $51.95 on 22 June (NASDAQ: VMSI) and a 55% premium to Ventana’s 3-month average of $48.30.

Roche perceives tissue-based diagnostics as an important step in the Swiss giant’s strategy of delivering personalised healthcare solutions to patients. While negotiations appear to be deadlocked, Roche remains upbeat while Ventana’s share price soared to over $88.50 in mid October 2007. Roche has said it would allow Ventana to operate as a dedicated business within the Roche Diagnostics Division, while retaining Ventana’s headquarters in Tucson, Arizona.

Biogen Idec puts up FOR SALE board

Seeking a buyer for the company -- has received “several expressions of interest”

Biogen Idec (BI), the Cambridge, Massachusetts-based biopharmaceutical company has revealed that its board of directors had authorized management to evaluate if third parties would have an interest in acquiring the company at a price and on terms that would represent a better value for shareholders than having the company continue as a stand-alone entity.

The company, among the world’s largest biotechs and best known for Avonex, its flagship multiple sclerosis treatment, has hired Goldman Sachs and Merrill Lynch to help find a buyer. Among prospective suitors are billionaire corporate investor Carl Icahn, currently thought to have upped a stake from 1% to 4%. Others tipped as possible contenders are Sanofi-Aventis, J&J and Pfizer. Elan Corp, Ireland’s pharma company, enjoys a 50% collaboration interest with BI in Tysabri, another multiple sclerosis treatment that was temporarily withdrawn from the market in 2005 over safety concerns. Since its comeback, about 17,000 patients around the world are currently on treatment with Tysabri. Elan could sell it’s interest in Tysabri or acquire BI’s interest or explore other options in the best interests of its shareholders. Elan has hired Lehman Brothers to advise the company on its options.

In September 2007, BI outlined its aims to generate strong operating and financial performance by the end of 2010. BI’s strategy assumed that: 100,000 patients with MS would be treated with Tysabri; the revenue coming from its International business would top 40%; four new products or existing products in new indications would be launched; six programs would enter late-stage clinical development; all generating revenue growth at a 15% compound annual growth rate from 2007 to 2010. Tysabri is a potential multibillion-dollar blockbuster and could be key to BI’s sale price, likely to be pitched in the $24-$34 bn bracket. Biogen acquired its Idec pharmaceutical arm for $6.7 bn in 2003.

Novartis-MIT collaboration for
continuous manufacturing

Investment of $65 million over 10 years to modernise and replace batch systems

Novartis and the Massachusetts Institute of Technology have launched a long-term, research collaboration with the aim of radically changing how pharmaceuticals are produced. Novartis will be investing $65M over the next 10 years for research activities at MIT (Cambridge, Mass.), establishing the Novartis-MIT Center for Continuous Manufacturing. The goal is to develop new technologies that can replace conventional batch-based systems for manufacturing pharmaceuticals.

Bernhardt Trout, an MIT associate professor of chemical engineering who runs the new Center sees how other industries, eg, petroleum and especially food have embraced continuous manufacturing, after investing time and money to develop the processes. Trout feels that pharmaceutical manufacturing requires a similar transformation. The prospective benefits of continuous manufacturing could include: speeding up the introduction of new drugs by designing processes earlier; using smaller production facilities with lower building and capital costs; minimizing waste, energy consumption and raw material use; monitoring quality assurance on a continuous basis while enhancing process reliability and flexibility to respond to market needs. According to Trout, Novartis and MIT will jointly share the rights to any research they develop together. Each party will control the rights to any technologies they develop on their own through the centre.

One potential hurdle in the process is the FDA. However, the FDA report, “Critical Path Opportunities Initiated During 2006”, suggests the FDA may be working with Novartis to develop a case study of a quality-bydesign approach to manufacturing drug substance and drug product. This approach identifies critical processing variables (environmental and process factors, raw materials attributes) and systematically determines their effect on performance and quality. The ultimate goal is the development of new manufacturing approaches that improve sponsors’ ability to assess and improve product quality. PAT tools (for example near-infrared and Raman spectroscopy and chemical imaging) are being developed to monitor critical manufacturing steps to provide quality assurance and to interface with process control.

Movers and Shakers

GlaxoSmithKline

Andrew Witty, currently president, Pharmaceuticals Europe for GSK, has been appointed Chief Executive Officer designate of GlaxoSmithKline. Witty will succeed Dr. Jean-Pierre Garnier following his retirement as CEO at the end of May 2008.

Celsis International

Philip Vorwald has been appointed Vice President and General Manager of Celsis International’s In Vitro Technologies (Celsis IVT) division, with responsibility for setting and overseeing the long-term growth strategy of the company’s ADME-Tox products. Vorwald will report to Jay LeCoque, Celsis International’s CEO.

Quintiles

Jay D. Norman has been appointed president of Quintiles Consulting business. The unit’s offerings include strategic product development, regulatory compliance, and pricing & reimbursement.

Pfizer

Dr. Martin Mackay has been named president of Pfizer Global Research and Development (PGRD), an independent biotherapeutics and bioinnovation center under the direction of scientist Dr Corey Goodman. In a separate move Dr. Briggs Morrison has been named head of clinical development for the PGRD pipeline.

INDUSTR Y NEWS – India and Asia- Pacific region

Nicholas Piramal targets launch of anti-cancer drug

Oncolytic, one of a series of NCEs from R&D unit, to go indepenedent Nicholas Piramal India Limited (NPIL), ranked among India’s major pharma players, plans to launch an anti-cancer drug by 2010. The US Foods and Drugs Administration (FDA) approved its IND application for its lead cancer compound, P 276-00, to treat Multiple Myeloma. It is the first IND from India for a NCE cancer drug approved by the USFDA.and the company is conducting clinical trials of the oncolytic in India and Canada.

Dr Swati Piramal, NPIL’s director of strategic alliance and communications explained that the company had three compounds in the clinical trial stage in the anti-cancer, anti-inflammatory and anti-infectives segment of which the anti-cancer drug might be launched by 2010. NPIL also has entered into a research collaboration with Eli Lilly for a metabolic compound of the US-based Company.

NPIL recently announced it will demerge its new chemical entities (NCE) R&D division into a separate company. At present, the company has 13 NCEs in its research pipeline, of which eight are expected to enter the human trials stages by March next year. Unlike other Indian companies, which out-licence molecules after the early stages of development, the company prefers to go alone as far as possible. The company expects to complete the demerger of the R&D division by mid-2008 and list the new company.

Mrs Piramal anticipates all leading Indian companies spinning off their R&D units to, “unlock the value in their research division.” Among India’s top 10 companies the collective market capitalisation of the NCE research could amount to $120 billion by 2015 compared with $20 billion at present.

Cadila, Lupin and Aurobindo aim to spin-out R&D units

Joining a trend to bring down costs and enhance valuations

Three of India’s mid pharma players, Cadila, Lupin and Aurobindo have announced plans to follow in the footsteps of Dr Reddy’s, which has already demerged its R&D unit, and Nicholas Piramel, which has annouced a demerger timetable. The strategy is designed to reduce cost pressures and improve the valuations of their other businesses. Valuations of the midsized players could benefit to the tune of 20-25% – although the value of their R&D business may be difficult to estimate or compare while their activities are primarily in generics (Aurobindo) or innovation (Cadila and Lupin).

Divesting R&D resembles a strategy adopted by western Big Pharma with the aim of maintaining stability and quality of research, a model for structuring R&D currently in fashion, while allowing a degree of autonomy. Examples are GSK’s Centres of Excellence for Drug Discovery (CEDDs), and AstraZeneca’s recently acquired Cambridge Antibody Technology, its biologicals business continuing to operate as a separate research unit in Cambridge, UK. However, global players, for example Pfizer and Merck, have not yet followed suit because R&D is a core business activity. Instead, they tend to divest their manufacturing units or enter into contract manufacturing (outsourcing) deals.

Lupin takes control of Japan’s Kyowa Pharma

Demand for cheaper generics in Japan provides opportunity for Indian companies.

India’s pharma company, Lupin, which went into a strategic alliance with Kyowa Pharmaceutical Industry (Kyowa) in 2005 to market finished formulations in Japan, has acquired an 80% stake in its Osakabased ally. Kyoto, a privately-held company owned by its promoters, the Sugiura family, is among Japan’s top 10 generic pharmaceutical companies. Lupin could acquire the remaining 20% stake in Kyowa in due course. The amount paid by Lupin has not been disclosed.

Japan, with a market size of $60 billion, is the second largest pharmaceutical market in the world after the US and is forecast to reach $70.8 billion by 2011. Japan’s generics market is worth $3 billion, about 5% of its total pharma market in terms of value, 17% by volume. Efforts by Japan’s government to cut the costs of healthcare have boosted the growth of the country’s market for cheaper generic drugs. The rapidly ageing population of Japan could drive its generics market to account for 35-40% of the total pharmaceutical market in the country. This gives generic drug makers, such as Lupin, an opportunity to capitalise through mergers and acquisitions.

Zydus Cadila, based in Ahmedabad, recently acquired 100% of Nippon Universal Pharmaceutical, Tokyo while Ranbaxy has acquired 50% of Tokyobased Nihon Pharmaceutical Industry, a joint venture between Ranbaxy Laboratories and Nippon Chemiphar. Recent regulatory changes have now made it simpler for overseas companies to bring their products into Japan. Non-Japanese companies can now outsource their manufacturing processes, even if they do not operate their own production facilities in Japan. However, these companies could face stiff competition from Japanese companies such as Takeda, Eisai Pharma, Mitsubishi Pharma, and Astellas that dominate the home market.

Dabur looks ahead to generic products launch in US

Strong oncology products pipeline with US market approvals

Oncology generics producer, Dabur Pharma, has announced that it is working on 17 new chemical entities (NCEs) and would launch 12 generic products in the US by the end of 2008. By the time WPhN went to press, in mid-Ocober 2007, Dabur had launched three generic products into the US market while awaiting approval for three others. Dabur is thought to have one product in Phase-I trial and one in Phase- II. Dabur’s product pipeline comprising 15 generic oncology products are expected to be launched by the end of 2009.

INDUSTRY HISTORY
– A century ago

Those were the days – a pharma-tardis odyssey

Snapshot of the lifescience industry 100 years ago.

With the end of 2007 in sight, the WPhN time capsule travels back 100 years to get a feel for the industry as it was in 1907 and gauge the opinion of some other doctors. That was in the pre-WW1 era, when pills were truly pill-shaped (spherical), often made by hand and dispensed by chemists and druggists according to traditional formulations. They don’t make ‘em quite like that any more -- but attitudes and controvery haven’t changed much.... In 1907, the British company Evans Sons Lescher & Webb (later Evans Medical Ltd), which had been founded in 1902 by merging earlier Evans wholesale drug firms in Liverpool and London, began to make biological medicines for humans and animals. These included sera and anti-toxins for diphtheria, tetanus and meningitis. The firm worked closely with Liverpool University Medical School, with whom it jointly administered the Incorporated Liverpool Institute of Comparative Pathology.

Medicinal controversy is deeply rooted

In the UK, vaccination against smallpox, thanks to the work of the English doctor Edward Jenner to develop a vaccine based on the comparatively mild cowpox, had become compulsory; but it was fiercely resisted by the Anti-vaccination Movement from 1853 until the Movement’s demise in 1907. In 1907, Ross Harrison developed the first animal cell culture using frog embryo tissues. Meanwhile, in the USA, Dr Elmer Lee, an experienced physician with a considerable degree of laboratory experience, writing to the New York Times in 1907, poured scorn on, “experiments with poisons, serums and laboratory research work,” declaring it was, “not important or likely to ever benefit medical practice and not useful to the sick.” “In due time,” he wrote, “the research laboratory will pass away and something better will take its place.” Dr Lee advocated, “the employment of natural food, nor artificial, not factory, laboratory, or made-up food compounds, but foods selected fresh and natural in the open markets, by wise use of the same, or non-use, as the case may be; by physical and physiologic movements or exercises, by the limited use of mechanics or surgery, it is surprising what benefits will accrue to the sick.”

At a 1907 session of the American Pharmaceutical Association, a more upbeat Dr Wiley stated that he, “had a contract to live to be 100,” explaining he was speaking facetiously, but wanted to make his point about the opportunity for the health of people over the whole country. In 1907, Red Cross volunteer Emily Bissell designed the first US Christmas Seals (an idea that began in Denmark). The successful campaign provided much-needed income for the Tuberculosis Society and was a reminder to the general public of the importance of medical care. Increased public awareness of diseases and new technologies such as vaccination, antitoxins, and later, “magic bullets,” enhanced the general public’s hunger for new cures.

In Germany, Paul Ehrlich had first come up with the “magic bullet” concept in 1906, while in that same year Dr August von Wasserman developed his syphilis test just a matter of months after the bacterial cause was determined. Embarking in 1907 on the development of the first chemotherapy, by 1910 Ehrlich’s arsenical Compound 606, marketed by Hoechst as Salvarsan, became the first effective treatment for syphilis.

UK pharmaceutical production

The Production Census of 1907 found that the combined output of the ‘drugs and medicines’ category (£4.9 million), accounted for just one-third of one per cent (0.34%) of the UK’s total manufacturing output (£1,428 million). Less than a third of the pharmaceuticals (£1.5 million) were proprietary medicines, the rest being fine chemicals and allied products (£3.4 million). Most firms traded internationally. Exports in 1907 came to nearly 40% of their total output, or almost £1.9 million out of £4.9 million. Retained imports were valued at less than £1.1 million. Therefore the pharmaceutical industry was a net contributor to Britain’s balance of trade. In 1907, most member firms sold in Britain to over 15,000 chemists and druggists whose professionalisation was well under way. Legislation in 1852 had provided for registration of pharmaceutical chemists followed by an Act of 1868 for qualifying examinations to be set by the (Royal) Pharmaceutical Society of Great Britain, formed in 1841, and for the compilation of a register of chemists and druggists. Their work was regulated by the Sale of Food and Drugs Acts of 1875 and 1899.

Foreign pharmaceutical companies

The drugs and medicine industry in the UK also included a number of foreign-owned firms, including Hoechst UK Ltd. However, the Patent Act of 1907 gave foreigners protection only if they worked their patents in Britain. German pharmaceutical firms set up manufacturing branches, using obsolete plant brought over from home. Likewise, the Swiss Hoffmann-La Roche made only slow and limited progress in Britain after arriving in 1909. US firms were then technologically behind the Germans and were a poor third to Germany and Britain in world drug exports. The activities of the UK branches of Parke Davis (1902) and United Drug (1912) were on a relatively modest scale.

In 1907, the German firm HERMES Arzneimittel was founded by Franz Gradinger as a family business, which has remained as a leading German pharmaceutical company in preventive medications. In 1907, Alembic, one of India’s most experienced manufacturers of bulk drugs and pharmaceutical formulations in human and animal healthcare, as well as a respected export house was founded. The company was committed to excellence in pharmaceutical healthcare through the development of indigenous technologies, with a mission to give access to the best healthcare products at affordable prices to everyone, anywhere in the world. Alembic became one of India’s most experienced manufacturers of bulk drugs and pharmaceutical formulations in human and animal healthcare, as well as a respected export house. Today, six of Alembic’s brands feature among the top 300 brands on the market in India.

News Editor

Charles Horth, PhD

Reading between the lines of current news items against the backdrop of turbulence in financial markets, rising oil prices and foreign currency gyrations, it begins to look as if the honeymoon period of low interest rates and cheap imports from Asian suppliers may be giving way to a painful readjustment of relationships.

India is experiencing the pain from rupee strength against a weakening US dollar, which remarkably is trading below parity with the Canadian dollar. It’s only a matter of time before the pressure on China to revalue the renmimbi becomes too great as currency traders pile in. While the euro has found a new status as a reserve currency, European manufacturers have suffered, France in particular.

With the pound caught in the crossfire between a strong euro and a weak dollar, so far the UK has weathered the storm – but be prepared to batten down the hatches and hope that politicians, who have never had it so good until now, don’t play fast and loose with the economy in their partisan interests.

E-mail: chashorth@googlemail.com

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