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DON’T TAKE YOUR CHECKBOOK TO TOWN
EXECUTIVES OF TWO EUROPEAN Big Pharmas were separately beating their chests last week, and proclaiming they’re ready to make more acquisitions. Bayer boss Werner Wenning tells the German financial daily Handelsblatt he’s paid down US$7 billion in debt this year, and can quickly raise the cash to buy another healthcare outfit. He says his next takeover may not be as large as the recent purchase of Schering AG, which he terms a “big bang.” Elsewhere, Sanofi-Aventis R&D kingpin Marc Cluzel says he wants to double or triple the percentage of biotech products in his portfolio, telling reporters: “If there is a good deal to be done, we will do it. We are very pragmatic.” San last week upped its stake in stateside biotechie Regeneron, to 19 per cent from four per cent.
SHUTTING DOWN THE LINES
WEEKS AFTER ASTRAZENECA dropped hints it may be thinking about getting out of the manufacturing game, Pfizer’s global R&D boss says his outfit might double the percentage of products it out-sources, to 30 per cent. Martin MacKay tells a business group in Hong Kong he’s eyeing Asian CMOs, with an intention of reducing costs. The company shut down three production facilities this year, in the US and Germany.
ALTERNATIVE BUSINESS MODELS
WE THOUGHT IT WAS HYSTERICALLY FUNNY a couple of weeks ago, when John Edwards, the US presidential candidate, proposed doing away with patents on new pharmaceuticals and instead awarding Big Cash Prizes to the lucky new therapies that win a government lottery. However, like many of the craziest ideas (“C’mon, everybody: Let’s invade Iraq!”), this one seems to be gaining traction. Among those backing the “prizes not patents” scheme are economist Joseph Stiglitz, a Nobel laureate, and Vermont senator Bernie Sanders, who has proposed legislation known as the Medical Innovation Prize Act of 2007. The economist who hatched this inventive idea, one James Love, tells Fortune magazine: “To me, it’s a market-oriented alternative to an unproductive, ethically challenged system.” Critics of the proposal—and, oh yes, there are several—point out that the concept is similar to the incentive system used in the former Soviet Union, which produced, um, few pharmaceutical breakthroughs. Def-enders of the plan say that was because the old Politburo gang were cheapskates, whereas the prize committee envisioned by Prof. Love, which would include equal numbers of consumer advocates, business leaders and science researchers, would hold the purse-strings to billions and billions of dollars. Whew. It’s hard to envision even our own Jack Layton, all tanked up on eggnog and shortbread cookies, coming up with anything quite so hallucinatory. Will drugmakers be able to trade their prize for what’s behind the curtain? Or will they simply exercise the other option, and quietly reincorporate in the Bahamas or Dubai?
‘WRITE IF YOU GET WORK’ DEPARTMENT
DID SOMEONE MENTION DUBAI? Last week, J-P Garnier, who is vacating his corner office at GlaxoSmithKline next May, said he’ll step right into a new gig, as an advisor to Dubai International Cap-ital, the investment arm of the emirate. Garn will help the locals out with their thorny problem: they have $13 billion to invest internationally and aren’t sure what to do with the cash. The outgoing GSK potentate faced anger from shareholders over his outsized salary demands, but the Dubai likely has the fiscal wherewithal to prevent Garn from having to eat Kraft Dinner in retirement.
REMEMBER CANADA’S DRUG COMPANIES?
A SHAKEUP IN CANADA’S LIFE SCIENCES industry is occurring, with surprising developments last week at two of the biggest domestic names in pharma. Axcan Pharma, the GI Tx specialty house based in Mont-Saint-Hilaire, Que., said it will be acquired by TPG Capital for US$1.3 billion. TPG, based in San Francisco, has investments in Biomet, Oxford Health Plans and Quintiles, among other healthcare outfits. Axcan’s price-tag represents a 28 per cent premium on its publicly traded shares. Ax-can is facing pressure from generic drugmakers, a factor observers say was key in management’s decis-ion to cash out. Analyst Laurence Terrisse-Rulleau tells Canadian Press: “They have grown the business as much as they can and to get to the next level of growth you have to do an acquisition. Elsewhere, Vancouver’s struggling QLT last week said it has begun exploring alternative ways to maximize share-holder value, including the sale of all or part of its assets. The new millennium hasn’t worked out so terrifically well for QLT, which has lost 86.57 per cent of its stock value since 2001. The maker of eye Rxs promoted its photodynamic therapy as the future of dermatologic and ophthalmic Rxs, but has under-performed expectations. Who’s next? Small- to medium-cap drugmakers and developers suddenly find themselves desirable takeover targets, as Big Pharma and the odd stray venture capitalist are seeking niche markets, either for pipeline prospects, or for “tuck-under” value to grow top-line revenues. QLT’s crosstown colleagues at Vancouver-based Angiotech Pharmaceuticals may be in a similar position of under-delivering investors’ expectations. However, Brian Bapty tells the National Post he thinks Angi has done a better job building its pipe-line than QLT. Says he: “It would be a shame to see that company taken out right as they launch some of these assets.” And then there’s Biovail. With its share price down nearly 30 per cent since this January, locked into paying an unsustainable 10 per cent annual dividend to shareholders, and with founder Eugene Melnyk enjoying quiet afternoons playing quoits or whist on his estate while CEO Doug Squires is left to… explain things, Biovail might just seem appealing to the same sort of shopper who snapped up Axcan. That could be Forest Labs, Shire, or an Indian drugmaker seeking North American exposure, or, hypothetically, another venture-capital moneybags. Let’s see, does Eugene have J-P Garnier’s number?
ERECTILE POLITICS
AMONG SEVERAL HARD-TO-OVERLOOK developments last week in the world of erectile dysfunction Txs, Ottawa cautioned patients against using Axcil and Desirin, two supplements marketed as all-natural alternatives to sildenafil (Viagra, Pfizer.) Health Canada says both products turn out to be not all that alternative, since they both contain undisclosed quantities of good old sildenafil. Over to Thailand, where Mr. Sayan Nopcha, a politician, accuses a rival of bribing electors, not with old-fashioned cash, or promises of jobs, but with good old sildenafil. Mr. Sayan charges his opponent with “giving out Viagra to gain popularity and votes. I think this is a very bad way of vote-buying.” In the UK, where the politics are only somewhat more sophisticated, Dr. Hamish Meldrum of the British Medical Association last week urged policy-makers at the National Health Service to make more funding available for ED Txs. Dr. Meldrum, noting that only one in 10 patients who need the medicine receive it, urged the government to broaden the prescribing criteria to make more men eligible for formulary drugs. Says he: “I think where they are drawing the line is not a very good place.” ED patients who insist on natural therapies will toast new research out of UCLA just published in the Journal of Impotence Research. The study suggests pomegranate juice shows efficacy in treating mild-to-moderate ED, likely due to antioxidants present in the beverage. Researchers fail to note that the therapy’s taste can be markedly improved when diluted with another natural product, namely a spot of vodka, as an aid to compliance. Says Dr. Christopher Forest: “Pomegranate juice has great potential.” Pour us another.
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