Pfizer continues its buying spree

This just in:
Pfizer Inc. (NYSE:PFE) and King Pharmaceuticals, Inc. (ETR:KIG) recently issued a joint statement confirming that a merger agreement had been approved by the boards of both companies, and that through this agreement, Pfizer Inc. would acquire King Pharmaceuticals, Inc. for a sum of $3.6 billion. You can read the full article here.
Apparently Pfizer is very excited about not only King's pain drug portfolio, but its pipeline as well.

Pharma layoffs near 35K in first half of 2010

Fierce Biotech has just posted an article here that contains some fairly scary statistics.
According to the article:

"The pharmaceutical industry has eliminated 34,987 positions so far this year, second only to the goverment in total number of layoffs in 2010."

As I have said before...The Pharma Industry is still a great place to work...but the industry is changing...and the environment is much more competitive.

One long time Pharma Executive said to me recently, "This industry has changed dramatically. It is very different then when I started. But I still love working in Pharma because there are not too many other places I can work where I can make something that actually can save someone's life. That feeling is what got me into the industry. And that feeling is what keeps me here."

I could not agree more....

Find Your Perfect Pharma Partner Online

Interesting article on Pharmaceutical Executive's website.

According to the article:

"At a weighted cost approaching $1.8 billion to bring a new molecular entity to market, few pharmaceutical companies have the pipelines required to replace revenues threatened by loss of patent protection. As a consequence, there are many within the industry that believe something has to significantly change about the way pharma companies innovate and develop drugs."

Increasingly Companies are expanding beyond the traditional means of finding Partners.
More and more, deals are being initiated using online relationships and networks. The article goes on:

"How do people in these organizations find each other in the new vast virtual pharma world? The old wisdom dictated that business development people worth their salt know who to call, they don't need a database. But this is no longer the case; nowadays, they can take advantage of the growing proliferation of partnering conferences, databases and consultants playing matchmaker.

Matchmaker databases include PharmaLicensing, which recruits innovators to list their assets for partnering and recruits buyers of innovation to find these assets. Thomson Reuters has recently taken this concept a step further in its Outpartnering Registry, which lets innovators list for free their drug partnering interest directly in its pipeline database, which many top pharma business development groups use to find drug licensing opportunities.

Big Pharma companies have traditionally relied on such databases to summarize and index the current state of the drug development pipeline, but, increasingly, smaller companies, venture capitalists and CROs are using such databases to find partnering opportunities."

While no deal, especially deals as complex as those in Pharma, will be done totally online, it appears that the concept of 'online networking' is continuing to extend beyond sites like Facebook and into Pharma. It truly is becoming a virtual world.

Judge's recent ruling and its impact on the Generics Industry

Interesting post by Ed Silverman on Pharmalot on the decision by US District Judge Berle Schiller to refuse to dismiss a lawsuit by consumers who allege two generic drugmakers failed to warn about side effects caused by differences in their versions of the Wellbutrin XL antidepressant.

Ed writes:
The lawsuit alleges that Teva Pharmaceuticals and Impax Laboratories became aware of the side effect issue, but failed to warn the public about differences that affected the release rate of the active ingredient. “A generic drug manufacturer is not absolved of liability because the FDA has approved its generic product,” Schiller wrote (read the ruling).

Some background: In 2003, GlaxoSmithKline released Wellbutrin XL, an extended-release form of the pill that could be taken just once daily and used a membrane-release technology, which meant the drug would seep at a controlled rate through a membrane that passed through the entire body intact, The Legal Intelligencer writes.

Since the membrane technology was patented, generic manufacturers who wanted to release a version of Wellbutrin XL were forced to devise their own methods of delayed release. Impax and Teva used a different matrix technology and their drugs achieved peak concentrations in two hours. Wellbutrin XL and generic versions made by other companies achieved this in five hours.

For patients who switched, the faster release made the drug less effective in combating depression, according to the lawsuit, which alleges neither Impax nor Teva took steps to warn doctors or patients that their versions worked differently or disclosed side effect complaints.

Bottom line - This decision obviously will have some impact on the Generic Industry. It has somewhat changed the landscape.

But the good companies in the industry will do what they have always done. They will see that the legal landscape has changed...they will adapt and make the necessary changes to deal with the changes...and they will continue to move forward.

More good news for Biotech in the Health Care Reform Legislation

Most people have been focusing on the 12 year Data Exclusivity afforded by the Health Care Reform Bill. But Forbes magazine has a great article regarding a part of the Health Care Reform bill that is not getting a lot of discussion.
In the article, the authors state:

Buried in the recently passed health reform package is a provision that provides an unusual and tremendous benefit to small and mid-sized (under 250 employees) biotech firms and their investors. This extraordinary gift from Congress (courtesy of a push by Sens. Robert Menendez, D-N.J.; Maria Cantwell, D-Wash.; and John Kerry, D-Mass.) provides a 50% tax credit for qualified biotech investments for tax years 2009 and 2010, or a grant for the same amount tax-free.
Thus a biotech company that has a tax liability can see its tax bill slashed and a business that has no tax liability can receive a nontaxable grant for the same amount. Bottom line: With this new provision a biotech business can look to put big money in its pocket immediately. Your business makes a qualified investment of $1 million and it gets a $500,000 tax credit or a $500,000 check from Uncle Sam. Wow.

This could prove to be a phenomenal boon to the industry.....

More Good News - R&D Investment by U.S. Biopharmaceutical companies is up

Fierce Biotech reports here that:

Despite a fragile economy, America's pharmaceutical research and biotechnology companies invested a record $65.3 billion last year in the research and development of new life-changing medicines and vaccines - an increase of more than $1.5 billion from 2008, according to analyses by the Pharmaceutical Research and Manufacturers of America (PhRMA) and Burrill & Company.

The article goes on to say:

While companies have been forced to make difficult business decisions, research spending as a percentage of sales remained high in 2009. Over the past nine years, America's pharmaceutical research companies have consistently invested around 18 percent of domestic sales on R&D activities.

Again, while the industry is still experiencing dynamic change, at least there are still some positive trends that we anticipate will help to set the stage for future growth within the Pharma industry.

Good News / Bad News for Pharma

Interesting blog post here entitled "Pharma Layoff Stats Show the Glory Days of Drugs Won't Be Coming Back". The post details the number of layoffs the industry has been experiencing.

While the news has been bleak for the industry, the worst may be behind us.

John A. Challenger, CEO of Challenger, Gray & Christmas, a major Outplacement Consulting Firm says:

"… there is an overall sense that we have turned a corner. With downsizing showing dramatic signs of stabilization, chances are good that increased job creation is approaching."

Mr. Challenger is also quoted as saying:

“We are seeing more job cuts related to business strategy, as opposed to cuts stemming from recessionary pressure. In other words, we expect cuts from mergers and acquisitions or from companies shifting focus from one business area to another.”

My opinion is this....the Pharmaceutical industry is in the midst of a significant contraction.
And the future of the industry may appear bleak.
HOWEVER....there is some truth to the saying that it is always darkest before the dawn.
What the industry is experiencing now is a major shift in its business model.
The old "Blockbuster" model under which the major Big Pharma firms achieved their dominance is no longer valid.
So the industry is changing. And change...even if it is for the good...is not always easy.

Bottom line....I tend to be a contrarian. Any time I hear the 'experts' all lining up in agreement with regards to any topic....I believe that in most instances...over time....the exact opposite will occur.
For example...when I became a Recruiter almost 20 years ago....I remember reading articles about how the Pharmaceutical Industry was bullet-proof. There appeared to be no end in sight for the dominant Big Pharma companies. The stock pickers on Wall Street claimed Big Pharma was recession-proof. They claimed the good times would never end for Big Pharma. The joke was as long as there was Disease...Big Pharma companies would always be extremely profitable.
And at that time...it appeared these companies would rule the Pharma landscape forever.

But things change. Industries change. Companies change. The world changes.

Now we hear the Pundits claiming that not only is Big Pharma in trouble...but the entire industry is in jeopardy. These same 'experts' are now touting the demise of the industry.

I could not disagree more.

I never believed the claims that the industry was bullet-proof. And I certainly don't agree with the predictions of the industry's demise. Like most things the truth lies somewhere in the middle. There will continue to be change. There will continue to be some 'pain'. But the industry will re-emerge...looking differently....but still in a position to thrive in the future.
And for people who love Science....love solving challenging problems...and relish the prospect of being in a position to help improve the lives and health of other human beings....the Pharmaceutical industry will still be a wonderful industry to work in.

Former Schering CEO sees more Pharmaceutical consolidation

Fred Hassan sees more consolidation in the Pharma sector.
You can see the interview here.
He claims that further consolidation is imminent because of two major factors:

1] New "Innovation Investments" require larger pools of resources. Hassan feels larger companies are better able to find drugs for complex diseases like Alzheimer's etc.

2] Smaller companies are running into cash-flow problems....and other than being acquired...these smaller companies have limited options with regards to sources of additional capital.

It is a short interview...but Hassan offers an interesting perspective in the clip.

Pfizer to chop billions from R&D

Fiercebiotech reports here that Pfizer is planning to cut R&D spending by $3 Billion by 2012.

I have felt for years that the Big Pharma business model was no longer valid in the current environment. Bigger is no longer better.

What does that mean for an R&D Chemist/Scientist in Pharma?

It means that while no company is 100% guaranteed secure and stable....going forward....you will have more relative security and stability in the smaller and mid-sized Pharma/Biotech firms than you will have in Big Pharma.

Pfizer and Merck signal impeding deep cuts in R&D

Pfizer and Merck are starting to release the numbers for their initial cuts in R&D.
However, this article on FiercePharma states:

"These layoffs are just the beginning, of course. Both pharma companies are planning deep cuts to eradicate any overlaps with the companies that they are swallowing. And in another ominous note for Big Pharma's embattled R&D organizations, Merck CEO Dick Clark (photo) told an audience attending a Goldman Sachs event that the company has to look at "the number of research sites you need" post-merger."

The article goes on to state:

"None of this can come as any kind of a surprise at the companies, which have made it clear that the old days of monolithic R&D groups left in complete charge of new drug development are over. They also have to deliver big cuts to investors hungry to see some real synergies following the M&A splurge. The cuts, though, create new opportunities for biotech companies with bright pipeline prospects."

The question is who will oversee drug development then if not R&D?

Pfizer Continues Push Into Generics

According to an article on FiercePharma, Pfizer has entered into deal with the Indian Generics firm, Strides.

According to the article:

"The drugmaker has agreed to source 40 generic treatments--including a bundle of cancer meds--from the Indian firm Strides Arcolab, for sale in the United States. The drugs will be marketed by Pfizer's relatively new Established Products unit, which sells some 600 off-patent products."

The article also noted that:

"...it's not Pfizer's first generics partnership, nor is it the drugmaker's first venture with an Indian generics maker. Last year negotiated for the rights to more than 30 oral generics made by Aurobindo Pharma, for sale in the U.S. and Europe. The deal also included 12 injectable antibiotics."

Pfizer's Established Products unit has only been around for a short period of time.
According to Pfizer's web site:

"Pfizer's Established Products Business Unit (EPBU) was created in 2008 to provide underserved patients with affordable medicines characterized by Pfizer's reputation for quality, safety, and innovation.

Led by David Simmons, President and General Manager, EPBU is a small, flexible unit that leverages Pfizer's strengths to manage the established product portfolio.

Established products are medicines that have lost patent exclusivity or are close to losing their exclusivity. Pfizer has over 380 established products, including many familiar brands such as Norvasc, Zoloft, and Zithromax.

Pfizer's global sales of established products are more than $10 billion annually."

These are interesting developments for Pfizer as a company....and the Pharma Industry as a whole....