More Hostile Takeovers in Pharma?

Anne Law asked an interesting question in her blog, "Will hostile takeovers become the norm for drugmakers? You can read her blog here.
The truth is.....It looks like there will be a continued shake-out in the industry. The Pharmaceutical industry is in the midst of a very dynamic period as the established players in Big Pharma look for ways to generate revenues now that the traditional "Blockbuster" model no longer works. The industry is starting to feel the competitive pressures that other industries have been dealing with for decades.
But the fact remains the Pharma industry is still remains one of the strongest industries out there.
And when I complain about the state of the Pharma industry to friends of mine who recruit for other industries, they laugh and tell me they would gladly swap their Recruiting Firm for mine. They say that while the Pharma industry is hitting some bumps in the road, the problems Pharma is facing pale in comparison to the problems plaguing other industries.
More on this topic later.....

Preparing for Layoffs

Joann Lublin over at the Wall Street Journal had a great article earlier this week about how to handle rumors of an impending lay-off. The short version of the article is this: Be Prepared.
Great article...and timely advice.

Roch's move was really a surprise

A couple of days ago, I posted about how the people at Genentech were blindsided by Roche's announcement of their intent to acquire the remainder of the outstanding shares of Genentech that Roche did not own.
And I guess it really was a surprise.
Further underscoring how unexpected the move by Roche was....Reuters reported that Arthur Levison, Genentech's CEO, sold 90,000 shares last Friday. If he had held on to those shares even one more day, he would have made substantially more profit...upwards of $1 Million Dollars.

Big Pharma Earnings - BMS to cut $1 Billion more

Tracy Staton at Fierce Biotech writes about the earnings reports that Big Pharma has announced over the last few days. The article is here.
While the news for the companies listed was generally upbeat....buried in the announcements are interesting tidbits such as the fact that Bristol-Myers Squibb is planning to cut another $1 Billion dollars...although the company did not provide any specifics.

These announcements further underscore the trend we have been seeing over the last few years.
Long Term Growth at the Big Pharma firms is a thing of the past. Big Pharma is at a loss to find products that can generate the revenue they need to support and grow their organizations. Big Pharma will not disappear. But going forward...if you are looking for stability and career growth...you are better off at a small or mid-size firms.

I expand on this discussion in a later post.

Roche Bids For Genentech

Roche announced a bid to take over the remaining shares of Genentech that it does not already own. Roche's Chairman of the Board, Franz Humer explains the rationale for the move:

"Our long and successful participation in Genentech has provided great benefits to both of our companies and shareholders. It has resulted in one of the biggest success stories in the healthcare industry. Roche's significant investment in Genentech over many years has helped it to focus on innovation and long-term projects, leading to some of the most important breakthroughs in the treatment of cancer and other life-threatening diseases.

The transaction will create a unique opportunity to evolve Roche's hub-and-spoke model into a structure that allows us to strengthen the focus on innovation and accelerate the search for new solutions for unmet medical needs. Combining the strengths of Roche and Genentech will create significant value and result in benefits for patients, employees and shareholders."

Unfortunately, according to reports, the move by Roche totally blindsided the people at Genentech. I guess the "unique opportunity" and "significant value"that Humer describes above wasn't so obvious to the people at Genentech.

Teva still better than Sandoz?

Back on June 5th, I posted about Daniel Vasella, CEO of Novartis, being quoted as saying,

“Teva is better than we are, and that’s hard to take."

I would love to hear his take on the recent announcement of Teva's acquisition of Barr.
What is he saying now?

Teva to acquire Barr

The world's biggest Generic Pharmaceutical company just got bigger.
You can read about it here.
And the industry consolidation continues. The question remains...Is a bigger company always better? Only time will tell.

Pfizer layoffs

Derek Lowe writes in his blog, In The Pipeline, that there are rumors that Pfizer in Groton is slated for layoffs. You can read his post here.
One significant difference about this projected layoff is that:

"...this is going to hit both PhD and associate chemists, as opposed to some earlier reorganizations there which mostly seemed to let lab heads go."

Derek goes on to write about Pfizer:

"It’s going to be a tough place to work, and it’s going to be a tough stock to own. If you have a chance to do anything about either of those situations, I’d look into it."

Big Pharma is sure turning out to be a tough place to be. Fortunately there are a number of smaller and mid-size companies that are growing and that are actually turning out to be great places to work. I will discuss why this trend is occurring in the Pharma industry in a future post.

Alzheimer's Drug problems

According to Ed Silverman in his Pharmalot blog, Myriad Genetics is discontinuing development of Flurizan, their Alzheimer's drug. But there is a bigger issue at stake here than just the failure of one drug. As Ed writes in his blog:

The failure is significant because Flurizan was one of the first drugs to reach late-stage testing that tried to prevent the buildup of amyloid plaque in the brain, a focus of much research into Alzheimer’s. Whether this will raise questions about other drugs targeting amyloid plaque remains to be seen.

Wyeth and Elan are jointly developing a drug that tries to block amyloid plaque and, so far, have generated considerable interest, even though preliminary Phase II results were mixed. Lilly is also in late-stage testing of a drug that works simlarly to Flurizan

Bottom line....are all these companies chasing after the wrong cure for Alzheimer's?

Pharma and the UK

According to an article in Thursday's Financial Times
Leading pharmaceutical groups are cutting back on clinical research in the UK, claiming insufficient commitment by the government and the National Health Service to support new drug development.

Pfizer of the US, Roche of Switzerland and Merck-Serono of Germany are among the companies which have told the Financial Times they have, or will, reduce the number of British patients enrolled in trials to test experimental medicines for life-threatening diseases such as cancer.

The article goes on the quote Harpal Kumar, who is the head of Cancer Research UK, who said:

“In the long-term there is a serious risk that if we get to the point where none of the new drugs are being used in the UK, the trials won’t be done here.”

There are many issues that can be addressed concerning the ongoing debate between the Government in the UK and the Pharma industry over the issues of costs. But the overriding issue here is that people in the UK will ultimately be denied access to new innovative drug treatments. Innovative treatments that save lives will be available in the future, but for people in the UK, they will not have the option of using them. That is a crime.

Novartis CEO - "Teva is better than we are."

File this quote under the category of 'Things you don't hear every day".
In a recent interview, Novartis CEO Dan Vasella said:

“Teva is better than we are, and that’s hard to take."

But Vasella did add:

“It is good to look at how we could be better.”

How often do you hear a CEO so openly praising the competition?
How often do you hear a CEO so openly criticizing his own organization?

War for Talent impacts the FDA

According to this article in the Hartford Courant, even the FDA is not immune to the effects of the War for Talent. Private sector Pharmaceutical companies have been poaching talent from the FDA, and it looks like there is no end in sight for the 'Brain Drain' at the Agency.

Biotech Mega Deals

Earlier in the week, Rueters reported that Ernst & Young had just released their annual Global Biotech Survey. According to the Consulting Firm:

"One or more mega acquisitions of mature biotechnology companies along the lines witnessed with MedImmune -- and nearly seen with Biogen Idec in 2007 -- is likely."

But do big deals make sense? Some experts believe smaller, more targeted, deals provide better results. And there is probably a lot more validity to the latter approach of smaller deals.
As one of my friends is fond of saying, "If you take one large empty drug pipeline and combine it with another large empty drug pipeline, you get one VERY LARGE....EMPTY PIPELINE."

Bigger isn't always better.

Happy Anniversary!!!

On a personal note...today The Harrison Group celebrates 12 years in business.
I started the firm on 5/23/96. Starting and operating The Harrison Group has been by far...with the exception of the birth of my kids....the most significant event of my life. I wouldn't trade my experience of running this company for anything. It really has been that great!!!

Good news for Pharma workers

Ed Silverman over a Pharmalot reports here that while there have been a number of layoffs in the Pharma industry, most workers are finding jobs at comparable or higher levels. In fact, Ed writes:

Of those laid off, 73 percent found new jobs at the same or higher level, and 84 percent did so without relocating.

The bottom line is this: People in the Pharmaceutical industry need to realize that while there has been a tremendous amount of change in the industry...while the newspaper seem to be full of negative press about the future of the industry...there still exists a tremendous amount of opportunity in Pharma. The Pharmaceutical Industry is still...by far...the most exciting and rewarding industry out there. People are being laid off...some companies are downsizing...but there is still a lot of hiring going on.

And I see it every day.

Hassan says Schering Plough recovery still on track

Fred Hassan told shareholders at a meeting in Memphis on Friday that he still feels that his turn-around plans for Schering-Plough are still on track. You can see the article here.
But he backs his claim up with some solid facts. Sales at Schering are up by $6.6 Billion in the last four years. And Schering-Plough now has 13 experimental drugs in the final rounds of human testing. That figure is up from 5 in 2003. The recent developments with Vytorin has obviously set Schering back somewhat...but maybe Hassan can still pull off another turn-around...Stay tuned.

Chinese Generics

According to a recent article on Reuters, there soon will be a wave of generics coming out of China.
The end result of this development will be a significant decrease in prices for generics.
The problem is this...if cost becomes the overriding concern for these companies, then quality will eventually suffer. Quality issues when they involve things like toys and consumer products are admittedly an annoyance...but rarely do those issues cause any serious damage. Unfortunately quality issues in products that we ingest can have extremely far-reaching implications.
Stay tuned for more...

Pharma rising

Fierce Biotech reports that profits rose at Novartis, Merck and Lilly. No...this does not signal the end of trouble for the Pharma industry. But - as they wrote in the article - profits are still better than the alternative. You can read the article here.

Pfizer's woes

Crain's New York reports Pfizer 1st quarter profits are down 18%. Ed Silverman on his blog wonders if Pfizer will now slash it dividend. See Ed's take on Pfizer here.

Pharma R&D cuts not as bad as reported

There has been a lot of discussion recently about the job cuts that we are seeing in the Pharma industry. But while the situation is admittedly tough for the people who are being laid-off, the truth is the industry as a whole is still in pretty good shape. As reported in FierceBiotech on 4/9, while there have been cuts,:

The money spent on R&D in the U.S. continues to rise, but after an 11.3 percent hike in 2006 budgets rose only 2.7 percent to a still considerable $35.4 billion.

Again, the industry still experiencing difficulties, but it is by no means decimated. While growth in R&D spending has slowed...the reality is...there still is growth!! While it is easy to get caught up in all the negative press we see about the industry, some times we do need to stop and take a look at the bright side.