Market Place
This week, Phispers brings you lots of news from the world of M&As. While Advent has reportedly shown interest in acquiring Sanofi’s European generic unit for around US$ 2.5 billion, Mylan is likely to pick up Merck’s consumer health unit. Shire, on the other hand, has sold off its cancer unit to Servier, ahead of Japanese drugmaker Takeda’s mega bid. Meanwhile, an appellate court in the US has struck down Maryland’s law that prohibits ‘price gouging’ by generic drugmakers. Novartis’ new CEO Vas Narasimhan shared his views on how to help bisiomilars gain traction in the US market. And drug shortages emerged in the UK.
Advent may acquire Sanofi’s European generic unit; Mylan to pick up Merck’s OTC business
Advent International Corp is likely to acquire Sanofi’s European generics division — Zentiva — in a deal that could be worth around US$ 2.5 billion (Euro 2 billion), including debt.
Based in Prague, Zentiva focuses on developing, manufacturing and marketing generic pharmaceutical products. Sanofi acquired the business in 2009, three years after becoming its largest shareholder.
According to news reports, Sanofi’s board could meet sometime early next week to vote on the deal.
Earlier, private equity firm Nordic Capital and Indian drugmaker Torrent Pharma had opted out of negotiations to acquire Sanofi’s European unit over price concerns. According to Bloomberg, PE firm Carlyle Group and Brazil’s EMS have remained in deal talks through final bidding.
If Advent acquires the French drugmaker’s European unit, the deal would signal the culmination of a process that was initiated more than two years ago as chief executive officer Olivier Brandicourt started shifting Sanofi’s focus to biotechnology and new medicines.
This year, Sanofi has announced over US$ 15 billion in transactions, including the acquisition of Bioverativ Inc and Ablynx NV.
Meanwhile, Merck KGaA is in advanced discussions with Mylan over selling its consumer health unit. According to Reuters, the two companies are negotiating a price between US$ 4.3 billion and US$ 4.9 billion. Although there’s no certainty they will close the deal.
Mylan called the Reuters report “untrue”. Strategically though, the deal makes sense. Mylan had acquired Meda in 2016 for US$ 9.97 billion in an effort to diversify by adding a broader geographic presence and more exposure to over-the-counter products. Buying Merck KGaA's consumer business would further that effort when the firm's core generic business is under pressure.
This isn’t the first time Mylan and Merck KGaA have been in transaction talks. Back in 2007, Mylan had bought Merck’s generics unit in a US$ 6.7 billion deal.
With Takeda
takeover bid looming, Shire sells its cancer drug unit to Servier
Even as it braces for a takeover bid by Takeda, London-listed rare diseases specialist firm Shire is selling its oncology business to an unlisted French drugmaker —Servier — for US$ 2.4 billion.
The Shire unit sells treatments for leukemia and pancreatic cancer.
The deal suggests there is value locked up inside Shire’s portfolio. The company said it plans to return proceeds from the sale to shareholders through a buyback.
The divestment of the cancer business may be a deterrent for Takeda, as it gets ready for a reported US$ 50 billion bid for Shire.
Takeda had highlighted oncology as one of the areas that was driving the case for a Shire deal, along with gastrointestinal medicine and neuroscience. However, oncology isn’t one of Shire’s major units — only 1.8 percent of the company’s total sales revenue came from this unit in 2017. Therefore, analysts say the sale of the oncology unit is unlikely to be a deal breaker.
In fact, the sale could make Shire slightly more affordable for Takeda, which spent US$ 4.7 billion to acquire cancer drugmaker Ariad Pharmaceuticals last year.
Takeda has not commented on the sale of Shire’s oncology unit. The Japanese drugmaker’s interest in Shire was made public last month-end.
Under UK takeover regulations, Takeda has until April 25 to announce whether or not it will bid for Shire, which has a market value of around US$ 47 billion.
US appeals court finds Maryland’s drug pricing law unconstitutional
In April last year, the Maryland General Assembly had passed a bill that prohibits ‘price gouging’ by generic drugmakers. The law came into effect in October 2017.
However, last week, the Fourth Circuit (a federal court located in Richmond, Virginia, with appellate jurisdiction over the district courts), struck down the Maryland law, as it held that the regulation violates the Commerce Clause.
The Washington DC-based Association for Accessible Medicine (AAM), an industry group of generic drugmakers, had challenged the law. The group failed its first attempt to get an injunction, but succeeded with the appeals court ruling last week.
In a 2-1 opinion, the Fourth Circuit ruled that Maryland's HB 631 is unconstitutional because it regulates transactions that occur outside of Maryland's borders. Rather than target gouging in transactions between retailers and consumers, the law zeroes in on manufacturer-to-wholesaler transactions, which mostly happen outside of Maryland.
Judge Stephanie Thacker wrote the judges “in no way mean to suggest that Maryland and other states cannot enact legislation meant to secure lower prescription drug prices for their citizens.”
“Maryland must address this concern via a statute that complies with the dormant commerce clause of the US Constitution,” she added.
AAM CEO Chip Davis said in a statement the “law, and any others modeled from it, would harm patients because the law would reduce generic drug competition and choice, thus resulting in an overall increase in drug costs due to increased reliance upon more-costly branded medications.”
Since Maryland passed its drug pricing legislation, many other American states — such as Nevada, California and Oregon — have passed measures of their own.
Novartis’ CEO pens his views on how biosimilars’ path to market can be simplified
Biosimilars have failed to take off in the US, and the new Novartis CEO Vas Narasimhan is concerned. In a guest post published in Forbes, Narasimhan called for cooperation from all players in the supply chain to help biosimilars gain traction.
Narasimhan said a tangle of intellectual property rules and rebating strategies have limited uptake for the copycat biologics. Moreover, legal impediments have stymied the launch of several biosimilars. While nine biosimilars have gained US Food and Drug Administration (FDA) approval, only three have hit the market.
Despite the snarls, Narasimhan is of the view that biosimilars represent an “undeniable opportunity” to increase patients’ access to biologic treatments and deliver value to the healthcare system.
To boost the market for biosimilars in the US, Narasimhan has called for simpler regulations and guidance to make the path to market clearer. He also called for an end to the “rebate wall” to “create better contracting models” to help patients access cost-saving biosimilar treatments.
According to him, the “rebate wall” favors big branded biologics at the expense of biosimilars and their potential savings.
Narasimhan’s comments have come soon after AbbVie’s settlement with Samsung Bioepis that ensures the latter’s Humira biosimilar — to be marketed by Merck in the US — won’t be launched before 2023. Humira is the world’s bestselling drug that generated US$ 18.4 billion in 2017 sales,
There is an undeniable opportunity for biosimilars in the US market. Biologics constituted 38 percent of the US prescription drug spending in 2015, and made up for 70 percent of spending growth between 2010 and 2015.
The US FDA Commissioner Scott Gottlieb had pointed out that generics saved the US healthcare system an estimated US$ 1.46 trillion between 2005-2015. Biosimilars could help increase those numbers, with potential savings estimated to be US$ 54 billion between 2017 and 2026, and up to US$ 150 billion if all the right conditions are in place.
UK may be
facing Brexit blues, as Mylan’s Epipen, Merck’s vaccine face shortages
The European Medicines Agency (EMA) has expressed concerns in the past over a negative impact on drug supply due to Britain’s imminent exit from the EU. It seems the EMA’s fears may be coming true.
First, Mylan NV said last week its emergency allergy antidote Epipen is in short supply in Canada and Britain, but remains available in the United States. And then there was news that Merck’s human papillomavirus shot Gardasil 9 is also facing shortage in the UK for private clinics.
A spokesperson for Merck, known as MSD in the UK, confirmed the drugmaker has “limited supply” for private clinics in the market. She noted there’s “good supply” of the HPV vaccine for the national immunization program for girls.
The shortage is caused by an increase in demand “in the UK and elsewhere, which has led to depletion in the market sooner than anticipated,” Merck's representative said. The company expects the shortage to continue through July.
Gardasil 9 and its predecessor Gardasil are Merck’s top-selling vaccines, with their revenues expanding 6 percent in 2017 to US$ 2.3 billion.
Similarly, GlaxoSmithKline has faced much flak for shortage of adult hepatitis B vaccine —RecombivaxHB — in the UK.
Last week, the UK website for Epipen notified consumers of “intermittent supply constraints” for the adult injector. It said the next shipment to Epipen’s distributor in the country was expected toward the end of April.
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