America’s generic price fixing probe widens to 300 drugs; Rift between Ranbaxy’s Singh brothers gets physical

America’s generic price fixing probe widens to 300 drugs; Rift between Ranbaxy’s Singh brothers gets physical

By PharmaCompass

2018-12-13Impressions: 2155

America’s generic price fixing probe widens to 300 drugs; Rift between Ranbaxy’s Singh brothers gets physical

This week, Phispers brings you news from the US, India, China and France.

In the US, the government’s probe into the alleged generic drug price fixing has now been expanded to include 300 drugs and 16 companies.

In India, the slugfest between the Singh brothers, former promoters of Ranbaxy, got murkier as Malvinder accused Shivinder of assaulting him.

In China, several homegrown companies have announced major investments to combat competition from MNC players, after the country eased rules to allow data from trials that were not done in China.

Moreover, drug pricing concerns due to a new government procurement program have set the Chinese drug stocks plummeting, thereby erasing US$ 26 billion in market value over only two days.

In France, drugmakers Sanofi and Boehringer announced job cuts.

And after announcing its revamp plan and job cuts last week, Bayer said its crucial late-stage uterine fibroid drug has run into serious trouble.



America’s generic price fixing probe expands; to include 300 drugs and 16 firms

Over the last two years, PharmaCompass has updated you on the generic drug price fixing incidents in the US. In 2016, federal prosecutors had unsealed criminal information against Jeffrey Glazer, the former CEO and founder of Heritage Pharmaceuticals. And in November last year, there was news that Mylan’s president, Emcure’s CEO and 12 firms were to be probed in the price-fixing case.

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According to a Washington Post report, the US government’s investigation over the alleged generic drug price fixing has now been expanded to include 300 drugs and 16 companies.

Investigators say voluminous documentation collected by them (much of which is unavailable to the public), shows the industry to be riddled with price-fixing schemes. The plaintiffs now include 47 states.

What started out as an antitrust lawsuit brought by states over just two drugs in 2016 is today “most likely the largest cartel in the history of the United States,” Connecticut Assistant Attorney General Joseph Nielsen told the Post.

In a note, Bernstein analyst Ronny Gal said there’s “some risk” for industry players as detailed in the Post article. However, most drugmakers have denied wrongdoing.

The investigation includes some of the biggest names in generic drugs, such as Teva, Mylan and Dr. Reddy’s. So far, the probe has received guilty pleas from two former executives of Heritage Pharmaceuticals who are cooperating with investigators.



Rift between Ranbaxy’s Singh brothers gets physical; Daiichi moves contempt plea

The slugfest between the Singh brothers, former promoters of Ranbaxy, got murkier last week. In a video, Malvinder Singh, the former chairman and managing director of Fortis Health, alleged that his younger brother Shivinder Singh had assaulted him.

“Shivinder Mohan Singh assaulted me, he physically hit me. He hurt me. He injured me. He broke the button. He bruised me...kept threatening me and refused to budge until the team here came together and separated him from me,” Malvinder Singh said in a video, showing his bruises. Shivinder denied the allegations made by his brother.

The rift between the brothers became public in September, when Shivinder formally disassociated himself from his brother who he blamed for problems at the group.

But the siblings’ troubles for the week didn’t end with the physical and verbal assault. Daiichi-Sankyo moved a contempt plea against the Singh brothers and Indiabulls in the Supreme Court of India alleging that the two created encumbrances on 1.2 million shares of Fortis Healthcare held by Fortis Healthcare Holding despite the court’s orders against it. The court will hear Daiichi-Sankyo’s plea on December 13.

The feud between the two is unfortunate, as the brothers have ruined the legacy they inherited from their grandfather and father. Not long ago, Ranbaxy was India’s leading pharmaceutical business, that had been taken global by their father, late Parvinder Singh.

The brothers sold their Ranbaxy stake to Japanese drugmaker Daiichi Sankyo for US$ 2.4 billion in 2008. The sale took place months before the US Food and Drug Administration (FDA) banned imports from two of Ranbaxy’s Indian plants. That was the start of troubles for the duo, as Daiichi later took them to court for allegedly suppressing and misrepresenting facts at the time of sale. The Singhs have denied any wrongdoing and are contesting the rulings in both Singapore and India. Daiichi sold Ranbaxy to Sun Pharma for US$ 3.2 billion in 2014.



Drug pricing concerns due to new govt program drive down pharma stocks in China

In China, the government is driving down generic prices through a new procurement program. The move has set the Chinese pharmaceutical stocks plummeting, erasing US$ 26 billion in market value over two days.

Last week, the MSCI China Health Care Index headed for its biggest two-day drop since 2005.

The procurement program is designed to control medical costs by getting 11 major cities, including Beijing and Shanghai, to combine their purchasing from drug companies. The winner of the tender process for each of the 31 drugs will become the sole supplier for hospitals in all of those cities, but at a much reduced price from before.

Domestic and foreign pharmaceuticals have opposed the centralized procurement plan since it was announced last month. Moreover, they are also of the view that relying on one supplier for each drug could potentially cause quality and supply issues in the future.

While the government said this was a pilot program, analysts expect centralized drug procurement to be the new normal for the generics market in China.



Akorn reconciles to court verdict; CEO steps down over failed Fresenius buyout

In October, German drugmaker Fresenius Kabi had won a case in the Delaware Court of Chancery wherein the court upheld Fresenius’ decision to terminate its agreement to merge with Akorn because of data integrity issues at the latter’s facilities.

Last week, Akorn said it will move forward and rebuild shareholder value as an independent company, following the decision from the Supreme Court of the State of Delaware.

Fresenius had agreed to acquire Akorn in April 2017, for approximately US$ 4.3 billion. The transaction was expected to close in early 2018. In March this year, Fresenius’ CEO Stephan Sturm had said the company may back out of its planned acquisition of Akorn if an independent probe into data integrity at Akorn yields evidence of wrongdoing. And in April this year, Fresenius abandoned the deal. Akorn sued to save the deal, but lost out in both the lower court and in Delaware’s top court.

Post the ruling, Akorn CEO Raj Rai said he would step down. With the litigation process concluded, Akorn’s board of directors announced it is engaged in a formal search for a new CEO to lead the company into its next phase. Rai has decided to retire, but will assist the board to ensure smooth transition. He will also remain in his role until the hiring date of the new CEO.

Akorn has said that despite misleading allegations made during the litigation process to damage its reputation among various stakeholders, it has received several new Abbreviated New Drug Application approvals from the FDA.



Chinese companies announce major investments to combat MNC players

In China, home-grown drugmakers are busy stepping up their game as they find multinational drug players producing more drugs in their home turf after the country eased rules to allow data from trials that were not done in China.

In August, China put out a target list of 48 treatments that are approved abroad, including some of the industry’s biggest names, in the hope of getting drugmakers to apply for Chinese approval based on foreign trial data. The list includes drugs like Roche and Chugai’s ALK cancer drug Alecensa , psoriasis therapies Taltz by Eli Lilly, Cosentyx from Novartis and GlaxoSmithKline’s shingles vaccine Shingrix.

Last week, there was news that a Chinese maker of heparin, APIs and some finished drugs — Changzhou Qianhong Bio-pharma — is launching the second phase of its manufacturing plant, investing nearly US$ 150 million as it moves into producing innovative biologic drugs for the Chinese market. The company has begun construction of the US$ 145 million (¥1 billion) project in the Changzhou National Hi-Tech District. It says when complete, the facility will add 200 million tablets and 60 million injections to its production, as well as making molecular diagnosis reagents.

Similarly, STA Pharmaceutical, a subsidiary of Wuxi AppTec, plans to add one API plant every year. It has planned on a major expansion in Changzhou, China. It will also look for opportunities to enter new geographic regions.



After Bayer announced job cuts, its top drug fails and investor pushes for split

There is more news from Bayer after last week’s news about its retrenchment plan. A few days after Bayer announced plans to cut its internal R&D group and retrench 900 R&D staffers, there was news that the company has tipped the market that vilaprisan, its crucial late-stage uterine fibroid drug, has run into serious trouble.

Vilaprisan had been billed as a top blockbuster prospect at Bayer. “For vilaprisan we have just some days ago put clinical development of our ongoing trials on hold,” Bayer’s R&D chief Joerg Moeller said.

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“That is due to very recent safety findings in long-term toxicology studies … We have therefore decided as a precautionary measure to stop enrollment into our ongoing program and evaluate the data,” he said.

This setback for Bayer comes after FDA rejected Allergan’s uterine fibroid drug Esmya in August this year.

Meanwhile, there was also news that investment firm Elliott (run by billionaire Paul Singer) might push Bayer to split up its crop and pharma businesses.

Activist investor Elliott Management is reportedly pushing for a two-way split — to separate crop science from its pharma business. However, it is yet to meet the Bayer management on the matter.



Sanofi and Boehringer announce job cuts in France

Last week, we had carried news on German drug major Bayer, which has drawn out a revamp plan that includes plans to slash 12,000 jobs worldwide and restructuring of its R&D business.

This week, there is more bad news from the pharma industry job market. French drugmaker Sanofi told unions last week it was planning to cut 670 jobs in France.

A Sanofi spokesman confirmed the company’s intention to shed 670 jobs out of a 25,000 workforce in France and said the plan was to be completed by the end of 2020. The plan, which is to be set on a voluntary basis, would affect human resources, IT, and finances among others. In addition, 80 IT jobs are to be outsourced.

Sanofi will also invest US$ 794 million (Euro 700 million) in France to upgrade its production sites, notably in the areas of vaccines manufacturing and other biologic medicines.

There were more job cuts announced in France. Boehringer Ingelheim is cutting around 10 percent of its workforce in France under a reorganization of its activities in the country. The overhaul will see 197 jobs lost in the company’s human health division, with a further 130 eliminated from its animal health segment. However, the company indicated that the reorganization will also result in the creation of 32 new jobs. The plan additionally includes some modification for 180 employment contracts of sales representatives, including 120 employees in the company's French human health division.

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“ The article is based on the information available in public and which the author believes to be true. The author is not disseminating any information, which the author believes or knows, is confidential or in conflict with the privacy of any person. The views expressed or information supplied through this article is mere opinion and observation of the author. The author does not intend to defame, insult or, cause loss or damage to anyone, in any manner, through this article.”

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