Market Place
This week, Phispers brings you the high-pitched drama from President Trump’s American Manufacturing Council, with Merck CEO Ken Frazier leading the pack of CEOs who abandoned it over the Charlottesville unrest, even as J&J’s CEO said he’ll stay on. But then, Trump disbanded the council.
We bring you
news on more generic companies in distress due to a drop in their business in
the US and compliance problems. Meanwhile, companies like Intas and Aurobindo
Pharma from India and Fosun from China are looking for growth via acquisitions.
And Softbank has invested US$ 1.1 billion in Roivant. Read on.
Merck CEO’s Trump council resignation over ‘intolerance’ has others follow; council disbanded
The US President Donald Trump’s American Manufacturing Council has been in the news for the last few days. First, Merck CEO Kenneth Frazier resigned from the council, after urging American leaders to reject expressions of ‘hatred, bigotry and group supremacy’ on Twitter.
In a statement, Trump had blamed “many sides” for the violence in Charlottesville, Virginia, over the last weekend. A white nationalist rally had turned violent in the city when a car rammed into many people who were protesting peacefully against the demonstration. White supremacists and other hate groups had assembled in the city to protest the removal of a statue of Confederate General Robert E. Lee.
Trump has since faced widespread criticism for not specifically denouncing the white supremacists. Following Frazier’s resignation, many CEOs — including Intel Corp’s Brian Krzanich, Under Armour Inc’s Kevin Plank and AFL-CIO chief Richard Trumka — quit Trump’s council over his ‘response to the Charlottesville violence’.
Though Frazier said he was taking a stand “against intolerance and extremism”, Trump mocked at him on Twitter, and said he will now “have more time to LOWER RIPOFF DRUG PRICES!” Later, Trump did condemn the hate groups, but it seemed too little to late.
Only three weeks back, Trump had called Frazier a “business genius” and a “great, great business leader” and had thanked Merck for investing in American jobs. Frazier is one of the few African-Americans to head a Fortune 500 company.
Meanwhile, on Tuesday, Johnson & Johnson’s CEO Alex Gorsky said he isn’t abandoning Trump’s council. In a statement, Gorsky said he’ll stick with the council as a way to express “the values of Our Credo as crucial public policy is discussed and developed.” He said J&J is “an important voice on healthcare.”
However, as the CEO resignations continued to mount, Trump tweeted, “Rather than putting pressure on the business people of the Manufacturing Council & Strategy & Policy Forum, I am ending both. Thank you all!”
Trump made the announcement on Twitter, less than an hour after one of the groups was planning to inform the White House that it would disband, a CNBC report said.
Dr. Reddy’s fails EU GMP inspection; can’t export to EU until it clears next inspection
Less than two months after providing positive inspection updates with regard to the status of its manufacturing compliance, Dr. Reddy’s Laboratories (DRL) failed a European cGMP manufacturing inspection last week. The inspection, by the German regulatory authority, at DRL’s FTO 2 finished formulation plant (situated in Hyderabad) uncovered critical deficiencies.
The inspectors concluded that the ‘essential elements of the Pharmaceutical Quality System’ were not effective. Due to this, the plant will not be able to make any further dispatches to the European Union until the next inspection, “to be initiated by an invitation from betapharm,” DRL said in a filing.
Betapharm Arzneimittel GmbH is DRL’s wholly-owned subsidiary in Germany and the Hyderabad plant produces tablets and capsules.
Previously, PharmaCompass had observed that the inspection focus of regulators has moved beyond audit trails. In the case of DRL, the inspectors found that out of specification (OOS) results were “systematically invalidated in hundreds of cases”.
The integrity of the batch manufacturing/packaging record at the Hyderabad facility was also questioned. The absence of recording “negative events” on the “clean” batch manufacturing records prevented successful investigation into market-complaints.
In addition to the integrity of the cleaning being questioned, the design, condition and maintenance of rooms and equipment were also major concerns at DRL. The inspectors found dirty rooms and equipment, along with unsuitable doors and dispensing equipment for manufacturing.
Generics in distress: Sun reports its first loss in 12 years; Mylan cuts
forecast
Generic drugmakers have seen their US businesses plummet as the US Food and Drug Administration (USFDA) has stepped up product approvals, ushering in more competition and prompting a steady erosion in prices.
As a result, generic drug stocks have been under pressure. Last week, Phispers reported on how Teva Pharmaceutical had reduced its earnings goal. Well, companies like Mylan NV and Sun Pharmaceutical Industries have joined the pack by reporting lackluster quarterly results and cutting guidance.
After a gap of 12 years or more, Sun Pharma reported its first quarterly loss last week, after it settled an antitrust case in the US. Sun Pharma paid US$ 148 million (INR 9.5 billion) to plaintiffs including Canadian rival Apotex in July to settle an antitrust lawsuit in the US over sleep-disorder drug modafinil.
Sun, which is India’s biggest drugmaker, posted a total loss of US$ 66.3 million (INR 4.25 billion) in the three months ended June 30, 2017.
Last week, Mylan also said it is likely to see a decline in its profitability due to delays in the launch of key new drugs and erosion in the prices for generics in the US.
Though the FDA is speeding up generics approvals, it’s just not speeding up the ones that Mylan badly needs.
Mylan said it plans to remove copies of big drugs like Copaxone from Teva and Advair from GlaxoSmithKline—from its 2017 guidance, pushing them into 2018. It now expects revenues to hit between US$ 11.5 billion and US$ 12.5 billion for the year, down from a previous range of US$ 12.25 billion to US$ 13.75 billion.
Chip Davis, CEO of the Association of Accessible Medicines — a trade group for generic and biosimilar drugs — said some of the (demand-supply) imbalances in the generic marketplace haven’t happened overnight. But the “reality is that the sustainable, robust competitive market is at risk now.” He expects generic drugmakers to continue to feel the pressure, amid declining prices and flat revenues.
From June 2016 to June 2017, the number of generic prescriptions is nearly flat, with an increase of only around 1 percent; while revenue is down 12 percent, Davis said.
However, one generic company that bucked the trend was Perrigo. It reported US$ 1.24 billion in sales and adjusted earnings of US$ 1.22 per share, topping the consensus for US$ 1.18 billion and 92 cents, respectively.
However, this performance too did not come on the back of generics — Perrigo’s generic business declined 13 percent year-on-year. The company performed well due to its consumer business.
India’s Intas and Aurobindo, PE player SK Capital and China’s Fosun in acquisition mode
Even during these bad times for generics, some pharma companies are on the prowl. For instance, Ahmedabad-based Intas Pharmaceuticals is on the look out for buying into a larger piece of Israeli-drugmaker Teva’s existing operations in Europe. Last year, it had bought out Teva’s UK and Ireland assets.
Intas — with Temasek and Chrys Capital as its investors — is bidding for Teva’s women's health, oncology and pain management divisions in Europe for US$ 1.5 billion. The company has reportedly reached out to several Indian and global banks, such as ICICI, Axis, Citi, Bank of Tokyo Mitsubishi UFJ, HSBC among others, to finalize the financing before putting in a bid by the month-end. If successful, this will be the largest cross-border M&A involving an Indian pharma company.
PharmaCompass has been routinely covering the troubles at Teva, the world’s largest maker of generic drugs. Teva plans to sell off its assets, in order to reduce its US$ 36 billion debt.
There is another company that Intas has set its eyes on — Mallinckrodt's US generic business. According to a news report, India’s Aurobindo Pharma and Intas are in the race to buy UK-based Mallinckrodt’s generic drugs business in the US valued at US$ 2 billion. Once complete, this will be the biggest-ever overseas acquisition made by an Indian drug company.
The generic business of Mallinckrodt generates sales of around US$ 1 billion. The companies have submitted an initial bid for Mallinckrodt’s generic business, which has been up for sale for the last couple of months.
Meanwhile, US specialty drugmaker — Arbor Pharmaceuticals — too is up for grabs. And amongst the bidders for a stake in Arbor are companies like Fosun International Limited’s healthcare business and Shanghai Pharmaceuticals Holding. The two companies are competing to buy a stake of at least 20 to 30 percent, sources said. The holding in the Atlanta-based Arbor could fetch around US$ 600 to US$ 700 million.
In the US, SK Capital, a private investment firm focused on specialty materials, chemicals and pharmaceuticals, said it has signed a definitive agreement to acquire Perrigo API, the active pharmaceutical ingredients (API) business of Perrigo Company Plc.
The two parties have agreed to enter into a long-term supply agreement for Perrigo API to supply multiple existing commercial and pipeline APIs to Perrigo. The transaction is expected to close during the last quarter of this year.
Softbank invests US$ 1.1 billion in Vivek Ramaswamy’s abandoned drug venture —Roivant
Last week, Roivant Sciences announced that Japanese conglomerate — SoftBank Group — is leading a US$ 1.1 billion investment to fund its expansion. SoftBank is the largest private financier in healthcare.
Roivant was founded by Vivek Ramaswamy, a 32-year old American entrepreneur who began his career as an investor in the biotechnology sector. Roivant is a holding company with companies like Axovant Sciences and Myovant Sciences under its umbrella, along with private-subsidiaries like Dermavant, Urovant and Enzyyant.
According to Endpoints News, SoftBank’s US$ 1.1 billion mega-investment in Roivant won’t likely be its last in biotech. Quoting reports, it says SoftBank group’s global US$ 100 billion equity fund has begun a recruitment campaign for scientists with an eye to backing more companies that use new data technology to identify drugs with solid development potential.
Ramaswamy’s business model has relied on therapies that have been taken off the shelves of some big players. Back in December 2014, Ramaswamy had bought an old Alzheimer’s drug that GSK had dropped for US$ 5 million. Six months after purchasing the compound from GSK, and without doing any clinical development, the drug resulted in the biggest biotech IPO ever for Axovant, which got valued at US$ 2 billion. Since then, Ramaswamy has been setting up more companies.
Biocon,
Mylan suffer another setback as European biosimilar applications are withdrawn
Last month, PharmaCompass broke the story about Biocon’s biosimilar program suffering a serious setback as a current Good Manufacturing Practices (cGMP) inspection by the French health agency — ANSM — in March 2017 of its drug product site located in Bengaluru, India, uncovered 35 deficiencies, of which 11 were deemed major.
The inspection was conducted on behalf of the European Medicines Agency (EMA) by the ANSM as a pre-approval inspection for the drug product manufacturing activities of the following (three) biosimilar products — Fulphila® (pegfilgrastim), Ogivri® (trastuzumab) and Semglee® (insulin glargine).
This week, in a stock exchange filing, Biocon said it has withdrawn the dossier for two of these products. Since the approval of its trastuzumab and pegfilgrastim applications would require a re-inspection of its drug product facility (for these products), the “request of withdrawal of the dossiers and re-submission is part of the EMA procedural requirements linked to this reinspection…,” Biocon said in the statement.
The announcement comes two weeks before the FDA is supposed to take a decision on the trastuzumab application.
Although Roche’s European patents on Herceptin (trastuzumab) expired in 2014, it is still the third-biggest drug, with 2016 sales of US$ 6.7 billion (CHF 6.8 billion) for the Swiss Group.
Until the news of the ANSM inspection surfaced, Mylan and Biocon were expected to be the first to bring a Herceptin biosimilar to market.
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