Market Place
This week in Phispers, we look at how Mylan’s president Rajiv Malik and Emcure’s CEO Satish Mehta, along with 12 major generic drug players, got added to an expanded investigation into the drug price-fixing case in the US. While Trump declared the opioid crisis a health emergency, pharma companies Celgene and Gilead saw their third quarter results and guidance get impacted by a drug trial failure and competition. Meanwhile, there was news on Novartis buying AAA, CVS Health showing interest in buying health insurer Aetna and Merck cutting jobs and withdrawing its application for Keytruda as treatment for advanced lung cancer.
Mylan’s president, Emcure’s CEO, 12 firms to be probed in price-fixing case
This week, attorneys general from 45 US states named Mylan’s president Rajiv Malik and Emcure’s billionaire CEO Satish Mehta as they expanded their three-year old investigation into price-fixing in the generic pharmaceuticals industry.
In addition to the two individuals, 12 major generic drug companies and 13 drugs were added to the expanded investigation. This week’s filing alleges collusion of 18 defendant companies, as well as two individual executives, involving a total of 15 drugs.
(To view the complete list of companies and drugs, click here)
The states allege multiple conspiracies that restrained trade, artificially inflated and/or maintained prices and reduced competition in the generic drug industry. According to the expanded complaint, Mehta and Malik were “directly involved in conceiving an illegal agreement and taking affirmative steps to ensure it was executed by their subordinates.”
Earlier this year, a federal criminal investigation resulted in the convictions of former Heritage Pharmaceuticals CEO Jeffrey Glazer and former Heritage President Jason Malek. Heritage is a wholly-owned subsidiary of Emcure. Both Glazer and Malek pleaded guilty and have been cooperating in the anti-trust investigations being conducted by federal and state prosecutors.
PharmaCompass had covered the illegal practices at Heritage Pharmaceuticals that had come to light when Emcure had filed a lawsuit against Glazer. It now remains to be seen if Glazer acted on his own or colluded with his bosses in India to fix generic drug prices in the United States.
As Trump declares opioid crisis an emergency, Insys founder
gets arrested
Last week, the US President Donald Trump hardened his stand on the opioid crisis, blaming it on factors like criminals, drug companies, Mexico and China. In the US, the crisis claimed over 30,000 lives in 2015.
He termed abuse of opioids a public health emergency and outlined steps to fight it — such as new efforts to curb prescription abuse, reduction in import of certain drugs and educating children on the risks.
“We must stop the flow of all types of illegal drugs into our communities,” Trump said. Blaming pharmaceutical companies for over-prescribing pain medications, he said the US Food and Drug Administration (FDA) will provide more training to doctors who prescribe drugs to prevent abuse. Moreover, he has requested that one opioid drug, Opana ER, no longer be sold.
According to Trump, a border wall with Mexico will “greatly help” reduce this problem. He also talked about China’s role in the production of fentanyl.
Meanwhile, John Kapoor, the founder of Insys Therapeutics, was arrested last week on charges of participating in a scheme to bribe doctors to prescribe a fentanyl-based cancer pain drug. Kapoor has resigned from the company’s board of directors, and his arrest is being seen as a step towards fighting the opioid epidemic.
The charges against Kapoor marked a major escalation of probes into Subsys, an under-the-tongue spray that contains fentanyl, an addictive synthetic opioid.
Celgene’s Crohn’s disease drug fails trial; Gilead reports weak Hep C sales
Two companies have not had a good going — Celgene and Gilead. The former announced that its drug mongersen — a potential treatment for Crohn’s disease — had failed. Celgene had purchased the drug four years ago for US$ 710 million from a private company in Dublin — Nogra Pharma Limited. The New Jersey-headquartered biotech firm had promised that if mongersen gets approved, Nogra would get another US$ 815 million. But that was not to be.
What was worse, Celgene’s third-quarter financial announced last week spooked its investors. The company missed analysts’ sales projections for the third quarter by 4 percent, cut its guidance for 2020 by 5 to 10 percent, and announced that sales of a key (plaque psoriasis) drug — Otezla — had missed forecasts by US$ 100 million.
In a note, Geoffrey Porges, a biotech analyst at Leerink, said: “Investors are likely to ask whether the company’s good fortune has run out, with disappointments (mongersen) and negative revisions (Otezla) left and right.”
Gilead, on the other hand, is trying hard to move away from hepatitis C. Its hepatitis C drugs generated US$ 2 billion during the last quarter — just US$ 300 million short of Wall Street’s projections. However, investors were cautioned about AbbVie’s new launch —Mavyret — which is expected to have a “big impact” on Gilead’s fourth-quarter results.
Gilead’s hepatitis C drugs have been facing competition from new rivals who have eaten into its market share and driven down prices over the last few quarters. However, we could expect some M&A action soon. “Gilead noted that it is in a ‘constant state of valuation and opportunities’ and that it is very, very active,” said an analyst.
Novartis buys radiopharmaceutical firm AAA for
US$ 3.9 billion
In July, PharmaCompass had covered news on how Lutathera — a nuclear medicine targeted at the type of cancer that killed former Apple Inc co-founder and CEO Steve Jobs — got a nod from the European Medicines Agency (EMA), boosting prospects for its developer Advanced Accelerator Applications (AAA).
Well, last week the French biotech — AAA — got bought over by Novartis for US$ 3.9 billion. Novartis is paying a 44 percent premium over AAA’s market valuation from September 28.
The deal further strengthens Novartis’ oncology business, which had got a shot in the arm in 2015, when it acquired GlaxoSmithKline’s marketed cancer drugs. And in August, its gene-modifying leukemia treatment (a chimeric antigen receptor T-cell therapy or CAR-T therapy) — Kymriah — got approved. This was the first CAR-T therapy to bag an FDA approval.
With AAA, Novartis will now have a technology that deploys trace amounts of radioactive compounds to not only diagnose a disease (by creating images of organs and lesions), but also to fight cancer.
Lutathera is a radiopharmaceutical — it uses radioisotopes to target neuroendocrine tumors. Along with Lutathera, Novartis also gets a pipeline of drugs from AAA with some near-term potential.
US Merck to cut 1,800 jobs, withdraws EU
application of cancer wonder drug
Late last week, Merck announced it had withdrawn its application for Keytruda (pembrolizumab) as a combination treatment for an advanced stage of non-small cell lung cancer (NSCLC) from the European Medicines Agency (EMA).
An analyst with Evercore ISI, Umer Raffat, said in a note that EMA was reluctant to approve drugs based on Phase II data, even though the FDA regularly does so in oncology.
The company is also moving to a new sales team structure in the US, and plans to cut 1,800 sales positions, while adding 960 jobs to a new chronic care salesforce.
According to a Fox Business report, three of Merck’s US sales teams will be cut: primary care, disease-focused endocrinology and hospital chronic care. This is “to better support changes in our business in the United States,” Merck’s spokeswoman said.
Merck’s new chronic care team will focus on Januvia (a diabetes drug), other primary care products such as sleep medication Belsomra, and products for respiratory conditions and women's health, she added.
Releasing its third quarter numbers in the US, Merck was also forced to concede that the NotPetya cyber attack had cost the company US$ 135 million in lost sales along with US$ 175 million in related costs. That extra US$ 310 million in costs will be repeated in Q4 as overall damages inch up to the US$ 1 billion mark, the company said.
As Amazon threat looms over US pharmacy
biz, CVS eyes health insurer Aetna
Amazon has been trying to get into the US$ 412 billion pharmacy business in the US. Every year, pharmacies in the US dispense about 4.5 billion prescriptions. Patients pick up about 9 out of 10 prescriptions at a retail pharmacy. Amazon’s entry into online prescription drug sales, therefore, poses an existential threat to brick-and-mortar pharmacies.
And that’s the reason why news about US pharmacy operator CVS Health Corp reportedly evincing interest in buying health insurer Aetna Inc is important. This potential acquisition could trigger another round of deal making in an industry that is fearing Amazon’s arrival. According to news reports, CVS Health is expected to buy Aetna for US$ 66 billion in what would be the biggest deal of the year.
If the deal goes through, it would also be the biggest of its kind ever in healthcare. “A potential combination would diversify CVS profit streams ahead of an Amazon entry and set the stage for a new healthcare-retail delivery model,” Morgan Stanley analysts wrote in a note.
A deal would make CVS-Aetna a one-stop shop for customers’ healthcare needs — which could range from employer healthcare and government plans to managing benefits and running drug stores.
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