The wave of divestures sweeping the pharmaceutical industry continues following the most recent announcements by SurModics and Pfizer*.
Beleaguered drug delivery company SurModics recently announced the sale of its pharmaceutical assets (such as injectable delivery platforms and biodegradable polymer implants) to Evonik Industries AG for $30 million. The move comes as no surprise following SurModics’ Q3 Earnings Call announcement, as well as the series* of layoffs* the company undertook over the past year. SurModics claims the move will allow it to recover from Johnson & Johnson subsidiary Cordis’ discontinuation* of “one-time blockbuster drug” Cypher, by focusing on growing its Medical Devices and In-Vitro Diagnostics (IVD) business units. SurModics faces an uphill task on the road to recovery with declining revenue from its profitable Medical Devices unit, and as the IVD unit faces stiff competition in the marketplace.
Generic and specialty drug company, Mylan, recently acquired the rights to Pfizer’s dry powder respiratory drug delivery system used to treat chronic obstructive pulmonary disorder (COPD) and other respiratory illnesses. While the $17.5 million sum Mylan will pay Pfizer may not seem substantial, Pfizer will earn “far more” in royalties from products Mylan is expected to develop and commercialize using Pfizer’s platform, especially when over 50% of the $34 million global respiratory and COPD markets comes off patent by the end 2016. While Mylan will initially use the Pfizer platform to produce generic versions of GSK’s asthma and COPD treatments, it will eventually develop its own brand product and additional generic products. This divestment comes on the heels of Pfizer’s sale* of its Capsugel platform, and the shuttering of its largest R&D plant in the U.K. as it struggles to slash $1 billion from its R&D budget. Expect Pfizer’s woes to continue when Lipitor comes off patent at the end of the year – although the profit sharing clause with Mylan will provide much-needed cash infusion. As Pfizer illustrates, drug delivery systems offer pharma companies a lifeline as traditional revenue streams dry up.
In the wake of declining revenues and patent expiries*, pharma companies like Pfizer will need to expand beyond their core business and seek additional revenue streams by turning to delivery systems. Considering this trend – as well as the increasing number of startups thirsting* for funding - clients have an opportunity to seek out promising technologies, whether through co-development partnerships or licensing new drug delivery platforms.
* Client registration required.