Tag Archives: Pfizer

Divestment wave continues as pharma banks on delivery systems

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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.

 

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Partnerships will drive success in targeted delivery, but what drives successful partnerships?

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Graphic of the WeekThe large drugmakers that have epitomized health for a century are in terminal decline, having adhered too long to a blockbuster-drug model that is now failing catastrophically. Today, firms like AstraZeneca and Pfizer face a $143 billion patent cliff and have run out of room for organic growth, forcing them to consolidate rapidly. But this hardly means the end of medicine – on the contrary, conventional medicine’s collapse is opening up new spaces for more personalized, humane, affordable, and effective healthcare.

In the latest report from our Targeted Delivery Intelligence Service, we explain how today’s partnerships will shape tomorrow’s growth in the pharmaceutical industry. While large and small players agree that collaboration is critical to future success, this week’s graphic illustrates that their expectations and perspectives on partnerships vary wildly. Perspectives on collaboration also vary across market sectors, as well, as exhibited by these other select findings from the report:

  • Pharmaceutical players are naïve about targeted delivery partnerships. Despite its history of developing new active ingredients through partnerships, the pharmaceutical industry has failed to capitalize on new delivery technologies. Drugmakers that survive consolidation will learn how consumer products companies use delivery technologies to improve convenience and usability – especially when developing products for chronic and lifestyle diseases like asthma, diabetes, and high cholesterol, where patient compliance is key to healthy outcomes.
  • Back-end loaded deal structures are more common in consumer markets. Clear project milestones are important to successful partnerships in consumer products and personal care, since the time to payback is shorter. Instead of pharma’s upfront payment model, partners pay royalties, since products get to market faster and see sales sooner.
  • Partnerships in emerging markets like China are both essential and challenging. Intellectual property laws, government regulations, and cultural values are just some of the challenges to tapping targeted delivery opportunities in China. Gaining insight from local presence, partnerships with leading universities, and hiring to leverage local know-how are important best practices for this and other emerging markets like the Middle East and India.

Source: Lux Research report “Growing Delivery Partnerships and Alliances.” (client registration required.)

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Kraft, GSK, and BASF announcements illustrate convergence of food, cosmetics, chemicals, and medicine

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The distance between food, cosmetics, chemicals, and medicine keeps shrinking, as evidenced by several recent commercial announcements. In May, food giant Kraft and its partner Medisyn, which specializes in discovery of novel active ingredients, announced an expansion of their collaboration. Specifically, in addition to developing health and wellness actives, they’ll be developing additional compounds aimed at improving food quality, food safety, and product performance. Delivering functional actives in food products is meant to keep the company growing in the face of a general stagnation in conventional food and beverages.

Meanwhile, BASF recently said it would spend $3.8 billion to acquire Cognis, which supplies raw materials for pharmaceuticals, food and beverages, dietary supplements, and cosmetics – new markets that the chemicals firm wants to enter. Now comes word that GlaxoSmithKline’s (GSK’s) consumer products division is close to launching sports nutrition drink Lucozade in the U.S. The company’s consumer business offers a more predictable revenue stream than the larger but more volatile pharmaceutical unit.

What’s behind the convergence of these ostensibly separate industries? It’s the growing understanding that chronic, lifestyle-associated diseases like obesity and diabetes (and their opposites of lifelong health and wellness) require lifestyle products – not simply medicines, procedures, or healthy habits, but a combination of them all.

DSM’s CEO recently bemoaned the pharma-grade scrutiny that European regulators are applying to foods. But foods are increasingly part of a larger strategy (among individuals as well as corporations) for addressing aging, increasing affluence, and chronic conditions (see the November 18, 2008 LRBJ*). Specifically, that strategy combines food with over-the-counter medicines, nutritional supplements, oral care, and skin care. Moreover, established players in these fields are looking to escape competition from generic drugmakers like Teva and lower-cost petrochemicals from rising Middle East rivals (see the January 5, 2010 LRBJ*). As such, these aren’t opportunistic moves by GSK, BASF, and Kraft – they’re a harbinger of the companies’ and the industries’ futures. Rivals like Pfizer, Bayer, DSM, and Unilever should take note.

*Client registration required.

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