Big Pharma and Biotech companies continue to cut marketing spending in US

We’ve been covering this topic for a while now.  Correctly I may add (see earlier post)     

https://57thstresearch.wordpress.com/2011/09/16/e-detailing-and-cloud-ipad-are-changing-in-pharma-generics-and-biologics-massive-sales-reps-to-be-layed-off/

AstraZeneca is the latest large pharma company  to report disappointing financials including  net profit  (- 8.3%) and top line revenue (-400 million) from last year.  The company is now outsourcing research and using more digital technologies to reduce overall head count and fixed costs.

In a very ominous sign AstraZeneca has “outsourced” research groups in North America and Eastern Europe with virtual groups at academic institutions and small biotechs.  The reasons the companies cited are “lower cost base” and access to best academic minds available (Yeah right))!

We expect mergers and acquisitions to pick up in the large cap marketplace as expiring patents, frugal insurers, generic competition and a dearth of new medicine has transformed these large innovate companies into “one trick” ponies.

The traditional pharma reps with fleets of new cars  full of doctor samples is no longer needed.  Companies are now use digital marketing tools complete with online avatar of sales presentation and IPAD’s to seamlessly integrate payments from insurers.  Companies that haven’t laid off enough sales teams are trying to position the sales teams as “trusted advocates”. The trusted advocate role is not long term as most doctors won’t see the value and companies will have a hard time not laying off higher paid employees for telemarketers,  low cost replacements or contract sales personnel.

 

Stay tuned for more and catch more indepth research at http://www.57thstventures.com

Generic Company Teva

 

 

 

 

 

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CVS/Caremark PBM’s drops drugs and ramps up strategy of promoting generics over brand name pharma! Branded Pharma fits back with co-pay rebates

Generic Company Teva

We told you about 6 months ago that coupons/rebates were a major new strategy that branded pharma was using to fight back against cheaper generic alternatives. 

Today it was announced that CVS Caremark (one of the largest PBM businesses) will stop  covering 30 drugs next year ranging from diabetes, erectile disfunction and others.  The reason? $$$ of course!

The question

 What does this mean for your portfolio if you have branded or generic alternatives?

  The answer

 This announcement favors the generic alternatives ( large or mid cap generic companies)

Reason

Companies like CVS/Caremark are vertically integrated and not only run thousands of retail drugstores but also have a substantial Pharmacy Benefits businesses that handle processing of drug benefits for companies and health plan customers. PBM’s tend to make “greater profit margins” from generic drugs than the branded alternatives.  So it makes sense that they are promoting the generic companies drugs. In  addition CVS/Caremark don’t like manufacturer discounts (ie rebates) that big pharma is using to combat the cheaper alternatives. These rebates negate c-pay levels set by the health plans to steer members toward cheaper drugs

What’s next in 2012

The move by CVS/Caremark will be the first of  many strategies PBM’s will use to combat the so-called copay cards from drug makers.  It is estimated that 50% of the therapies that CVS PBM has targeted by customers use the co-pay cards. These co-pay cards (ie coupons) give customers a break  by offsetting higher branded alternatives (such as Viagra, Lipitor) with a coupon to defray the costs.  This is big pharma’s answer to combatting generics and giving customers a cheaper alternative.

So CVS/Caremark has decided to drop Eli Lilly’s Insulin products (Humulin), Bayer’s (Levitra) and 32 others.

Read our research report at www.57thstventures.com  Search the site or go to the free sample Health Care reports

Norvartis has upside but patent expirations are a cause of investor concern

In on corner we have a 54 Billion dollar diversified pharma juggernaut with

4% dividend yield

147 drugs in its pipeline including kidney-cancer dug Afinitor, MS drug Galvus and hypertension drug Tekturna

Diversification of business including Sandoz ($8.5 billion in sales), consumer product business ($6.2 billion) and vaccine sales of $2billion

 

So what’s the problem

Well 60% of their current $54 Billion is in branded pharma and 3 blockerbuster have looming patent expirations including

Diovan – High Blood pressure that’s facing patent expiration in 2012

Gleevec – Cancer that’s facing patent expiration in 2013

Zometa – Cancer that’s facing patent expiration in 2016

so it’s recent focus on “cost control” (i.e. laying of 2,000) is merely a stop gap measure to preserve operating margins and flow thru to EPS

the real question is  Can they grow top line revenues to command such a healthy premium over Pfizer?

We at 57thstresearch DOES NOT  think they can get to a stock price of 70 and a 12+ forward earnings range without another ALCON type of acquisition.

We say wait and see and don’t load up on NVS at this current price.

Check our other free research on NVS here www.57thstventures

Norvartis turns to social media for it’s Excedrin branding campaign

We told you back in December that the pharma industry would start slowly with customer outreach and branding initiatives using Social Media

https://57thstresearch.wordpress.com/2011/03/07/pharma-wants-direct-to-consumer-social-media-advertising-however-fda-says-will-facebook-and-twitter-be-around-in-the-future/

We see that Novartis is launching a new digital media campaign for its blockbuster Excedrin OTC migraine and headache reliever. Since video is the most additive form of social media (roughly 70% of social media users engage with it) it makes sense that Norvartis is a comedian and actor Zach Woods (NBC’s “The Office”) to play in a series of online videos that parody daily problems that cause headaches. 

The first video launched today and the others will follow in the coming weeks. The effort, which has a social media platform as the videos will be on Excedrin’s Facebook page, launches with Woods getting the restaurant check for several of his friends.

The strategy and trends are that consumers in the “new normal” period after the 2009 recession have traded down to private label painkillers instead of branded players. The private label players in the $2.5 billion OTC painkiller market, which gained big-time after Tylenol and Motrin recalls in 2010 hurt Johnson & Johnson.

The percentage of respondents who agree that OTC store brands work just like advertised brands grew from 62% in 2007 to 65% in 2009. Also 69% of respondents who take OTC pain medication say that store brands are just as effective as name brands.

Competing brands have not benefited the way private-labelwhich says still says that drug stores are the most important channel for OTC analgesics.

Excedrin has focused on cornering the headache-pain market in recent years, while Tylenol and Advil have focused on an older demographic. At least one recent ad for Excedrin has targeted teenage and young adult females, who are more common sufferers of migraine headaches.

In addition to private-label, negative attitudes challenge brand names. Mintel finds that a majority of respondents try to avoid using OTC analgesics by trying other types of remedies first.

55% of respondents who use OTC pain medication report trying to relax or use a home remedy for pain before turning to OTC products. “This attitude is stronger among under-35s, who have fewer health problems in general and try to avoid medication until necessary

Excedrin’s new campaign features under-35 actors.

The good news for Excedrin is that the acetaminophen/aspirin combination is particularly popular among 25 to 34 year olds as a headache reliever.  While acetaminophen remains roughly tied with ibuprofen as the most popular OTC pain medication, Excedrin’s aspirin/acetaminophen combo trails acetaminophen alone, ibuprofen alone, aspirin, and naproxen (Aleve) in popularity among consumers over 18, per the firm.

Novartis’ Excedrin products had about 8% share of the OTC analgesics market last year.  Let’s see if they can get a BOOST from social media efforts and if they can quantify just what worked …metrics..KPI’s they tracked. 

The pharma and biotech industry are watching

Abbott is splitting in Two Next?

Abbot is splitting into two companies in early 2012. What does it mean for investors.

Abbott had to do this because of (a) expiration of Humira’s $8 Billion revenue stream from patent expiration in 2017.
By unlocking the value into the medical products company which has $22 Billion in sales ABT will be able to tell investors “a coherent story”!
The question can ABT grow earnings over the muted reaction to the stock split? Stay tunedPharma News and Research

Teva’s biologics entry into the generic and branded pharma market will cause further disruption

We have an interesting ideas for small cap biotech pharma
Generic biologicals. All the biologicals ( amgen, J&j) 2011 injectbiles.

Generic Company Teva

Barr and hospira make the generic biologicals .

Teva have been  diversifying away from being a generic company  to more of a branded as they  they have a branded drug copaxon. ~ MS drug .

Big Question.: Can the FDA approve generic biologicals? There is no process for doing.

Remember in the new Buy and bill model  step (1) doctor buy and bills patient/ insurance company. (only for onjectibles) the pharma companies ARE NOT supposed to promote the spread. Before the health care legislation it used to be paid on awp. (average wholesale price) not it’s reimburseable on asp (average selling price) they have changed the reimbursement rate to average selling price + 6% for doctors. Injectibles (only doctors)

Specialty pharmacies (caremark) are the new growth market. Certain ailments require specialty drugs!

More ideas and research at www.57thstventures.com

Japanese Drug Market top 3 in Market Share is changing

Japanese Drug market $100 billion is second in the world behind the US. Yet the top 3 in market share make up only on 17.7% of the market! There’s a huge opportunity for Merck, Roche and Astellas to make significant inroads into the lucrative Japanese Drug Market!

#1) Increase G&A marketing expenses to take advantage of “direct to consumer” that Japanese consumers are embracing! Promo activities like newspaper advertising and sales reps calling on doctors

#2) increase pipeline by looking to buy or have joint venture with Eisai or Mitshubishi Tanabe

#3) Create more social awareness to overcome society stigmas thru social media campaigns

Search our blog for more or read more research exerpts at 57th St Ventures

Sorrell vs. IMF Health goes deep inside business of pharma data mining techniques

There is a landmark case that speaks to the hot button issue of PRIVACY.

The case challenges a Vermont Law that letting doctors decide whether their names can be sold 

to pharma companies for marketing purposes.

Here’s how it works currently (Step 1)  Pharmacists sell the information to data mining companies , which then sell

data and analysis (i.e. which customers would be great prospective prospects for “detailing”) to pharma companies WITH

PATIENT NAMES removed or encrypted.  That data fuels drug companies CRM efforts using companies such as ZS Associates

to do statistical regression studies that present data on prospects, territories profiles etc.

The outcome is purely based on Free Speech and is likely to be won by the 3 data companies (IMF Health, SDI Health and Source Analytics).

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Technology Investments are changing clinical studies in Pharma and Biotech

Changing Technology is innovating drugmakers supply chain

Health information access is changing the ways drugmakers develop medicines and communicate with doctors, insurers and patients. Better info from patient records is helping companies design more cost-effective clinical trials and tailor marketing materials to the people who most need them. For example, mobile phone software can help patients find clinical trials for cancer or track blood-sugar levels.

Large Investments by drugmakers are falling behind non- pharmaceutical companies, including  General Electric Co., Telus Corp., Canada’s third-and International Business Machines Corp., which have committed to spending at least $20 billion on health-related information services. Pharmaceutical companies have invested “a small fraction of that but over the next decade, monitoring patient care and proving results will be an increasing part of their business.

Applications created for Apple Inc.’s iPhone include a German language DiabetesMapp, which helps patients map specialists nearby, by A Abbott Laboratories; Merck’s Vree for diabetes education and tracking of blood glucose, nutrition, and activity; and Novartis’s VaxTrak to keep records of vaccinations.

Stay tuned for more updates at www.57thstventures.com