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

 

 

 

 

 

Infotech companies that specialize in trimming health care costs are great picks in 2012

Despite all the talk about trimming health care costs, the reality is that only a fraction of doctors today use money saving Infotech.

Question : What is Infotech?

Answer:  Companies that provide new data systems that link patient records, testing labs, pharmacies, and insurers are HITTING the market.

In 2011 a record $410 Million in health care infotech.  

Startup companies to watch include:

Watermark– has an attachment that a diabetic can stick in your Iphone slot and receive sugar levels from “the cloud”. A doctor is alerted if your levels get too high.

Athena – prints a bar code onto a blood vial to replace the possible inaccuracies that a technician may cause. The bar code is then scanned and electronically sent to the testing lab. The results are then provided to the doctors A/R and to the insurer. Huge savings are realized in labor and errors.

The strategy of these infotech companies to to focus on the chronic disease market that affects 90% of the U.S. population.

Investors should look at this market because only 1% of today’s doctors have “closed loop systems” so the penetration % will grow especially with the new health care laws that favor EHR (Electronic Healt
h Records)

more at www.57thstventures.com

Buy and Bill for Pharma and Biotech in 2012

Buy and Bill is changing the business model for all large and mid cap companies.

The sales rep is only beneficial to the doctor if it can assist him/her in buying the products a the lowest wholesale price and billing quickly enough to recoup the

reimbursement from the insurance company. Investors should look at liquidity ratios on balance sheets. If 30% of A/R are > 90 days and days payable outstanding is increasing it’s a warning flag.

Therefor if the sales rep’s company doesn’t have significant “buyer power” (i.e. Teva, Pfizer, Norvartis, Merck) it’s harder to get a low wholesale price.

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Gilead Sciences in bold move pays a 94% premium for Pharmasset. Can you say overpaid!!

Yes Gilead Sciences Inc. agreed yesterday to buy Pharmasset for $10.8 billion, valuing a DEVELOPER of an experimental, oral treatment at 70X its net assets, the most ever for a medical drug acquisition greater than $500 million. 

As a former banker I would say that this 94 percent premium paid for the small cap based on Pharmasset’s 20-day average is the richest on record.

If you were to apply this  premium to comparables in the sector then

 Inhibitex would cost $1.1 billion

Achillion would cost $791 million

Idenix Pharmaceuticals Inc. would be $1.3 billion.

Gilead is paying for potential as the hepatitis C therapies market is potentially worth $20 billion by 2020.

So who will buy either Inhibitex, Achillion and Idenix within this year?

Gilead (GILD) suffered its steepest stock drop in a year and a half yesterday, and none of these other unprofitable biotechnology companies even have a hepatitis C drug for sale yet, the other targets would require no more than a fifth of the price for Pharmasset even with the same premium.

It’s amazing to me that Gilead’s willing to gamble $11 billion. It is a statement on the future opportunity to the market. Hepatitis C is an enormous business target.

Oral Treatment

Gilead, the world’s largest maker of HIV medicines, is paying $137 a share in cash for Pharmasset to gain an oral drug in development for a virus that is now largely treated with injections. The price tag is 70 times its book value (VRUS), or the value of its assets minus liabilities.

Pharmasset had 40 patients who received its experimental hepatitis C treatment, PSI-7977, were responsive after 12 weeks. About half the patients had been followed up to 24 weeks and were all cured with no significant adverse events. The drug was tested in combination with ribavirin, a medication currently used in treating the disease, in patients with hepatitis C genotypes 2 and 3. Genotype 1 is most common and hardest to treat.

Speculative or expensive Land Grab?

Hepatitis C is a viral infection that can lead to swelling of the liver. As many as 170 million people globally carry the virus, which is transmitted through exposure to infected blood, and more than 350,000 die from related illnesses each year, according to the Geneva-based World Health Organization.

Since Hepatitis C is very prevalent in the population. A lot of the market opportunity is going to expand if you have an all- oral regimen.

High Price

A company and a board can’t agree to do an acquisition where you don’t believe you’re going to make your money back in multiples.

Gilead has confidence in not only this molecule, but this molecule plus our portfolio, in achieving the sales levels necessary to justify this…stay tuned!

Gilead fell 9.1 percent to $36.26 yesterday, the biggest drop since April 2010. Gilead and has  term A and B credit facility that it is raising $6.2 billion in debt.  It actually  could have bought a smaller company with a hepatitis C treatment for less financial risk.

The stock market know the hot areas are HIV, Oncology and other treatments such as diabetes, hepatitis C, autoimmune diseases and a few more. Hence Gilead shares increased 6.9 percent to $38.76 today.

Treatment Acquirers

Pharmaceutical companies that may look to expand in the market for hepatitis C treatments include Roche Holding AG (ROG), Merck (MRK) & Co., Bristol-Myers Squibb Co. (BMY) and Johnson & Johnson (JNJ), according to Miller Tabak’s Funtleyder and Brian Skorney, a New York-based analyst at Brean Murray Carret & Co.

These companies are all heavily invested in the antiviral arena and globally this is a huge, huge market opportunity.

Inhibitex as is next as a Target

Inhibitex is an attractive takeover candidate because its INX-189 treatment is similar to Pharmasset’s drug.

With a market value of $831 million, Inhibitex would be a smaller acquisition and a “much different de-risking story” than Pharmasset, Inhibitex shares climbed as much as 34 percent yesterday before closing at $10.61, a 19 percent gain. The shares rose 1.6 percent to $10.78 today, the highest since December 2004.

Inhibitex’s oral treatment was potent and well tolerated, showing no serious side effects in a clinical stuy

Next up Achillion (ACHN) For Sale

Achillion, the New Haven, Connecticut-based company expecting clinical data on three experimental hepatitis C therapies by about yearend, is in “advanced discussions” with potential partners and acquirers, CEO Michael Kishbauch said in an interview last week. The hepatitis C market may be worth $20 billion by 2020.

Achillion, which doesn’t have any products for sale yet and has a market value of $414 million, may be part of “continued consolidation” in the industry

Achillion Pharmaceuticals has the most optimized portfolio of treatments for chronic hepatitis C and are committed to providing the greatest value to our shareholders and hepatitis C patients.

Idenix (IDIX), with a market value of $765 million and a slate of five experimental medicines for hepatitis C

The most advanced, IDX184, is a nucleotide polymerase inhibitor, the same kind of medicine as Pharmasset’s lead drug. The Cambridge, Massachusetts-based company started enrolling patients in a mid-stage clinical trial this year and expects to report one-month data for the first 30 patients next quarter.

Pharmasset for a while now has been the very clear frontrunner as far as a drug in clinical development and  there’s so much potential revenue to be made that I don’t think they’re ready to give up and just say because Gilead did this deal the game’s over.

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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

Generic Pharma is gaining scale as Endo Pharma buys Qualitest for it’s urology products

Big Pharma companies aren’t the only drugmakers diversifying these day

Read more about Generics at http://57thstventures.com/images/Biological_-_Generic_Biologicals_field_notes.pdf
Subscribe: http://www.57thstventures.com Like its behemoth brethren, Endo Pharmaceuticals is snapping up a privately held generics company–Qualitest Pharmaceuticals–for about $1.2 billion in cash. The deal will broaden Endo’s reach in treatments for pain, but with off-patent drugs rather than branded ones.

It’s Endo’s third recent deal as the company works to fill the expected gap in sales when its lead drug Lidoderm, which is used to treat shingles pain, goes off patent in 2015. That med brings in about $700 million a year. Last month, Endo made a deal to buy Penwest Pharmaceuticals, and in May bought device maker HealthTronics.

The combined company will have 46 potential generics, including urology drugs, cancer meds, and blood-pressure treatments, Reuters reports. Endo says it hopes the revenue growth of the combined generics business to be at least 15 percent over the next two years.

Endo Pharmaceuticals said Tuesday that it would buy Qualitest, a rival American generic drug maker, for $1.2 billion in cash from Apax Partners, adding to its offer of treatments for pain and in the field of urology.

David Holveck, the head of Endo, said that the acquisition would diversify its revenue stream and give it “critical mass in the generics market.”

Endo said it already filled 90 percent of all prescriptions for treating pain through generic drugs, and that Qualitest drew 40 percent of its revenues from the field.

The company will be using $500 million of its own cash, a $300 million credit facility and another $200 million in financing. The deal is expected to close in the last quarter of this year, or the first quarter of the next, pending the customary approvals.

Vertex Pharma Hepatitis C drug proves more effective in recent study. Takeover target?

Vertex Pharmaceuticals Inc. recently said it’s hepatitis C drug made treatment quicker and more effective in a study that may lead to $1.8 billion in annual U.S. sales.

The virus was undetectable in 75 percent of patients given 12 weeks of Vertex’s experimental medicine, called telaprevir, along with standard treatment, compared with 44 percent of patients getting the standard therapy alone

There are no proven medicines available for patients with hepatitis C, or HCV, who don’t respond to standard care, which is typically a combination of ribavirin and a pegylated interferon such as Roche Holding AG’s Pegasys. These drugs only cure half of patients who take them, and many patients develop serious side effects or can’t tolerate the medicine combination.

“This result appears clean enough and compelling enough to support expedited registration of telaprevir in this population.

Telaprevir now looks well positioned for relatively smooth filing and approval as the first HCV antiviral by late 2011.”

The study also showed that most patients who received the telaprevir-based drug cocktail required just 24 weeks of treatment, compared with 48 weeks for the standard regimen.

Estimated U.S. sales from telaprevir of $582 million in 2011 and $1.82 billion in 2012.

Merck looming…..