(Vienna)formed a strategic alliance for vaccines. This new collaboration comes after Novartis signed in 2006 a marketing and distribution agreement with Intercell for IC51, a new vaccine currently in Phase III trials preventing infections from the Japanese encephalitis virus. 

Under the new agreement, Novartis secured opt-in rights to all future vaccine candidates discovered by Intercell during the long-term collaboration. Among the various Intercell projects eligible to Novartis are the IC43 vaccine candidate for  patients with hospital-acquired pseudomonas infections, which is now in Phase II trials, and the preclinical vaccine IC47 against pneumonia infections in the elderly and infants. 

The alliance will specifically focus on the development of vaccines derived from Intercell's Antigen Identification Program (AIP), including IC31 adjuvant technology in selected areas. Intercell's AIP approach is complementary to the Reverse Vaccinology system used by Novartis, which selects vaccine candidates based on highly conserved antigen sequences. 

Intercell has responsibility for all costs through the end of Phase II clinical trials, and Novartis will assume responsibilities for Phase III development, manufacturing, and commercialization for any projects chosen during the collaboration. Novartis also gained exclusive rights to further develop the next-generation IC31 adjuvant in enhancing the effectiveness of influenza vaccines. An influenza vaccine formulated with this adjuvant began Phase I trials in June 2007. Rights have also been gained to develop IC31 in other disease areas. 

Novartis will make an upfront payment of EUR 270 million ($367 million) to Intercell for exclusive opt-in rights for any existing unpartnered vaccine project or any future projects following the completion of Phase II clinical trials. This upfront payment includes the purchase of 4.8 million new Intercell shares, which will increase Novartis's equity stake in Intercell to 16.1% from the current 6.1% acquired at the time of the IC51 vaccine agreement in 2006. The agreement is subject to customary regulatory approvals, including those in the United States. 

(Philadelphia,PA) agreed to jointly develop lixivaptan, an oral compound expected to enter a Phase III clinical trial this year for the potential treatment of hyponatremia in patients with congestive heart failure. The agreement is expected to become effective in the third quarter of 2007, and is subject to customary approvals and closing. 

Under terms of the agreement, Cardiokine will receive a $50-million upfront payment and up to $170 million in additional milestone payments for the successful development and global commercialization of lixivaptan, as well as royalties on commercial sales. Biogen Idec will be responsible for the global commercialization of lixivaptan, and Cardiokine will have an option for limited copromotion in the United States. 

 (Whitehouse Station, NJ) announced a license and research collaboration agreement for the joint development and commercialization of the "I-vation" sustained drug-delivery system with triamcinolone acetonide and other products that combine proprietary drug compounds of Merck with the I-vation system for treating serious retinal diseases.  

Under the terms of the agreement, Merck will lead and fund development and commercialization activities for the SurModics I-vation drug delivery platform in combination with triamcinolone acetonide and proprietary Merck compounds.  SurModics will receive an upfront licensing fee of $20 million and will be eligible to receive up to an additional $288 million in fees and development milestones associated with the successful product development and attainment of appropriate US and EU regulatory approvals for these new combination products. Merck will reimburse SurModics for its development activities, and SurModics will manufacture and supply clinical and commercial products. SurModics will also receive royalties on product sales. 

 to manufacture the active small interfering RNA (siRNA) component of its RNAi therapeutic, ICS-283. Agilent will manufacture the siRNA material to support clinical development of ICS-283. ICS-283 is a nanoparticle-based siRNA that targets the vascular endothelial growth factor. 

(South San Francisco, CA)  formed a collaboration for the global research, development, and commercialization of two of Abbott's investigational anticancer compounds: ABT-263 and ABT-869. Beyond those two compounds, scientists at the two companies will  conduct additional follow-on research in the area of Bcl-2 family protein antagonists and VEGFR-targeted (vascular endothelial growth factor receptor) kinase inhibitors. 

formed a licensing agreement for the worldwide research, development, and commercialization of Toyama Chemical's  oral rheumatoid arthritis agent T-5224. T-5224 is an inhibitor of the transcription factor AP-1 (Activator Protein-1). 

Under the terms of the agreement, Toyama Chemical granted Roche exclusive rights to research, develop, and sell T-5224 worldwide, excluding Japan, where Toyama Chemical will retain exclusive rights. The agreement also encompasses the joint research and development of backup candidates to T-5224. Toyama Chemical will receive upfront payments and milestone payments up to $370 million. If the drug is approved for marketing, Toyama Chemical will receive royalties from Roche based on the net sales of T-5224.  

and the PNA Inventor Group entered into a nonexclusive licence agreement to allow Link Technologies to manufacture and sell monomers for peptide nucleic acid (PNA) synthesis worldwide under the PNA Inventor Group's patents. PNAs are oligonucleotide analogues in which the standard sugar-phosphate backbone of DNA is substituted with a pseudo-peptide backbone. PNAs have numerous identified and proposed applications in molecular biology procedures, diagnostic assays, and antisense and antigene therapies. Initially, Link will offer Fmoc/Bhoc protected PNA monomers. These monomers are compatible with commercial automated oligonucleotide, peptide, and combinatorial synthesizers. It is anticipated that these products will be available from July 2007. 

 signed an exclusive drug-development and supply agreement with 

(Mumbai, India) for an oral abbreviated new drug application (ANDA) drug product to prevent organ- transplant rejection. Under the terms of the agreement, Cipla will develop, manufacture, and supply the drug product, and Akorn will conduct the bioequivalency clinical trial, ANDA regulatory submission, and marketing and distribution in the United States. Akorn expects to launch the product in late 2009. 

 (London) for goserelin, the active substance in AstraZeneca's oncology medicine "Zoladex." Bachem has supplied AstraZeneca with goserelin for more than 15 years. The new agreement runs for five more years. 

Chineham, Basingstoke, Hampshire, UK (June 20)

 will acquire the exclusive development rights to "Daytrana," 

 (Miami, FL) new transdermal patch for ADHD. Daytrana was developed and is manufactured by Noven and was launched by Shire in June 2006. As part of the agreement, Shire made a $5.9-million milestone payment to Noven. 

(Atlanta, GA) to manufacture its HIV-1 DNA vaccine. Althea will manufacture material to be used in Phase II trials scheduled to begin in early 2008. 

division Merck Serono formed a collaboration with the biopharmaceutical company 

(San Diego, CA) to develop and commercialize Ambrx's long-acting growth hormone products. The collaboration will focus initially on the development of ARX201, the most advanced product candidate, currently in Phase I/II clinical trials.  

(Mississauga, ON, Canada) to develop palatable drug products. The collaboration will give Senopsys's clients access to prototype drug formulations manufactured by Patheon, and Patheon will give its clients taste assessment and optimization services.  

 awarded two contracts totaling $132.5 million to  

 (Gaithersburg, MD) to retrofit their influenza-vaccine manufacturing facilities. Sanofi Pasteur, the vaccines division of the 

(Paris), received a $77.4-million contract and plans to contribute an additional $25 million. MedImmune was awarded $55.1 million and plans to contribute an additional $14 million. The overall project includes design, retrofit, and facility maintenance so that the companies can switch to pandemic influenza-vaccine manufacture upon a request from the government. 

Sanofi plans to begin the design phase immediately, with the retrofit starting as soon as the new influenza-vaccine manufacturing facility is operational and licensed by the 

 (Rockville, MD). The company's existing facility will be phased out and decommissioned for the retrofit. Once both facilities are validated, the company's capacity will increase threefold. 

The contracts are part of HHS's Pandemic Preparedness Plan, which was issued in November 2005 and outlines public-health preparedness and response activities for an influenza pandemic. According to the World Health Organization, 1–2.3 billion hospitalizations and 280,000–650,000 deaths could occur in the next influenza pandemic in industrialized nations alone. HHS hopes to stockpile enough prepandemic influenza vaccine for 20 million people. 

entered into a long-term manufacturing services agreement with X-GEN Pharmaceuticals, Inc. (Big Flats, NY). Dalton will fill and finish sterile commercial products for X-GEN. 

to manufacture ProNAi's PNT2258 DNAi-based cancer therapy. Polymun will use its propretary cross-flow injector technology to manufacture the therapy, for which ProNAi hopes to prepare an investigational new drug submission later this year. 

(GSK) pledged 50 million doses of H5N1 adjuvanted prepandemic influenza vaccine to the World Health Organization (WHO). The donation is part of WHO's stockpile initiative, which aims to create a stockpile of prepandemic vaccines that can be distributed to the world's poorest countries at short notice. GSK will deliver the vaccines over a three-year period. 

, a developer of nasal drug-delivery devices, and 

 (Kenilworth, NJ), formed an agreement that expands Schering-Plough's evaluation of, and option for exclusivity rights to Kurve Technology's "Controlled Particle Dispersion" platform from a single field to multiple fields of use. Kurve Technology's Controlled Particle Dispersion contains six critical-to-function design parameters that enable the modification of deposition and droplet characteristics.   

Articles

News

The latest pacts from the pharmaceutical supply chain.

Agreements and contracts

Outsourcing in the clinical research sector has reached a critical juncture in its evolution. Pharmaceutical companies are poised to gain major benefits from the scale, scope, and expertise of contract research organizations (CROs)—if they are willing to relinquish control and let their CROs do what they do best.  

That's the principal conclusion of a survey conducted by consulting firm 

 (Dallas, TX) and presented at April's Partnerships with CROs conference sponsored by the Institute for International Research (IIR). This was the third year that Everest and IIR conducted the survey. Everest is a consulting firm focused exclusively on outsourcing in a wide array of industries. 

According to Todd Hintze, Everest's industry principal for healthcare, the objective of the survey was to gauge whether research and development (R&D) outsourcing in pharma is delivering the same level of market value that outsourcing has delivered in other sectors such as information technology and business processes. 

In Everest's view, true outsourcing requires the transfer of ownership of a business process from the client to the service provider. In a true outsourcing relationship, the client's principal concern is for the results of the process rather than its mechanics. The underlying rationale is that the service provider can do the job better, faster, and cheaper because it has superior economies of scale, greater depth of experience, better technology, and access to lower-cost labor markets. 

According to Hintze, pharmaceutical companies are missing out on the full advantages of clinical research outsourcing because they are unwilling to relinquish control. Although some of this reluctance reflects the industry's regulatory environment and prominence as a target for lawsuits, Hintze says that pharmaceutical companies primarily need to get their "blocking and tackling" right. In particular, they need to be better at defining their outsourcing objectives, establishing governance mechanisms, and training staff responsible for managing outsourcing relationships. 

The understanding and alignment of objectives between clients and CROs was one of the biggest problems highlighted in the Everest survey. Hintze says that companies are often inconsistent in following their stated objectives; for instance, stating initially that innovation is a prime objective, then focusing on price when it comes time to negotiate the contract. He also notes that agreements and relationships developed among operational people are often undone once the negotiations are handed off to legal and procurement staff. 

Metrics should measure progress toward objectives, so developing effective metrics can't be achieved unless the objectives are aligned. Too often, metrics are defined after the project has started, rather being defined in the service agreement. Furthermore, notes Hintze, both the client and the contractor should have incentives to work toward the common objectives, and both should feel pain if they don't. 

Pharmaceutical companies also fail to pay adequate attention to relationship governance, says Hintze. Too often, governance is not dealt with until a problem arises after the project is launched. Without a proper structure for resolving problems, including escalation to higher management levels, issues can remain unresolved for long periods, jeopardizing project objectives and completion. 

The overwhelming majority of pharma company respondents to the Everest survey indicated that they prefer doing work in-house when speed or cost is of paramount importance. Interestingly, though, executives and operational staff see things differently: Executives are more favorably disposed to outsourcing, while the line-operations staff prefers keeping work in-house.  

This suggests that there is a missing link between executives' strategic vision and the day-to-day realities of managing outsourcing projects. The Everest research suggests that the disconnect may be in training: More than 60% of respondents indicated that they received either no training or only on-the-job training for their outsourcing management responsibilities.  

Although Hintze did not say so outright, the Everest survey suggests to me that pharmaceutical executives aren't providing adequate leadership in moving their organizations toward a more strategic approach to outsourcing. Accepting the notion that CROs are as competent as in-house staff, if not more so, is still a cultural challenge in most major pharmaceutical companies. The reluctance results from a mix of arrogance bred during years of financial success and the fear of compounding already-high risk arising from scientific and market factors with the additional risk posed by the loss of control over key processes. There may also be reluctance on the part of some managers to adopt outsourcing because it means a reduction of their headcount. 

Indeed, while the expenditures on contract services by major pharmaceutical companies continue to grow, companies have been slow to develop the infrastructure to support effective external sourcing. I was talking recently with a strategic sourcing director at a major pharmaceutical company. The role of his team is to support the sourcing activities in the company with "big-picture" analysis of issues like supply-and-demand conditions, development of the supplier base, and risk scenarios. He complained that the sourcing teams are very focused on managing transactions with existing suppliers and spend little time thinking about long-term strategic issues that could lead to more effective results from sourcing practices. 

Pharmaceutical companies seem to be moving in the right direction, but it will take more time. True outsourcing, the relinquishing of control, as Hintze defines it, is most often embraced only as part of a desperate effort to turn around a company's performance. This was true in the automotive industry, and it is evident in the efforts of some major pharmaceutical companies to respond to major pipeline and market reversals. Executives at 

(Whitehouse Station, NJ), for instance, have made public commitments to outsource more of their basic activities, and their efforts to flatten their organizations by culling out layers of management will lessen the resistance to developing effective outsourcing relationships. We also are seeing pharmaceutical companies and CROs experiment with models that incorporate more performance-based incentives, especially as more functional outsourcing relationships are developed (i.e., arrangements whereby companies outsource an entire functional process such as data management to an external service provider). 

It's taking some time, but pharmaceutical companies are beginning to appreciate that giving up some control can lead to much better outcomes. 

 is president of PharmSource Information Services, Inc., and publisher of 

Outsourcing

An industry survey finds that pharma's outsourcing practices keep the industry from reaping the full benefits of outsourcing.

Stall Out in R&D Outsourcing

(ISPE) launched a new initiative called Product Quality Lifecycle Implementation (PQLI) at its Washington Conference held in Washington D.C. in early June. 

ISPE says in its role as a "catalyst for change," the association is working with regulators in the United States, Europe, and Asia-Pacific to help industry find solutions to the challenges in implementing guidances of the International Conference on Harmonization (ICH). The goal of these sessions is to begin to define areas where industry will be able to provide the technical framework for the implementation of Quality by Design in regulatory submissions. 

 agreed to follow up with patients affected by 

(Basel, Switzerland)'s "Viracept" (nelfinavir), which was recalled in June. The drug, an antiretroviral medicine used to treat HIV-1 infected patients older than three years, was recalled from the European market after it was learned that some batches had become contaminated with ethyl mesilate during manufacturing. Ethyl mesilate is harmful to DNA. 

The agency's Committee for Medicinal Products for Human Use (CHMP) concluded on June 13 that there were insufficient data to establish which doses of ethyl mesilate might be toxic to humans and requested that Roche carry out animal studies to calculate this level more precisely. Preliminary results are expected by the end of 2007. 

CHMP also asked the company to identify the group of patients exposed to the contaminated batches of Viracept so that the committee can follow up and monitor their situation. CHMP plans to monitor all patients exposed to high levels of the contaminant in batches released since March 2007, as well as all pregnant women and children ever exposed to Viracept, including those children exposed in utero. 

The agency also recommended that the European Commission suspend Viracept's marketing authorization. Until the manufacturing issues are identified by CHMP and resolved, the drug will not be available to patients. 

(Rockville, MD), the European Commission (EC, Brussels, Belgium), and the 

(EMEA, London agreed to extend cooperative activities to the areas of pediatrics and medicinal products for rare diseases (i.e., orphan drugs). These activities will include scientific dialogue on extensions of therapeutic indications and risk-management plans. 

According to a prepared statement, the agreement "builds on the achievements in cooperation on vaccines, oncology, and pharmacogenomics" with the objective of "promoting and protecting public health, reducing regulatory burden and costs, and bringing innovative products to patients in a timely manner." 

The European Union recently adopted legislation governing pediatric therapeutics. During a meeting with FDA in mid-June, the EU finalized its  "Principles of Interactions" document, which aims to facilitate timely exchange of scientific information and ethical issues. The meeting also involved a discussion of "upstream regulatory cooperation on new medicines legislation." Although no details of this discussion were released, the agencies announced plans to hold a meeting on a "Transatlantic Workshop on Administrative Simplification in Medicines in Regulation" on November 28 in Brussels. 

—The House Subcommittee on Health voted to forward the amendments to the Prescription Drug User Fee Act to the House Committee on Energy and Commerce. The bill was altered slightly in committee. Langauge that would have eliminated the  

(Rockville, MD) preemption authority over state laws was removed, as was a provision limiting exclusivity to six months for all drugmakers 

Developments from the US Food and Drug Administration, European Medicines Agency, and other key regulatory bodies and news from key trade associations.

Regulatory and association news

 completed the sale of its medical nutrition business to Nestlé for $2.5 billion, one of the company's final steps in a divestment program to focus its strategy on healthcare, with pharmaceuticals at the core. The final step of this process, the previously announced divestment of Gerber baby foods for $5.5 billion, is expected to be completed this year.  

 (AMRI) completed its previously announced acquisition of two pharmaceutical manufacturing sites, along with additional land for expansion, in Aurangabad and Navi Mumbai, India for approximately $11 million in cash. AMRI acquired from the Runwal Group (Mumbai, India) the assets of Ariane Orgachem Pvt. Ltd. in Aurangabad and Ferico Laboratories Ltd. in Navi Mumbai. The facilities currently manufacture pharmaceutical intermediates and bulk active ingredients. AMRI also obtained additional land in Aurangabad and plans to invest approximately $15 million to expand and upgrade manufacturing capabilities over the next three years. In addition to expansion and improvement of intermediates and active pharmaceutical ingredient manufacturing capabilities, investments will include upgrades to existing environmental and safety systems and procedures, and improvements to wastewater treatment facilities.  

 plans to separate its hospital-based product business, Abraxis Pharmaceutical Products (APP), from its proprietary products businesses, Abraxis Oncology and Abraxis Research, to form two public companies. Abraxis Pharmaceutical Products will become APP Inc., and Abraxis Oncology and Abraxis Research will become the new Abraxis BioScience. 

 "Strategic initiatives executed over the past few years, including the acquisition of global rights to Abraxane and the nab technology platform, the acquisition of the AstraZeneca anesthesia/analgesic portfolio, and the acquisition of the Pfizer manufacturing facility in Puerto Rico, have accelerated the growth of two robust businesses with more than 1900 employees and combined revenues that are expected to approach $1 billion by the end of 2007," outlined  Patrick Soon-Shiong, chairman and CEO of Abraxis BioScience, in a company release. 

Following the separation of the businesses, each current shareholder will own one share of Abraxis Pharmaceutical Products, Inc., and one share of the new Abraxis BioScience, for each share previously held. The transaction is expected to be completed in the fourth quarter of 2007, subject to customary closing conditions, obtaining of a private-letter ruling from the 

(Washington, DC)that that the separation will be tax-free to Abraxis BioScience and its shareholders, and other regulatory approvals. 

Abraxis has received commitments for $1.45 billion of senior credit facilities comprised of a funded $1.3-billion term loan and an unfunded $150 million revolving credit facility. A portion of the proceeds raised through the debt financing will be used to repay the current company's existing debted and approximately $1.0 billion will be transferred to the new Abraxis BioScience immediately prior to the separation. Detailed information about the separation of the businesses will be provided when the company files a Form 10 registration statement for the new Abraxis BioScience, which is expected to be filed in the third quarter of 2007. 

Following the separation, APP will be one of the largest stand-alone publicly traded companies focused on injectable pharmaceuticals, according to the company, and will have approximately 1400 employees. APP expects to generate revenue growth in 2007 in the mid-teens over 2006 revenue of $583 million. The headquarters of APP will remain in Schaumburg, Illinois. 

Soon-Shiong will remain as chairman and will serve as CEO of APP. Thomas H. Silberg will continue to lead APP as president. Frank Harmon will remain as executive vice-president and chief operating officer of APP. Key executive officer positions, as well as the board of directors, will be named prior to, or at the time of, the close of the transaction. 

In 2006, APP had 10 abbreviated new drug application (ANDA) approvals. From 2001 to 2006, APP had 55 ANDA approvals. It has 29 ANDAs pending with 

 (Rockville, MD) and more than 60 product candidates in various stages of development, according to the company. 

The key technology platform of the new Abraxis Bioscience is its "nab" (nanoparticle-albumin bound) technology platform. The technology is commercialized in a nab-based form of the anticancer therapy paclitaxel.  

Abraxis Bioscience is developing other nab-based products, which include nab-docetaxel (ABI-008), mTOR inhibitor nab-rapamycin (ABI-009), and the HSP90 inhibitor nab-17AAG (ABI-010). The investigational new drug application (IND) for ABI-009 is the third investigational product based on the company's nab technololgy. Abraxis anticipates filing two additional IND submissions over the next 12 to 18 months for ABI-010 and nab-thiocolchicine dimer (ABI-011). 

Soon-Shiong, who will remain chairman and CEO of the new Abraxis BioScience, envisions that the new company will be positioned in personalized medicine. "The era of personalized medicine has arrived, and with the financial and scientific resources created as a result of this transaction, the new Abraxis BioScience will be uniquely positioned to forge new paradigms of drug discovery and personalized drug development," he said in a company release.  

The new Abraxis BioScience, as a stand-alone publicly traded company, will have its headquarters in Los Angeles, California and employ more than 500 people. The executive committee of Abraxis BioScience will remain in their current positions. The new board of directors for this business will be determined prior to, or at the close of, the transaction. 

will begin a consultation process with employees involved inthe production of an inhaler for "Exubera," the inhaled insulin product of

(New York). Based on a slow take-up for the product, Bespak expects lower production for the Exubera inhaler and redundancies among the 160 employees at Bespak's production facility in Milton Keynes. The costs of the staff reductions are recoverable by Bespak under the terms of its contract with Nektar Therapeutics. During the consultation process, Bespak will remain in detailed discussions with Nektar on potential strategies to address the short to medium-term supply issues. 

—The board of the generic-drug manufacturer 

recommended that Actavis's shareholders accept a revised offer for the company from 

 (London), an investment firm led by Bjorgolfur Thor Bjorgolfsson, chairman of Actavis.Under the terms of Novator's revised offer, Actavis shareholders would receive EUR 1.075 per share. This represents a premium of 19.6% over Actavis's share price on May 9, 2007, the day immediately prior to Novator's announcement of its initial offer, which was subsequently published on June 1, 2007. The revised offer represents an additional 10.6% increase above the initial offer of EUR 0.98 per share. The revised offer also contains a clause by which existing Actavis shareholders are entitled to receive an additional payment in the event that Novator sells 10% or more of its common equity interest in Actavis within 12 months of the revised offer closing.  

 (Tucson, AZ) for $75 dollars per share in cash, or roughly $3 billion. Ventana specializes in histopathology (tissue-based diagnostics). Roche says its entry into tissue-based diagnostics is an important step in its  strategy of delivering personalized healthcare solutions.  

Roche made multiple efforts to engage in discussions with Ventana's chairman and board concerning a negotiated transaction, but Ventana declined. Roche decided to commence a tender and remains willing to discuss a negotiated transaction agreed to by both parties, as this route continues to be Roche's preferred option. 

Roche will operate Ventana as a dedicated business within the Roche Diagnostics Division, and will retain Ventana's headquarters in Tucson, Arizona. On July 11, Ventana Medical Systems' board of directors recommended to the company's shareholders not to accept Roche's offer. 

formed a new division, Advanced Topical Solutions (ATS Pharmaceuticals). ATS will focus on gastroenterology and dermatology. 

,formerly Cardinal Health Pharmaceutical Technologies and Services, was officially launched as an independent company. Catalent was acquired by The Blackstone Group in April 2007. The company provides technology, development, manufacturing, and packaging solutions for pharmaceutical, biotechnology, and consumer healthcare companies. 

is restructuring to refocus its resources. The company will reduce its US workforce by approximately 70% and eliminate the position of chief operating officer. 

sold its American subsidiary Isochem, Inc. (Lockport, NY) to Buckingham Capital Partners II, LP. Isochem manufactures phosogene derivatives used as intermediates for the fine chemicals market. The company will be renamed VanDeMark Chemical Inc. 

 is closing its pilot manufacturing plant and reducing its workforce by approximately 40 employees. The closure was partially attributed to the company's decreased emphasis on internal manufacturing capabilities. The facility was used for pilot-scale production of proteins and antibodies. 

and Texcel Medical (East Longmeadow, MA) formed a strategic alliance to help pharmaceutical manufacturers and biotechnology companies bring combination products to market. The alliance brings together Microtest's testing facilities and regulatory experience and Texcel's manufacturing infrastructure and engineering expertise. 

 and Laurus Labs Limited (Hyderabad, India) are forming a new contract drug-development company to be called 

.The new company will be based in Hyderabad and provide integrated services, technologies, and manufacturing capabilities for the entire drug-development process. Aptuit Laurus will comprise a 160,000-ft

  research and development facility in Hyderabad, a large-scale manufacturing plant that is currently under construction in Vishakhapatnam, and Aptuit's existing informatics development and support group in Bangalore. Aptuit will invest approximately $100 million during the next four years to build on Aptuit Laurus's development, manufacturing, and informatics capabilities. 

plans to eliminate 32 jobs, approximately 5% of its workforce, as it forms Nabi Biologics and Corporate Shared Services groups. In addition, the company is engaging in discussions for the sale of all or a significant part of the company. 

is restructuring its anti-infectives business in an effort to make it more profitable. DSM plans to make the DSM Anti-Infectives business group a separate entity. In addition, DSM is partnering with North China Pharmaceutical Corporation Ltd. (Hebei Province, China) to create a joint venture for the production and marketing of anti-infectives in China. The restructuring is expected to result in the loss of around 100 jobs in 2007 and 2008. 

acquired all the technologies, assets, and related intellectual property of Particle and Coating Technologies Inc.(PCT, St. Louis). KV hopes the acquisition will augment the development of its advanced drug-delivery product pipeline. PCT uses proprietary processes to develop products for the pharmaceutical industry that include novel particle coatings, controlled release, inhalable particle delivery, and fast-dissolving tablets. 

A roundup of company moves and positioning from the pharmaceutical and biotechnology industries and contract service providers.

Mergers, acquisitions, and restructuring

Led by the United States, the North American pharmaceutical market accounts for almost half of global pharmaceutical sales, but select countries are increasing their share of the global market. By 2020, Brazil, China, India, Indonesia, Mexico, Russia, and Turkey are projected to account for almost 20% of the market. In addition to changing patterns for pharmaceutical industry growth, emerging countries also are stepping up their role in operations for drug development. 

Shifting patterns of global pharmaceutical growth

In 2006, pharmaceutical sales in North America, which accounts for 45% of global pharmaceutical sales, grew 8.3% to $290.1 billion, up from growth of 5.4% in 2005, according to 

 (Fairfield, CT). Sales in the five major European markets (France, Germany, Italy, Spain, and the United Kingdom) increased 4.4% to $123.2 billion, down from 4.8%-growth in 2005. Thus, 2006 was the third year of slowing performance. Sales in Latin America grew 12.7% to $33.6 billion, and sales in Asia Pacific (outside of Japan) and Africa grew 10.5% to $66 billion, according to IMS. Japan's pharmaceutical market declined 0.4% in 2006 to $64.0 billion, the result of the government's biennial price cuts.  

While established markets in Europe and Japan showed slowing pharmaceutical sales, China and India saw robust sales growth in 2006. Pharmaceutical sales in China grew 12.3%  to $13.4 billion in 2006, compared with growth of 20.5% in 2005, according to IMS Health. This slowdown in growth resulted from the government's introduction of a campaign to limit physician promotion of pharmaceuticals, according to IMS. India was one of the fastest growing markets in 2006, with pharmaceutical sales increasing 17.5% to $7.3 billion. 

 "Last year, India transitioned from a 'developing' market to an emerging one, with many multinational pharmaceutical companies tapping into the huge potential this market offers," said Ray Hill, IMS's general manager of global consulting, in a company release. "Several factors, including the acceptance of intellectual property rights, a robust economy, and the country's burgeoning healthcare needs, have contributed to accelerated growth in that country." 

 Overall, 27% of total market growth is now coming from countries with a per-capita gross national income of less than $20,000, according to IMS Health. As recently as 2001, these lower-income countries contributed just 13%. 

The growing importance of emerging countries to the future of the global pharmaceutical market is also underscored by a 2007 analysis by 

 (New York). By 2020, the global pharmaceutical market is expected to more than double in value to $1.3 trillion, and the seven emerging (E7) countries of Brazil, China, India, Indonesia, Mexico, Russia, and Turkey could account for as much as one-fifth of global pharmaceutical sales. That growth parallels overall improving economics for the E7 countries. The real gross domestic product (GDP) of the E7 countries is projected to triple from $5.1 trillion in 2004 to $15.7 trillion in 2020, but  real GDP growth of the G7 countries (Canada, United States, France, Germany, Italy, Japan, and the United Kingdom) will grow by 40% from $25.8 trillion to $36.1 trillion, according to the PricewaterCoopers report, "Pharma 2020: The Vision, Which Path Will You Take?" 

Growth of offshore drug-development activities

The rise of domestic pharmaceutical markets also is changing the participation of those countries in drug-development services. A 2006 analysis by the 

 points to the growing partnerships between multinational pharmaceutical companies (MPCs) and local companies in India.  

"India's greatest attraction is its promise of near-immediate gratification for MPCs that seek to enhance chemistry-related activities and accelerate clinical trials," said senior partner John Wong, regional chairman of Boston Consulting Group's Asia-Pacific region and a coauthor of the 2006 report, "Harnessing the Power of India: Rising to the Challenge in Biopharm R&D", in a company release.   

 "Deciding whether to engage in India is not nearly as difficult as deciding how," said Simon Goodall, partner at Boston Consulting Group and coauthor of the report. "The key to any game plan in India is to determine which services best support your strategy and which options will foster success. When it comes to a strategy for investing in India, one size does not fit all."  

He points out that each company must establish its own approach and take into consideration variables such as previous offshoring experience, concerns about security and control, aversion to risk, and budget. The most critical influence on a company's chosen approach is the nature and scope of the planned activities. Clinical trials, data management, or less complex chemistry activities, for example, might be safely outsourced to an established local vendor, according to the Boston Consulting Group study. Advanced chemistry work or preclinical trials, in contrast, might require a local collaborator with proven end-to-end capabilities or a captive facility tooled with top-notch equipment and staff. 

The report points out that the multinational pharmaceutical companies should take at longer-term perspective when evaluating India as source for operations. This approach would consider operations as part of a global network rather than a short-term solution for less expensive custom synthesis or biostatistics work. 

The growing role of India in the pharmaceutical value chain is also evident in increased partnerships with Indian drug-development companies and by internal investment by the pharmaceutical majors in the region. 

(New York) unveiled plans to expand its research and development capabilities in India. The company said it will "significantly" increase the scope of its existing relationship with 

 (Bangalore, India) to further develop integrated capabilities in India in medicinal chemistry, biology, drug metabolism, and pharmaceutical development. Under the terms of the agreement, Biocon, through its subsidiary Syngene International, will work with Bristol-Myers Squibb to establish a research facility in Bangalore that could ultimately house more than 400 scientists to help advance Bristol-Myers Squibb's discovery and early drug development. 

In a separate multiyear agreement, Bristol-Myers Squibb expanded its relationship with 

 (New York) to include support for clinical data and document management, pharmacovigilance, and scientific writing functions in India. Accenture will also provide maintenance and support for research and development (R&D) information systems. Bristol-Myers Squibb will use Accenture's life- science centers in Bangalore and Chennai.  

(London) opened a new $15-million process R&D laboratory next to its R&D center in Bangalore, India. The new 8000-m

  process R&D facility can accommodate up to 75 scientists. The facility is AstraZeneca's only process R&D facility outside of Europe and is the company's fourth such facility overall. The company also has two process R&D facilities in the United Kingdom and one in Sweden.  

China's role in the pharmaceutical value chain

Just as India is raising its profile in the pharmaceutical value chain, so is China, and key considerations for the pharmaceutical industry are how to position its drug-development activities in India and China and how to balance internal operations and outsourcing activities in those countries. 

While analysts say the offshoring strategies should involve both countries in the near and the longer terms, China and India require differing business models. "Outsourcing some of a company's 'excess' leads to India is a great way to quickly ease bottlenecks and access a broad and reliable vendor base," said Kim Wagner, partner at Boston Consulting Group and coauthor of the 2006 report "Looking Eastward: Tapping China and India to Reinvigorate the Global Biopharmaceutical Industry," in a company release. "In contrast, the optimal business model in China is generally the captive R&D center, which helps ensure a stake in that country's huge potential market in the longer term."  

China's increasing significance in the R&D strategy of the pharmaceutical majors can be seen by several recent investments. 

(GSK, London) opened a new R&D center in Shanghai. GSK R&D China will focus on research into neurodegeneration with the goal of creating new medicines for disorders such as multiple sclerosis, Parkinson's disease, and Alzheimer's disease. The center will eventually direct the global discovery and development activities within its therapeutic area from drug-target identification to late-stage clinical studies, while collaborating with research institutions elsewhere in China and other countries. 

GSK also has a growing R&D presence in China. For the past decade, the company has collaborated in discovery with the Combinatorial Chemistry Laboratory at the 

, the drug-research institute of the Chinese Academy of Sciences. In development, GSK started 17 clinical studies in China during 2006 and plans an additional 18 in 2007, according to a 2007 GSK press release.  

GSK has its Chinese headquarters in Shanghai and major offices in Beijing, Tianjin, and Hong Kong. The company employs more than 2200 people in China and pursues all its businesses there: prescription medicines, vaccines, and over-the-counter medicines. It has manufacturing plants in Shanghai, Tianjin, and Suzhou. 

 (Basel, Switzerland) announced plans to invest $100 million to build an integrated biomedical R&D center in Shanghai's Zhangjiang Hi-Tech Park that will become an integral part of its global R&D network. R&D activities at the site will initially focus on addressing medical needs in China and Asia, particularly infectious causes of cancer endemic to the region. 

 "The Shanghai center will allow us to combine modern drug-discovery approaches with those of traditional Chinese medicine that have been used to treat patients in China for thousands of years," said Daniel Vasella, chairman and CEO of Novartis, in a November 2006 press release. "This new research center will help Novartis contribute to the needs of patients in China and elsewhere and has the potential to become a global center for biomedical innovation." 

The Shanghai center will become the eighth site within the Novartis's R&D network. Scientists will initially work in a 5000-m

  start-up facility that was scheduled to open in May 2007. Construction of a permanent 38,000-m

 facility for approximately 400 scientists will begin in July 2007. The site will also include an integrated exploratory development center that will closely collaborate with basic research and local academic centers to further develop the concept of mechanism-based medicine and leverage emerging new technologies.  

Novartis ranks as the fourth-largest pharmaceutical company in the Chinese hospital market with a compound annual sales growth rate of more than 30% during the last five years, according to the company. In February 2006, construction began on a $83- million development and production plant in Changshu, Jiangsu Province, scheduled to open in 2007.  

The company also has  R&D collaborations with Chinese partners. Novartis has a research partnership with the  

to identify and test traditional medicines for pharmacological properties. It also established collaborations with the pharmaceutical R&D service company in 

 named Shanghai's Zhangijang Hi-Tech Park as the initial base for its new Innovation Center China (ICC). The ICC was first announced in May 2006 as part of larger $100-million R&D investment package and is the primary focus of AstraZeneca's latest investment in China. The facility was scheduled to open in mid-2007. AstraZeneca already has 2900 employees in China and a manufacturing site at Wuxi, Jiangsu Province and clinical research facilities.   

(CAS, Beijing) established a joint research foundation in China. The aim of Novo Nordisk-Chinese Academy of Science Research Foundation is to fund or cofund activities of common interest within the fields of diabetes and biopharmaceuticals, including related disciplines and technologies such as protein chemistry, immunology,  inflammation, toxicology, oncology, endocrinology, and drug delivery. 

In January 2002, Novo Nordisk established an R&D center in Beijing. After five years of R&D activity in China, Novo Nordisk decided to cooperate with CAS and fund $2 million  in supporting research in diabetes and biopharmaceuticals. 

In 2006, Novo Nordisk expanded its production facilities in Tianjin, China  and  designated the Tianjin plant as Novo Nordisk's primary production base in the Asia Pacific region for supply to China and export markets. The expansion included a new assembly plant for Novo Nordisk's "NovoPen 3" insulin pen as well as an expansion of current packaging facilities for "Penfill" insulin cartridges and "FlexPen" prefilled insulin pens. Novo Nordisk's first plant in Tianjin was built in 2002, and the new plant was built on its existing 40,000-m

 (Whitehouse Station, NJ) extended and expanded an agreement through which the contract R&D firm 

(Shanghai) for providing chemistry-related R&D services. The ecompanies first signed a pact in 2003, and the new agreement is effective through 2010. The new agreement increases the number of full-time WuXi scientists assisting Merck and includes a broad range of functional services including synthesis, process research, and medicinal chemistry.   

Reflecting the growing importance of China in its business strategy, 

(New York) held its board of directors meeting in Shanghai last October, marking the first time the company had convened this meeting in China. Pfizer has invested more than $500 million in China as of October 2006, according to a Pfizer China press release. 

Investment in other emerging pharmaceutical markets

In addition to China, the large pharmaceutical companies are also investing in other emerging pharmaceutical markets.  

In April 2007, Novo Nordisk inaugurated a major expansion of its production facilities in Montes Claros, Brazil. The new 37,000-m

  plant is the largest manufacturing facility of Novo Nordisk outside Denmark and represents an investment of approximately $200 million. According to Novo Nordisk,the facility is the largest single investment in the history of the pharmaceutical industry in Brazil. 

The new unit will increase Novo Nordisk's insulin manufacturing capacity in Brazil significantly. The plant will formulate and fill insulin into 3-mL "Penfill" cartridges, which are used in the company's pen systems. Approximately 95% of the total volume produced in the Montes Claros plant will be exported to other countries such as Germany, Austria, the United Kingdom, Ireland, Australia, New Zealand, Canada, and later to several developing countries.  

Novo Nordisk recently approved an additional investment of  $50 million for the construction of a manufacturing facility for  the "FlexPen," prefilled insulin pen in Montes Claros. The new FlexPen facility is expected to become operational by 2009. 

Global Feature

Although North America accounts for the largest share of the pharmaceutical market, Brazil, China, India, Indonesia, Mexico, Russia, and Turkey are projected to account for almost one-fifth of the global market by 2020. The rising participation in select countries' drug-development activities is evident by recent investment and outsourcing by the pharmaceutical majors.

Changing Patterns for Global Pharmaceutical Growth

withdrew its new drug application for rimonabant for the treatment of obesity in the United States. A  

(Rockville, MD) advisory panel recently said that the drug should not be approved because it may increase suicidal thoughts and depression. European regulatory authorities are reviewing the safety and efficacy data for the drug. Sanofi says it is working with FDA on required modification to resubmit its file at a future date.  

—The European Commission  (Brussels) granted marketing authorization for 

 (New Brunswick, NJ) "Invega" (paliperidone prolonged release tablets), an atypical antipsychotic medication for the treatment of schizophrenia. This once-daily medication is specifically designed to deliver paliperidone,  the active ingredient in Invega, through the  osmotic delivery system "OROS." Invega was approved in the United States in December 2006.  

reported that the Committee for Medicinal Products for Human Use (CHMP) of the 

has issued a positive opinion recommending marketing authorization of a new formulation of "Rebif" (interferon beta-1a) for treating relapsing multiple sclerosis. The CHMP recommendation will now be considered by the European Commission, which will deliver its final decision on the granting of the marketing authorization. 

(Rockville, MD) has accepted the new drug application for "Isentress" (raltegravir). Isentress is  an antiviral agent called an integrase inhibitor that inhibits the insertion of HIV DNA into human DNA. FDA granted Isentress priority review status. Merck anticipates FDA action by mid-October and is moving forward with regulatory filings in countries outside of the United States. 

—The competition between biosimilars and branded drugs intensified followong favorable reviews of three biosimilar products for a popular treatment for anemia. During a June 18–21 meeting, the 

  Committee for Medicinal Products for Human Use (CHMP) recommended marketing authorization for three products shown to be similar to "Eprex/Erypo" (epoetin alfa) manufactured by Janssen-Cilag, a subsidiary of 

 (New Brunswick, NJ). CHMP granted positive opinions to "Binocrit" from  

(Holzkirchen, Germany), "Epoetin alfa Hexal" from 

(Holzkirchen, Germany), and "Abseamed" from  

Epoetin alfa is an injectable protein drug for treating anemia associated with chronic kidney disease and in oncology patients. It also is the active ingredient in "Epogen" (epoetin alfa recombinant) from 

 (Thousand Oaks, CA) and "Procrit" (epoetin alfa) from Ortho Biotech (Bridgewater, NJ), a Johnson & Johnson Company. 

—Senators Orrin Hatch (R-UT), Edward Kennedy (D-MA), Michael Enzi (R-WY), and Hillary Clinton (D-NY) agreed on legislation that would authorize the 

 (Rockville, MD) to approve follow-on versions of biologic therapies. The legislation establishes standards by which FDA would approve follow-on biologics, a means to quickly resolve patent disputes, and incentives that encourage innovation and the development of new therapies. 

Announcing the legislation, titled the "Biologics Price Competition and Innovation Act of 2007," Senator Hatch stated that biologics are the future of medicine. He remarked, "Just as we did with Hatch–Waxman in 1984, we're giving incentives for both pioneer and generic drug firms. We're ensuring that we continue to get the latest medical breakthroughs while creating a clear pathway to get less expensive biologics on the market quickly." 

The act would require an applicant to demonstrate the absence of clinically meaningful differences in safety, purity, and potency between its biosimilar product and the brand product. The demonstration includes analytical data, animal testing, and at least one clinical study, unless FDA determines this requirement is unnecessary. 

Under the legislation, FDA could approve a biosimilar product as interchangeable, thus allowing it to be substituted for the brand product without the intervention of the prescribing healthcare provider. To demonstrate interchangeability would require evidence that the biosimilar product produces the same clinical result as the brand product in any patient and presents no additional risk in terms of safety or diminished efficacy if a patient changes between products. 

As an incentive for the development of new biological products and interchangeable biosimilar products, the act grants 12 years of data exclusivity for the brand company, during which a biosimilar product may not be approved. The act also provides one year of exclusivity for the first interchangeable biological product. 

The legislation outlines a process for identifying and resolving patents that the biosimilar product may infringe. The biosimilar applicant and the brand company together would identify the patents at issue and offer their opinions as to their validity. The two parties then would either agree to a list of these patents to be litigated first or exchange lists. The brand company must then sue the biosimilar applicant within 30 days to defend the patents. If a court decides that a patent is valid and was infringed by the biosimilar product before the 12-year data exclusivity has ended, the court must enjoin infringement of the patent until it expires. For identified patents not included in this initial litigation, the biosimilar applicant must give the brand company notice 180 days before it launches its product, and the brand company may then seek a preliminary injunction to block the launch. 

discontinued its development program in lung cancer for PF-3512676, an investigational compound, in combination with cytotoxic chemotherapy. This includes two Phase III clinical trials and two Phase II clinical trials. Pfizer licensed PF-3512676 from 

				 (Rockville, MD) issued an approvable letter for maraviroc, which is under review as a therapy for treatment-experienced patients infected with CCR5-tropic HIV-1. 

—The US District Court for the Southern District of New York affirmed the validity and enforceability of 

's(Paris) patent on clopidogrel bisulfate. Clopidogrel is the active ingredient in "Plavix," the company's treatment for coronary artery disease. The court's decision effectively maintains patent protection for this product in the United States until November 2011. Sanofi-Aventis and 

's(Weston, ON, Canada) generic clopidogrel bisulfate infringed on Sanofi-Aventis's patent and prohibited Apotex from marketing the product in the United States until its patent expires. The Court rejected Sanofi's and BMS's request to make Apotex recall product it had already shipped. 

On August 31, 2006, the court granted Sanofi's and BMS's request for a preliminary injunction to halt sales of Apotex's generic version of clopidogrel. Apotex subsequently filed a motion to stay the injunction, which the court denied. 

The latest on active pharmaceutical ingredients in development and under commercial manufacture.

API watch

                                           Germantown, WI (July 9)—

appointed James Davidson as chief operating officer. In this role, he will be responsible for all technical operations, providing technical and strategic oversight to all chemistry, engineering, and quality functions within the organization. Prior to joining CML, Jim Davidson spent 23 years in the pharmaceutical industry with Parke-Davis/Warner-Lambert and Pfizer, most recently as vice-president of science and technology within the pharmaceutical sciences division of Pfizer. In this role, he managed groups located in Michigan, Missouri and California and was responsible for all aspects of the chemical (API), analytical, and pharmaceutical dosage-form development across a significant portion of Pfizer's research portfolio. 

(AMRI) gave Prasad S. Raje leadership responsibility for AMRI's manufacturing business in India. He transferred from Syracuse, New York to company offices in Mumbai, India and will report to Jonathan Evans, AMRI vice-president for pharmaceutical development and manufacturing. 

 reported that Peter Kellogg, executive vice-president, finance and chief financial officer (CFO) will leave the organization to become CFO at  

(Whitehouse Station, NJ).  Kellogg will leave Biogen Idec on Aug. 10. The company will announce its plans regarding the CFO position over the coming weeks. 

PTSM: Pharmaceutical Technology Sourcing and Management-07-13-2007