Looking at the first 11 months of 2013, mergers and acquisitions (M&A) in the pharmaceutical/biopharmaceutical industry have increased on both a value and volume basis compared to the same period last year. Although there were no megamergers in the industry, there were several noteworthy deals. 

Thus far in 2013, there have been several noteworthy transactions. Amgen’s $10.4-billion acquisition of the biopharmaceutical company Onyx Pharmaceuticals, is one of the largest therapeutics transactions of the year. In August 2013, seeking to build its oncology drug portfolio, Amgen agreed to acquire the biopharmaceutical Onyx Pharmaceuticals for $10.4 billion ($9.7 billion net of estimated Onxy cash) and closed on the deal in October 2013. Onyx Pharmaceuticals has a growing multiple myeloma franchise, which includes Kyprolis (carfilzomib) for injection already approved in the United States. Onyx holds global rights to Kyprolis, excluding Japan. Kyprolis has orphan-drug designation in the United States with exclusivity until July 2019, and patents in the US that extend until at least 2025. In addition, Onyx has three partnered oncology assets: Nexavar (sorafenib) tablets (an Onyx and Bayer HealthCare Pharmaceuticals compound), an oral kinase inhibitor, approved in the US for unresectable hepatocellular carcinoma and advanced renal cell carcinoma; Stivarga (regorafenib) tablets (a Bayer compound), an oral kinase inhibitor, approved in the US for for metastatic colorectal cancer; and palbociclib (a Pfizer compound), an oral, small-molecule cyclin-dependent kinase 4/6 inhibitor, now in Phase III trials, to treat ER+, HER2-negative advanced breast cancer. Amgen says that the acquisition of Onyx will add to Amgen's late-stage pipeline. This pipeline includes nine innovative products for which registration-enabling data are anticipated by 2016. Four of these products are oncology products. Onyx's pipeline complements Amgen's oncology portfolio, according to Amgen.

Also, in August 2013, Amgen closed on its deal with the French pharmaceutical company Servier under which Amgen has obtained commercial rights in the US to Servier's oral drug, approved in the European Union as Procoralan (ivabradine), for chronic heart failure and stable angina in patients with elevated heart rates. Amgen also received an exclusive option to develop and commercialize Servier's investigational molecule, S38844, for cardiovascular diseases in the US. Currently, S38844 is in Phase II studies for the treatment of heart failure. Through the collaboration, Servier obtained an exclusive option to commercialize omecamtiv mecarbil in Europe. Omecamtiv mecarbil is an activator of cardiac myosin, which is currently being tested for potential applications in the treatment of heart failure in patients with systolic dysfunction.

Thus far, AstraZeneca has been active on the M&A front. In August 2013, MedImmune, the company’s biologics arm, agreed to acquire the biopharmaceutical company Amplimmune for $500 million with $225 million upfront and the rest contingent on the achievement of specified milestones. It closed on the deal in October 2013. Amplimmune is a Maryland-based developer of cancer immunotherapeutics.

The acquisitions strengthen MedImmune’s oncology pipeline by obtaining multiple early-stage assets for its immune-mediated cancer therapy (IMT-C) portfolio, including AMP-514, an antiprogrammed cell death 1 monoclonal antibody (mAb). AMP-514 is in late-stage preclinical development, and Amplimmune expects to file an investigational new drug filing before the end of 2013. Other Amplimmune assets include multiple preclinical molecules targeting the B7 pathways.

Founded in 2007 and headquartered in Gaithersburg, Marlyand, Amplimmune is focused on developing costimulatory/co-inhibitory molecules that rebalance the immune system and are intended for treating cancer, autoimmune disease, infectious disease, and transplantation. Amplimmune has three biologic product candidates: AMP-224 is in Phase Ib trials in cancer; AMP-110 for autoimmune diseases in partnership with Daiichi Sankyo; and AMP-514 for cancer. The acquisition builds on MedImmune's oncology R&D activities. MedImmune’s oncology research is focused on IMT-C, a therapeutic approach that may lead to durable and prolonged response rates across a range of cancer types. IMT-Cs are being designed for the immune system to counteract the tactics employed by cancer cells to avoid detection and attack the body. MedImmune's clinical-stage program includes tremelimumab, an anti-OX40 mAb, and MEDI-4736, an anti-PD-L1 mAb. The acquisition of the Amplimmune technology and pipeline strengthens AstraZeneca's and MedImmune portfolio to enable the use of data-driven combinations of IMT-C molecules as well as combinations with highly targeted small molecules.

In another deal, in June 2013, AstraZeneca completed its $1.2-billion acquisition of Pearl Therapeutics, which is focused on the development of inhaled small-molecule therapeutics for respiratory disease. The acquisition gives AstraZeneca access to a potential new treatment for chronic obstructive pulmonary disease currently in late-stage development and inhaler and formulation technology that provides a platform for future combination products. The $1.2-billion deal included $560 million in upfront payments, $450 million in deferred compensation contingent on reaching certain development and regulatory milestones, and $140 million in sales payments, contingent on reaching sales thresholds. 

In May 2013, AstraZeneca agreed to acquire Omthera Pharmaceuticals, a specialty pharmaceutical company based in Princeton, New Jersey, focused on the development and commercialization of new therapies for abnormal levels of lipids in the blood for $323 million ($260 million in cash and $63 million for Omthera’s cash balance). Omthera’s investigational product, Epanova, being developed for the treatment of patients with very high triglycerides, is a omega-3 free fatty acid composition that has been shown to bolster levels of eicosapentaenoic acid and docosahexaenoic acid in the blood. In addition to the cash payment, each Omthera shareholder will receive contingent value rights of up to approximately $4.70 per share, equating to approximately $120 million in total, if specified milestones related to Epanova are achieved, or if a milestone related to global net sales is achieved. This will bring the total potential acquisition cost to approximately $443 million. The transaction is expected to close in the third quarter of 2013. Also in April 2013, MedImmune, the biologics arm of AstraZeneca, acquired AlphaCore Pharma, an Ann Arbor, Michigan-based biotechnology company focused on the development of ACP-501, a recombinant human lecithin-cholesterol acyltransferase (LCAT) enzyme.

In a move to bolster its oncology portfolio, Johnson & Johnson completed its $1-billion acquisition of Aragon Pharmaceuticals, a privately held pharmaceutical discovery and development company focused on drugs to treat hormonally driven cancers. The acquisition includes Aragon’s androgen receptor antagonist program. Aragon’s lead product candidate is a second-generation androgen receptor signaling inhibitor, ARN-509, in Phase III development for castration-resistant prostate cancer (CRPC). Under the terms of the agreement, Johnson & Johnson is making an upfront cash payment of $650 million, plus additional contingent payments of up to $350 million based on reaching predetermined milestones.

In May 2013, GlaxoSmithKline acquired Okairos, a Swiss privately held developer of vaccine platform technologies for EUR 250 million ($325 million) in cash. GSK plans to use the vaccine platform in its of new prophylactic vaccines (designed to prevent infection) as well as new classes of therapeutic vaccines (designed to treat infection or disease). The deal also includes a small number of early-stage assets.

Other deals include: Perrigo's proposed $8.6-billion acquisition of Elan; Shire's proposed $4.2-billion acquisition of Viro Pharma, a company specializing in treatments for rare diseases; Valeant's $8.7-billion acquisition of Bausch + Lomb; and Actavis' $8.5-billion acquisition of Warner Chillcott. 

Among contract service providers, two key moves were the merger of Cambridge Major Laboratories and AAIPharma Services and the proposed merger of Patheon with DSM Pharmaceutical Products. 

Articles

Global Feature

Pharmaceutical Technology takes a look at the major deals and moves of 2013.

Pharma's Year in Review

 reports that a simple low-cost device that helps newborn babies to breathe has been awarded the highest fund in the first GSK and Save the Children $1-million Healthcare Innovation Award.The life-saving kit, called a "bubble" Continuous Positive Airway Pressure (bCPAP) is used to help babies in respiratory distress, which is often caused by acute respiratory infections like pneumonia. CPAP devices use air pressure to keep patients airways open, and as there are few wall-mounted air supplies in Malawi hospitals, the newly innovated bCPAP air pump works on its own. Plus it is made of durable materials that are inexpensive and easy to repair.  A similar version is already commonly used in developed countries where they cost at least $6,000 each. This innovative low-cost bubble CPAP adaptation can be produced for approximately $400.The organization behind the innovation and recipients of a $400,000 share of the $1-million award is Friends of Sick Children, Malawi, a partnership between the pediatric department of Queen Elizabeth Central Hospital in Blantyre, Malawi, Rice 360°: Institute for Global Health Technologies in the United States and the University of Malawi College of Medicine. The funding from the Healthcare Innovation Award, along with backing from the Ministry of Health in Malawi, will mean use of the device can be replicated and expanded to Tanzania, Zambia, and South Africa.

Sanofi Pasteur, the vaccines division of 

 and provider of oral and inactivated polio vaccines (OPV and IPV) commended the Global Alliance for Vaccines and Immunization (GAVI) for their recently announced support of the introduction of IPV in routine immunization in the world’s 73 poorest countries. The combined use of OPV and IPV is expected to improve immunity in countries threatened by the resurgence of polio. The support from GAVI Alliance paves the way for the implementation of the recommendation from the World Health Organization’s (WHO) expert group on immunization (SAGE) that all countries introduce at least one dose of injectable inactivated polio vaccine (IPV) in routine polio immunization programs.The GAVI Board also announced it intends to enlarge the Alliance’s vaccine portfolio. GAVI will further support yellow fever vaccination in endemic regions and will contribute to a global cholera vaccine stockpile for use in epidemic and endemic settings. 

CSR and Sustainability Forum

A roundup of developments in global health and sustainability from the bio/pharmaceutical industry, its suppliers, and other public and private organizations.

Pharma News in Global Health and Sustainability

Global spending on medicines is expected to meet the $1 trillion threshold in 2014 and reach $1.17 trillion by 2017, according to a recent report by the IMS Institute for Healthcare Informatics. The report, 

The Global Use of Medicines: Outlook through 2017,

 found that growth in global spending on medicines increased 2.6% to $965 billion in 2012 and is forecast to grow at a 3–6% compound annual growth rate (CAGR) over the next five years. 

IMS projects a gradual increase in global medicine spending growth during the next five years. Annual growth in spending is expected to rise from 2–3% in 2013 to 5–7%  in 2017, the highest pace of growth since 2009. The absolute global spend for pharmaceuticals will increase by $230–260 billion on a constant dollar basis compared to the $217 billion in the past five years. The single largest impact on growth levels is the continuing effect of many blockbuster drugs coming off patent and an increase in lower-cost generic alternatives. In addition, the gradual return of global growth in gross domestic product (GDP)  to more than 4% by 2017 will contribute to an upward trend in medicine spending levels. 

“As we pass the fifth anniversary of the global economic slowdown, and with many countries moving toward universal health coverage, we expect to see continued divergence in growth rates between the pharmerging and developed markets,” said Murray Aitken, executive director of the IMS Institute for Healthcare Informatics, in an IMS press release. “Austerity measures aimed at medicine budgets along with the growing availability of lower-cost generics will lead to annual spending growth of 1–4% among the markets of North America, Europe, and Japan. In contrast, pharmerging nations will experience 10–13% spending growth.” 

In 2012, the developed markets in aggregate reduced their medicine spending for the first time due to patent expiries and austerity measures, along with policy changes to increase generic-drug penetration, according to IMS. Growth in developed markets will rebound from negative $3 billion in 2012 to $20 billion to $25 billion by 2017. The US will resume increased spending levels in 2014 after two years of reduction due to expansion of healthcare access and lower patent-expiry levels. Growth in the “pharmerging” markets, as defined by IMS, will increase from $26 billion in 2012 to between $30 billion and $50 billion in 2017, primarily due to increased access to medicines as infrastructure and health systems evolve, notes IMS. The pharmerging countries include China, Tier 2 countries (Brazil, Russia, and India), and Tier 3 countries (Mexico, Turkey, Venezuela, Poland, Argentina, Saudi Arabia, Indonesia, Colombia, Thailand, Ukraine, South Africa, Egypt, Romania, Algeria, Vietnam, Pakistan, and Nigeria).

The developed markets of North America, Europe, and Japan will see modest single-digit spending growth during the next five years due to a combination of economic and healthcare austerity measures and savings realized from the growing availability of lower cost generic versions of brands following their patent expiry.

In the US, the next five years will see the greatest impact from the implementation of the Affordable Care Act, notes IMS. IMS notes that the uncertainty ranges from the level of enrollment of the currently insured to the speed with which the payment system changes from one based on fee-for-service to one based on performance and patient outcomes. The change in the service-delivery model, including the corporatization of medical care and the relative negotiating power between payers and providers, will impact medicine spending, though the direction and magnitude of that impact is uncertain, notes the IMS report. For the US pharmaceutical market, IMS estimates a compound annual growth rate (CAGR) of 1 to 4% from 2013–2017. The US pharmaceutical market is projected to reach between $350 billion and $380 billion by 2017. Patent expiries and the impact of low-cost generics will impact spending growth throughout the forecast period, which had their strongest impact in 2012 and 2013. Less impact from expiries contributes to approximately half of the higher market growth in 2014 relative to 2013. 

Pharmaceutical spending growth in the EU5 (Germany, France, Italy, United Kingdom, and Spain) is expected to between zero and 3% for the period of 2013 to 2017 compared to 2.4% for 2008–2012, notes the IMS report. Pharmaceutical spending in the EU 5 is projected to reach $140 billion and $170 billion in 2017, according to IMS. Europe has seen a greater adoption of generics and more restrictive policies that have made patients in almost all European countries less likely to gain access to innovative medicines, notes the IMS report. The performance of the European pharmaceutical industry during the next five years will depend on the extent of the economic recovery in Europe. Higher growth is anticipated in Germany and the United Kingdom compared to Spain, Italy, and France as these markets already have generically efficient markets. All five major European countries have seen a lower uptake of new medicines in the most recent five-year period. Germany and the UK had strong uptake controls prior to the financial crisis and see the least deterioration. 

 In Japan, forecast spending growth of  a 2–5% CAGR is projected from 2013 to 2017, notes IMS. In Japan, the key issue is the establishment of a generic-drug market, driven by the Japanese Ministry of Health, Labor and Wealth’s (MHLW) goal of increasing generic volume as a percentage of generic and listed drugs to 60% in 2018. If the MHLW is successful, it would mean that 2018 generic levels in Japan would be at a level similar to that of France and Spain. 

For the “pharmerging” markets, IMS projects that the market will increase at a CAGR of 10–13% and reach between $370 billion and $400 billion by 2017. For China, the largest pharmerging market,  IMS projects a CAGR of 14–17% in the next five years with the market reaching between $160 billion and $190 billion by 2017. Despite the healthy projections, pharmaceutical industry growth in China was revised downward due to a slowdown in GDP growth due to a loss in business confidence, along with lower investment, in the market, notes IMS, which points to several key issues. Volume-based growth will be driven by government efforts to improve healthcare and medical services, including expansion of insurance coverage to critical illness and increased use of private hospitals. Efforts to expand the essential drug list and the National Development and Reform Commission recent investigation into drug prices and cost could result in a cheaper, off-patent original brand market. Also, a new revision of the National Reimbursement Drug List could result in a more comprehensive list of innovative products receiving reimbursement, notes IMS. 

 Growth in Tier 2 countries (Brazil, Russia, and India) will show a CAGR of 10-13% for the period of 2013–2017 and reach between $90 billion and $110 billion by 2017. Growth in India’s pharmaceutical market, the second largest emerging market behind China and largest pharmaceutical market among the Tier 2 countries, will show a CAGR of 5–8% between 2013 and 2017 with the market reaching between $100 billion and $130 billion by 2017, according to IMS. Growth in the Tier 3 pharmerging markets (Mexico, Turkey, Venezuela, Poland, Argentina, Saudi Arabia, Indonesia, Colombia, Thailand, Ukraine, South Africa, Egypt, Romania, Algeria, Vietnam, Pakistan, and Nigeria) will be between 5% and 8% during the next five years with the market expected to reach between $100 billion and $130 billion by 2017. 

Global spending on medicines is expected to meet the $1 trillion threshold in 2014 and reach $1.17 trillion by 2017, according to a recent report by the IMS Institute for Healthcare Informatics

The Global Divide in Pharma Industry Growth

It’s becoming harder to ignore the rapid emergence and impact of single-use devices on biomanufacturing. Data from BioPlan Associates’

 10th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production

 suggest that the interest in disposable devices has begun to extend to biopharma operations beyond basic single-use bags and connectors (1). 

  BioPlan Associates asked more than 200 biopharma industry decision-makers to identify the top areas they want their suppliers to focus their new product development on. Four disposable device categories top the list, each cited by more than one-third of respondents (see Figure 1):  disposable products, bags and connectors (43.8%); disposable probes and sensors (39.6%); disposable bioreactors (34%); and disposable purification products (also 34%). 

Rounding out the top five innovation areas were process development (upstream) services (29.9%), followed by analytical assays (27.1%), process development (downstream) services (26.4%), and analytical development (26.4%). 

It’s not a surprise to see bags and connectors top the list. This area has been a growing trend over the past five years. While many respondents separately said they expect to see fully disposable facilities in the next five years, the predominant single-use paradigm still involves dropping multi-layer plastic laminated bags/liners into what are basically classic-design stainless-steel bioreactors, mixers, and other fluid containers. The majority of vendors are behind this approach, particularly as they invested heavily in expensive bag-making facilities in the past few years. This approach, though, may actually stifle long-term innovation--as vendors won’t be focusing as much on other more innovative product lines in the near future. 

Aside from bags and connectors, there is continuing demand for improvements in single-use bioprocessing sensors and probes. Currently, few single-use sensors are sufficiently robust, and sensors are restricted to relatively few analytes. Relatively few single-use sensor products are currently available, and there are often issues regarding ports and how to pass single-use sensors through bioreactors and other vessels and their bag liners. 

The industry is likely to see innovation in tubing and connectors, many targeted to replace and/or be cheaper than silicone, including fluoropolymers tubing, fluoropolymer-lined tubing, and new thermoplastics blended tubing. Many of these new tubing options will provide improved performance compared with silicone, likely by being heat-sterilizable at higher temperatures, lasting longer, and resulting in less leaching from plastics. 


  Several trends are driving innovation interest in single-use equipment. Greater application of quality-by-design (QbD) principles in manufacturing stimulates interest in probes and sensors. Similarly, innovation in probes and sensors is fueled by commercial interest in biosimilars and biobetters, which require the ability to demonstrate rigorous, extensive, and robust comparability. 

  Results from BioPlan’s study show that disposable innovation is growing. Interest in new disposable products is up in this year’s survey, and bags and connectors represent the highest level in at least the past four years at 43.8% of respondents (up from 38.9% in 2010). The same is true for disposable probes and sensors, up from 29.3% of respondents in 2010 to 39.6% in 2013. 

Interest for improved cell-culture media is down to 25% this year from 35.4% in 2010, suggesting that these products have improved sufficiently relative to the hurdles in other areas of bioprocessing, such as downstream processing. The pendulum may be swinging back from downstream problems, as other product areas experiencing a relative decrease this year in demand for improvements include: process development (downstream) services (26.4% this year versus 34.9% in 2010); chromatography products (25% vs. 36.7%); and general separation products (16.7%, from 20.5%). 

Disposable purification product innovation


  BioPlan evaluated the differences between how respondents at biotherapeutic developers and CMOs viewed the need for innovation. The two groups’ perspectives were quite different.

The most dramatic differences were seen with disposable purification products, with 61.1% of CMOs citing this as an area of innovation interest, more than twice the rate for developers, at 30.2%. CMOs are generally involved with many more and diverse products compared to innovator companies and see more issues with purification than developers. 

Aside from disposable purification products, CMOs expressed slightly less interest than developers in disposable product innovation (most notably for probes and sensors), surprising given that disposables provide the flexibility and rapid turnaround required by CMOs. Areas where CMOs had more interest compared to product developers included process development and downstream services, analytical development, process development and formulation, validation, and instrumentation.

On a regional basis, interest in disposable bags and connectors was fairly consistent across the United States (47.7%) and Western Europe (45.7%). US respondents were more attracted to innovation in disposable probes and sensors compared with Western Europeans (46.5% and 31.4%, respectively) and disposable bioreactors (38.4% vs 31.4%), while the opposite was true with respect to disposable purification products (34.9% and 42.9%, respectively). 

Respondents in the rest of the world in general were less interested in disposable innovation and more interested in services. Bioprocessing products are marketed and readily available worldwide, while many countries lack bioprocessing critical mass and infrastructure and have fewer CMO and CRO services available. 


  Improvements in upstream manufacturing have greatly improved yields in recent years, much of this due to improved cell lines and expression systems. With enhancements in these and other areas, users are now expressing desires for comparable improvements in downstream purification. 

BioPlan’s study suggests that upstream improvements are now more highly desired than downstream improvements despite downstream still being very much a problem area compared to upstream bioprocessing. Why users desire better bags and connectors over better downstream technology, where most of the bottlenecks are, is up for debate. Users are generally experienced in the bag-in-a-vessel paradigm, not seeing any substantial technological changes or progress with these products since their launch about a decade ago while advances in upstream manufacture are more common and are moving more into the mainstream, such as tangential flow filtration chromatography and new Protein A products and alternatives. 

Nevertheless, downstream purification processes remain little changed and are increasingly the major limiting factor in commercial-scale biopharmaceutical manufacture. It would be expected--certainly if CMOs are to be seen as leading indicators--that purification will become a more highly sought area for which product improvements are desired. 

10th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production


Eric Langer is the president of BioPlan Associates, tel. 301.921.5979, elanger@bioplanassociates.com.

Outsourcing

Interest in chromatography innovation continues to decline.

PTSM: Pharmaceutical Technology Sourcing and Management-12-04-2013

Pharma's Year in Review

Pharma News in Global Health and Sustainability

The Global Divide in Pharma Industry Growth

Disposable Applications in Demand for BioPharma