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Volume 31, Issue 6
Boston, MA (May 8)-The global biotechnology industry showed several positive signs in 2006, including increases in overall revenues and financing, although the industry as a whole continues to operate at a loss, according to Ernst & Young's (New York, NY, www.ey.com) annual analysis of the biotechnology industry. Its report, "Beyond Borders 2007," was issued at the Biotechnology Industry Organization's (BIO, www.bio.org) annual conference and exhibition, which was held in Boston May 6–9.
Fundamentals Favorable in Global Biotechnology Industry
Boston, MA (May 8)—The global biotechnology industry showed several positive signs in 2006, including increases in overall revenues and financing, although the industry as a whole continues to operate at a loss, according to Ernst & Young's (New York, NY, www.ey.com) annual analysis of the biotechnology industry. Its report, "Beyond Borders 2007," was issued at the Biotechnology Industry Organization's (BIO, www.bio.org) annual conference and exhibition, which was held in Boston May 6–9.
The global biotechnology industry posted revenues (based on revenues of publicly traded companies) of $73.5 billion in 2006, a 14% gain over 2005. The United States accounted for 75% of total revenues or nearly $55.5 billion, and Europe accounted for $11.5 billion. On a global basis, the total number of publicly traded companies increased 5% to 710 in 2006, with 336 companies in the US and 156 in Europe. The total number of public and private companies increased modestly, 0.3%, on a global basis to 4275, with 1452 of those companies in the US and 1621 in Europe.
Other fundamentals were strong. Capital raised on a global basis increased 42% to $27.9 billion, the largest amount raised since 2000. Venture capital reached $5.4 billion, an all-time high in the global biotechnology industry, with gains of 38% in the US and 47% in Europe.
Strong competition, particularly among pharmaceutical buyers, contributed to healthy merger and acquisition (M&A) activity in 2006. The average premium in M&A transactions with values over $500 million increased to 60% in 2006, more than twice the average M&A premium from 2003 to 2005.
"In many ways, 2006 was the year of the deal—but this is all the more remarkable because there was no one deal of the year," said Glen Giovannetti, Ernst & Young's global biotechnology leader, in a company release. "In prior years, high deal values were typically driven by a single mega deal, but in 2006 we now have widespread recognition among buyers of the potential value in biotech's platforms and pipelines."
In a reversal of recent trends, deal activity in 2006 showed that pharmaceutical buyers gravitated toward early-stage platforms and technologies.
The revenues of publicly traded US biotech companies grew 14.2% in 2006 to $45.3 billion—below the 2005 growth rate and the industry's historic compound annual growth rate, according to the Ernst & Young report. The industry's revenues were lowered by two significant acquisitions—Novartis's (Basel, Switzerland, www.novartis.com) acquisition of Chiron and Abbott Laboratories' (Abbott Park, IL, www.abbott.com) acquisition of Kos Pharmaceuticals (Miami, FL, www.kospharm.com)—which reduced the industry's revenues by $2.5 billion. Without these acquisitions, revenues would have grown by 20%.
The US biotech industry posted a net loss of nearly $3.5 billion in 2006, a 151% increase over 2005, when it recorded a net loss of $1.4 billion. This increase was attributable to large acquired in-process research and development (IPR&D) charges related to certain acquisitions, explains the report. Factoring out the impact of these deal-related charges, which totaled in excess of $4 billion for the industry, the publicly traded US biotech industry would have shown an aggregate net profit for the first time.
"We predicted profitability in the US industry before the end of the decade," said Mike Hildreth, Americas biotechnology leader for Ernst and Young in a company release. "Only a strong deal year with high charges for in-process research and development kept the industry from reaching that goal."
Bristol-Myers Squibb and Pfizer Sign Development and Commercialization Pact
New York (Apr. 26)—Bristol-Myers Squibb Company (BMS, www.bms.com) and Pfizer, Inc. (www.pfizer.com) entered into a collaborative agreement for the development and commercialization of apixaban, an anticoagulant that BMS discovered. The companies are studying apixaban's ability to prevent and treat various venous and arterial thrombotic conditions, including deep-vein thrombosis and pulmonary embolism.
According to the agreement, Pfizer will pay $250 million upfront to BMS and will fund 60% of development costs from January 1, 2007 onward. BMS will pay the remaining development costs. Pfizer may make as much as $750 million in additional payments to BMS, depending on the achievement of developmental and regulatory milestones. The companies will share responsibility for devising the clinical and marketing strategies for apixaban and will divide commercialization expenses, profits, and losses equally.
BMS and Pfizer also agreed to cooperate on the research, development, and commercialization of a Pfizer discovery program. Among the program's focuses are advanced preclinical compounds that potentially could treat metabolic disorders such as obesity and diabetes.
Under this agreement, Pfizer will supervise all research and early-stage development activities for the metabolic-disorders program. The companies will conduct Phase III development and commercialization activities jointly. BMS will pay Pfizer $50 million upfront as part of the agreement. Pfizer will assume 60% of development and commercialization expenses, and BMS will assume the remaining portion. The companies will share profits and losses the same way.
BIO Calls for 14-Year Data-Exclusivity Period for Biologics
Washington, DC (May 3)—The Biotechnology Industry Organization (BIO, www.bio.org) published a position paper stating that any legislation establishing a regulatory pathway for follow-on biologics should grant pioneering products 14 years of data exclusivity. The organization defines data exclusivity as the time period after the innovator's product is approved during which the US Food and Drug Administration (Rockville, MD, www.fda.gov) may not approve a follow-on biologic (FOB) product that relies on the innovator product's safety and effectiveness.
"For biologics to receive the same length of effective market protection that small-molecule drugs receive under the Hatch-Waxman Act, the period of data exclusivity in any FOBs framework must be no less than 14 years," said Jim Greenwood, BIO's president and CEO in a prepared statement. "Anything less could skew investment away from biologics research and development, jeopardizing the development of future pioneering biomedical advances."
BIO asserts that protecting biologics is not entirely analogous to protecting small-molecule drugs. Unlike a generic small-molecule drug, which must be the same as an innovator product, a follow-on biologic may be only "similar" to the corresponding innovator product. In addition, because biologic products are large molecules produced by living cells, patent protection for such products is often narrower and easier to "design around," than that of small-molecule drugs.
For those reasons, an FOBs regime would create a "patent protection gap" that would allow a follow-on manufacturer to elude an innovator's patents while still relying on the innovator's product to bypass the full regulatory process.
Greenwood remarked that a 14-year exclusivity period for biologics would be consistent with previous Congressional efforts to protect the pharmaceutical industry. "Given that Congress has previously concluded that up to 14 years of patent protection is appropriate for drugs and biologic products, any statutory formula that allows for follow-on biologics should allow for at least the same degree of effective market protection," Greenwood said in a prepared statement.
Data exclusivity is particularly important for the biotechnology industry, BIO observes, because the industry is composed mainly of small companies with unstable funding. The organization notes that these companies would be vulnerable to follow-on biologics legislation that could change investment incentives.
FDA Issues Guidance for Testing for DEG-Contaminated Glycerin
Rockville, MD (May 1)—The US Food and Drug Administration (www.fda.gov) issued a guidance to alert pharmaceutical manufacturers, pharmacy compounders, repackers, and suppliers to the potential public health hazard of glycerin contaminated with diethylene glycol (DEG), a poison.
FDA has received and continues to receive (most recently in October 2006) reports about fatal DEG poisoning of consumers who ingested medicinal syrups such as cough syrup or acetaminophen syrup that were manufactured with DEG-contaminated glycerin. The guidance provides recommendations to help pharmaceutical manufacturers, repackers, other suppliers of glycerin, and pharmacists who engage in drug compounding avoid using glycerin that is contaminated with DEG and prevent incidents of DEG poisoning.
To avoid using DEG-contaminated glycerin, FDA advises that certain analytical testing procedures be performed on all lots of glycerin. These tests include a specific identity test that incorporates a limit test for DEG on all containers of all lots of glycerin before the glycerin is used in the manufacture or preparation of drug products.
The relevant safety limit for DEG is 0.1%, as recognized by the United States Pharmacopeia (USP) monograph for glycerin.
FDA recommends that a manufacturer perform the identity tests, including the limit test for DEG, which appears in the USP monograph for glycerin. Alternatively, a manufacturer may use an equivalent identification procedure that includes a test to detect and quantify DEG, provided it meets the relevant safety limit. One alternative procedure is a thin-layer chromatography method published in the Journal of AOAC International.
FDA also advises that drug-product manufacturers know their supply chain for glycerin, including the manufacturer of the component and any subsequent distributors. The agency advises that all personnel in pharmaceutical manufacturing facilities, especially personnel directly responsible for the receipt, testing, and release of glycerin, should be made aware of the importance of proper testing and the potential hazards if the testing is not done.
The guidance further urges repackers and others who distribute and prepare glycerin for use in drug products to test glycerin that is used, sold for use, or intended for use in drug products. FDA also recommends that pharmacies that use glycerin in compounding drug products either test the glycerin for DEG content or ensure that such testing was properly done by a reliable supplier. In addition, FDA says that bulk or repackaged glycerin intended for use as an excipient or other component of a drug product should be tested for DEG content following good manufacturing practices.
-Patricia Van Arnum
EMEA Launches GMP Database
London (May 1)—The European Medicines Agency (EMEA, www.emea.europa.eu) launched a database designed to facilitate the exchange of information about compliance with good manufacturing practices (GMPs).
EMEA designed and launched the database, called EudraGMP, to improve national competent authorities' ability to supervise the quality of medicines. It contains information about all manufacturing and importation authorizations issued by national authorities of individual European Union (EU) member states as well as Liechtenstein and Norway. The database also contains information about GMP certificates, which the competent authorities issue following each GMP inspection conducted either within the network or in third countries.
EMEA expects that EudraGMP will improve the sharing of information and the coordination of action for manufacturing authorizations and GMP certificates between national authorities by eliminating duplication. The database also facilitates information sharing about the outcome of EU inspections with regulatory authorities outside Europe.
Only national competent authorities, the European Commission, and EMEA can access the database. National competent authorities worked closely with EMEA to design the database as part of the EU telematics strategy for pharmaceuticals. The strategy was agreed upon by EU member states, the European Commission, and EMEA in 2000.
Approximately 15,000 importers and manufacturers operate in Europe, and EMEA expects that as many as 7000 potential new GMP certificates will be included in the database each year. These numbers are expected to increase as third-country inspections begin and new GMP requirements for active substances are implemented.
New Hope for Worldwide Influenza Vaccine Supply
Geneva, Switzerland (Apr. 27)—A meeting of the World Health Organization (WHO, www.who.int) and the Committee for Medicinal Products for Human Use's (London, www.emea.eu.int) approval of Novartis's (Basel, Switzerland, www.novartis.com) new cell culture-derived influenza vaccine offered new hope that sufficient numbers of vaccines could be produced in case of a pandemic.
Increasing vaccine production capacity has been a concern for WHO since it was determined during a two-day meeting in February 2007 that the industry lacked "the manufacturing capacity to meet potential pandemic influenza vaccine demand."
At a meeting at WHO headquarters on April 25, representatives from countries that have experienced human H5N1 infections, donor countries, and vaccine manufacturers agreed to develop a mechanism to ensure that developing countries have access to influenza vaccines in case of a pandemic. Attendees also discussed the possibility of creating a stockpile of H5N1 vaccine and concluded that it "may be feasible" as vaccine manufacturers increase capacity over the next three to five years to meet growing demand.
WHO plans to set up expert groups to explore the best way to create, maintain, fund, and use a stockpile of Avian influenza vaccine. However, Marie-Paule Kieny, the director of the WHO initiative for vaccine research, admitted that presently "most countries with resource constraints do not have the means to access influenza vaccines." To address this issue, WHO is supporting an effort to build production facilities in developing and industrialized countries. This effort has received financial support from the Japanese government and from the United States Department of Health and Human Services (HHS, Washington, DC, www.hhs.gov). Projects to establish influenza vaccine manufacturing facilities are in the final stages of approval in two Latin American and four Asian countries.
The International Federation of Pharmaceutical Manufacturers & Associations (Geneva, Switzerland, www.ifpma.org) is collaborating with WHO to help developing countries gain access to pandemic influenza vaccines through technology transfer, and Sanofi-Aventis (Paris, France, http://en.sanofi-aventis.com ) already has transferred vaccine technology to the Brazilian government. The government passed the technology on to the Butantã Institute (Sao Paulo, Brazil, www.butantan.gov.br), which has begun producing vaccines. In addition, WHO is working with UNICEF to help developing countries find financing to access products manufactured by multinational vaccine producers.
Influenza vaccine production could be made easier if cell culture-derived vaccines become more prevalent. Novartis's "Optaflu" influenza vaccine recently was recommended for approval by the Committee for Medicinal Products for Human Use. Optaflu could be the first influenza vaccine to reach the market that uses a mammalian cell line rather than chicken eggs for antigen production. According to Dr. Jorg Reinhardt, chief executive officer of Novartis Vaccines and Diagnostics, cell culture-derived vaccines can be scaled up quickly and easily in the event of a pandemic. Virus cultivation also could be more robust because most circulating viral strains are unable to replicate in chicken eggs.
FDA Licenses Sanofi-Pasteur's H5N1 Vaccine
Lyon, France (Apr. 17)—Sanofi-Pasteur (http://en.sanofi-aventis.com), the vaccine division of the Sanofi-Aventis Group, announced that the US Food and Drug Administration (Rockville, MD, www.fda.gov) has licensed its H5N1 vaccine, making it the first avian-influenza vaccine for humans in the US. The vaccine will be part of the government's vaccine-stockpile program to prepare for a potential pandemic.
Licensure was based on a clinical trial conducted by the National Institute of Allergy and Infectious Diseases completed in 2005.
Although no human cases of H5N1 infection have been reported in the US, nearly 300 people worldwide have been infected with the virus since 2003, and more than half have died.
Ensuring sufficient manufacturing capacity to provide an adequate number of doses remains a challenge, however, as worldwide agencies develop strategies for timely development, manufacture, and distribution.
"We are working closely with other government agencies, global partners, and the vaccine industry to facilitate development, licensure, and availability of needed supplies of safe and effective vaccines to protect against the pandemic threat," said Jesse Goodman, MD, MPH, director of FDA's Center for Biologics Research and Evaluation, in an FDA release.