Business roundup: August 2011

Companies making moves into Russia

Several companies have made recent moves into Russia. Novartis has started building a new manufacturing site in St Petersburg. The site - to be completed by 2014 - will produce generic as well as branded drugs and create 350 jobs for local people. Novartis says it represents its most significant investment in Russia so far. It is part of a $500 million five-year investment in the country announced in December 2010. 

Meanwhile, Pfizer has signed a memorandum of understanding with ChemRar High Tech Center, a ’business incubator’ in Moscow, covering ’research, development and commercialisation of innovative drugs in Russia’. In particular, the companies will look at cardiometabolic, infectious and oncological diseases, which are a high priority for the Russian healthcare system. 

In March, Pfizer struck an agreement to have Russian biotech Petrovax Pharm manufacture its pneumococcal vaccines. 
Andrew Turley 

Pharmaceutical

Amgen takes BiTE of Micromet

US biotech Amgen and German company Micromet have signed a cancer therapy deal worth up to €695 million (£600 million). Amgen will receive development and commercialisation rights to BiTE (bi-specific T-cell engager) antibodies for use against two solid tumour drug targets - of three identified by Micromet. Only €10 million will be paid up front, the remainder coming if and when milestones are reached. The Micromet lead product candidate is blinatumomab, currently in trials for patients with acute lymphoblastic leukaemia. 

AstraZeneca sells devices unit

UK drug maker AstraZeneca (AZ) has agreed to sell its medical devices business, Astra Tech, to US group Dentsply for $1.8 billion (£1.1 billion). Astra Tech made 2010 sales of $535 million from a range of dental, urological and surgical devices. Dentsply says that the deal will make it number three in the dental implant business. 

Production of flu vaccine on the rise

The World Health Organization (WHO) has said that global production of seasonal flu vaccine will double to 1.7 billion doses by 2015 as a result of new manufacturing capacity under construction, according to news reports. This quantity could be tripled to 5.4 billion doses in response to a new flu pandemic. 

Diabetes drug passed in EU

The long acting formulation of diabetes drug exenatide, to be marketed as Bydureon by US pharma major Eli Lilly , has been given a green light in Europe. Exenatide, a glucagon-like peptide 1 (GLP-1) receptor agonist, was developed by biotech Amylin Pharmaceuticals. Eli already markets the drug in a formulation taken twice per day called Byetta, global sales of which decreased 11 per cent to $710 million in 2010. 

Levaquin generics are on their way

Generic competition to antibiotic Levaquin (levofloxacin) from US Healthcare giant Johnson & Johnson (J&J) will soon be here. The US has granted 12 manufacturers, including Teva, Dr Reddy’s and Sandoz, approval to market generic versions of the drug. This is bad news for J&J. Levaquin, together with the related product Floxin (ofloxacin), contributed $1.4 billion to J&J sales in 2010. 

Cladribine ended

German drug maker Merck KGaA says it is dropping its marketing applications for multiple sclerosis (MS) drug cladribine in Europe and the US. In addition, the company is pulling the drug from the markets in which it is already approved, Russia and Australia. Cladribine was unusual among MS drugs insofar as it was taken orally. But it was effectively forced into second place by Gilenya (fingolimod) from Novartis, another MS pill, approved in the US in January. In contrast, the US Food and Drug Administration (FDA) turned down cladribine for market approval in March.

Tradjenta wins EU green light 

Diabetes drug Tradjenta (linagliptin) from Boehringer Ingelheim and Eli Lilly has won a positive opinion from the European Medicines Agency (EMA) committee, making European approval highly likely. The drug, a dipeptidyl peptidase-4 inhibitor designed to reduce blood sugar in adults with type 2 diabetes, was granted US approval in May.

R&D spend falling

The global pharma industry is spending less on R&D, and launching fewer new molecular entities (NMEs), according to a report from business intelligence firm Thomson Reuters. Last year, R&D expenditure ($68 billion) was lower than it was in any one of the preceding three years. Furthermore, 2010 saw the lowest number of NMEs launched by the major pharma companies in the past 10 year 

R&D spend falling

The global pharma industry is spending less on R&D, and launching fewer new molecular entities (NMEs), according to a report from business intelligence firm Thomson Reuters. Last year, R&D expenditure ($68 billion) was lower than it was in any one of the preceding three years. Furthermore, 2010 saw the lowest number of NMEs launched by the major pharma companies in the past 10 years. 

Pain relief without misuse?

Oxecta (oxycodone), from US drug maker Pfizer and Acura Pharmaceuticals, has been granted US marketing approval for pain relief. The drug, which is taken orally, is designed to prevent misuse and abuse through the incorporation of a clever cocktail of compounds. Try to dissolve the pills in a solvent in order to inject the drug, and you’ll get a sticky mess that can’t be drawn up into a syringe. Try crushing the pills and snorting the powder, and you’ll get a nasty burning sensation in your nose. The pills are even packed with niacin, vitamin B3, so that, if you take too many, they induce a range of extremely unpleasant but essentially harmless effects (flushing, itching, sweating) intended to act as a long term deterrent. 

Meanwhile, Remoxy, another formulation of oxycodone from Pfizer, has been rejected by the US Food and Drug Administration. Remoxy is a high viscosity, liquid formulation in a slow release, hard gelatine capsule, similarly designed to resist common methods of misuse and abuse. In 2005, Pain Therapeutics, which developed the candidate, struck a licensing deal with King Pharmaceuticals. Pfizer gained access to the candidate when it bought King in October 2010, the $3.6 billion (£2.3 billion) deal bringing Pfizer boldly into the pain relief area. 

Chantix in trouble

Smoking cessation drug Chantix (varenicline) from US drug maker Pfizer is associated with a 72 per cent increase in risk of serious cardiovascular problems in smokers without a history of heart disease, according to a new study. This is more bad news for the controversial drug, which has been linked to depression and suicidal behaviour. But, in an editorial in the same journal, Taylor Hays at the Mayo Clinic in Rochester, MN, highlighted the low total number of adverse events - the absolute increase in risk was less than 1 per cent. He cautions healthcare providers against abandoning Chantix which he says is ’among the most efficacious pharmacotherapies used for the treatment of tobacco dependence’. The authors note that the drug doubles a smoker’s chances of successfully quitting. 

Fancy paying up front for R&D?

A new approach to EU approval of new antibiotics could significantly improve our chances of staying one step ahead in the ongoing fight against bacterial resistance, a new report says. The UK Office of Health Economics (OHE) is recommending two options. Regulatory authorities could review new antibiotics more swiftly while member states put in place systems to ensure prices reflect the growing cost of antibiotic resistance. 

Alternatively, companies could receive upfront payments for registrations, rather than volume of use. The OHE says this could ’balance the tension between public health goals of policy makers - to slow the growth and spread of resistance and encourage the development of new antibiotics - and the need for pharmaceutical companies to earn a return on their R&D investments’.

Gilead is first into patent pool

HIV specialist biotech Gilead is to share its intellectual property rights on its medicines in a patent pool, designed to make them more accessible to populations in developing countries. Gilead is the first drugmaker to sign up to the scheme - the Medicines Patent Pool - and commentators expect that other major pharma companies, such as Pfizer, GlaxoSmithKline, Bristol-Myers Squibb, Roche and Boehringer Ingelheim, will follow suit. Around 33 million people suffer from HIV worldwide. Most live in Africa and Asia, where the medicines are too expensive for the majority of people to afford. The Medicines Patent Pool was launched by Unitaid health financing and is funded by a tax on airline tickets. It will create a system of patent holders to license technology to makers of cheap generics in exchange for small royalties. The agreement with Gilead allows the production of generic copies of tenofovir, emtricitabine, cobicistat and elvitegravir, as well as a combination of these in a single HIV pill known as the Quad. 

Sanofi sells Dermik to Valeant

Canadian pharma company Valeant is to buy Dermik, the skincare business at Sanofi, for $425 million (£260 million), giving it control of brands such as BenzaClin, an acne treatment, and ’wrinkle filler’ Sculptra. Valeant launched a $5.7 billion hostile bid for US drugmaker Cephalon in April, but the Cephalon board described the bid as inadequate and advised shareholders not to participate. Cephalon subsequently agreed to a $6.8 billion bid from Israeli generics manufacturer Teva. 

Chemical

Beleaguered Belarus

Belarus is considering selling stakes in its chemical companies to Russian investors following its economic bailout, according to news reports. In June, the Eurasian Economic Community, an international group led by Russia, agreed to provide $3 billion to prop up the ailing nation. In return, Belarus agreed to a $7.5 billion privatisation programme. Belarusian prime minister Mikhail Myasnikovich said that two state-owned Russian companies,Rosneft and Sibur, could gain parts of the fertiliser and chemical plant owned by Grodno Azot. But the companies have since denied this, according to news reports elsewhere. Grodno Azot makes liquid ammonia (1 million tonnes per year), urea (800,000 tonnes per year), urea ammonium nitrate mixture (700,000 tonnes per year) ammonium sulfate, methanol, caprolactam, biodiesel and liquid carbon dioxide. 

EU industry growth to beat predictions

The European Chemical Industry Council (Cefic), which represents the chemical industry in Europe, has increased its prediction for industry growth in 2011 to 4.5 per cent. The new figure is almost twice what the organisation came up with in November 2010, with a slowdown in recovery towards the end of 2010 throwing off the trend. Cefic says that 2012 is likely to produce more modest growth of around 2.5 per cent. 

Eastman buys Sterling for $100m

US chemical company Eastman has agreed to buy petrochemical company Sterling Chemicals for $100 million in cash. The transaction includes plasticiser and acetic acid manufacturing assets at the only Sterling site, in Texas City, US. Eastman will use the site to produce alternatives to phthalate plasticisers. 

Styron IPO

US polystyrene manufacturer Styron is hoping to raise up to $400 million through the sale of shares having filed for an initial public offering (IPO). The company was sold by chemical giant Dow to private equity firm Bain Capital for $1.6 billion in March 2010. The Securities and Exchange Commission filing was made in the new name of the company, Trinseo, which was selected in April. 

Soil bacteria to control nematodes

Agrichemical giant Syngenta has signed up to work with US biotech Pasteuria Bioscience on using Pasteuria spp, a naturally occurring soil bacteria, to control nematodes. Pasteuria says that nematodes, tiny, worm-like organisms, cause $100 billion of crop damage annually, across a wide range of crops. Syngenta says it will focus first on soybean and hopes to bring a product to market within two years. 

Access to lithium iron phosphate

German speciality chemical company Süd-Chemie is setting up a foundation through which it intends to sell sub-licenses for lithium metal phosphate (LMP) battery technology, including lithium iron phosphate (LiFePO₄ +C) materials. The relevant patents are held by three organisations: Hydro-Québec, Université de Montréal and CNRS. And, until now, Süd-Chemie was the only licensed supplier. The company will, from here, facilitate the distribution of the technology through the foundation, called ’LiFePO4+C Licensing’. Sub-license agreements have already been established with two Japanese companies and two Taiwanese companies.

M&A activity to remain high

A new report says that merger and acquisition activity in the chemical industry will remain high in 2011, with more deals being struck, and more money changing hands, than before the economic downturn began in 2008. Emerging markets will be the focus. According to the report from accountancy firm Deloitte, sales will continue to grow in 2011, driven by higher prices and better economic conditions leading to increased demand in the end markets, particularly the automotive industry. 

Lonza buys Arch for $1.4bn

Life sciences major Lonza is to acquire biocide specialist Arch Chemicals for $1.4 billion (£870 million) to create the world’s leading microbial control business. Lonza will buy all outstanding shares in Arch for $47.20 per share in cash. It is expected that the deal with strengthen Lonza’s place in the life sciences sector. ’Lonza and Arch Chemicals offer highly complementary products and technologies and together will be the global leader in controlling unwanted microbes,’ said Stefan Borgas, Lonza chief executive. 

AkzoNobel makes UK changes...

Dutch chemical major AkzoNobel says it is going to spend €110 million (£98 million) on a new paint manufacturing site in the northeast of England - as it closes two UK sites employing 240 people. The new site will fall within 25 miles of the existing AkzoNobel site in Prudhoe, which employs 89 people. Under the plan, which has gone to employees for consultation, the Prudhoe site, along with manufacturing operations in Slough that employs 131 people, will be wound down by the end of 2014. According to local news reports, the new site would create 140 new jobs. 

..and buys coating company

In addition, AkzoNobel  says it intends to buy German coatings company Schramm, which makes coatings for plastics, metals and electrical insulation, for €142 million. The company made 2010 sales of €115 million. In addition, AkzoNobel intends to carve out the coatings activities of Korean company SSCP, which owns a 71 per cent stake in Schramm - a stake it has agreed to sell to AkzoNobel.

Bayer pays out in GM rice row

German chemical group Bayer has agreed to pay $750 million (£470 million) to settle a legal battle with US rice farmers over a genetically modified (GM) strain. In 2006, Bayer disclosed that a then unapproved strain of its GM rice had entered the US food chain. A group of farmers filed a lawsuit in the aftermath claiming that they had been financially harmed by the effect on critical export markets and the drop in the price of rice. 

Green tech

Furanics for green chemicals deal

Belgian chemical major Solvay has teamed up with Dutch company Avantium to take forward the Avantium Yxy technology for making greener versions of popular chemical building blocks. The plan is to develop a new generation of greener high performance polyamide engineering plastics made from renewable raw materials. The Avantium technology uses catalysts to convert biomass into ’furanics’, such as FDCA (2,5-furandicarboxylic acid), named after the furan moiety they are built around, which often drops out of the chemical digestion of cellulose. 

Thin cell progress

US photovoltaics manufacturer First Solar has won $4.5 billion (£2.8 billion) in loans for the creation of three alternating current cadmium-telluride (CdTe) thin film solar generation sites in California. Combined, the three sites will produce 1330MW of electricity from over 20 million CdTe modules. Compared with traditional silicon based materials, CdTe materials can be sliced more thinly for use in photovoltaic modules, reducing the cost. 

In brief

Innate anticancer deal

Pharma major Bristol-Myers Squibb has bought rights to anticancer candidate IPH2102 from Innate Pharma in a $465 million deal. The deal is back loaded, reflecting the early stage of development: IPH2102 is still in Phase I trials. Innate will get just $35 million upfront but become elligible for payments totalling up to $430 million as it passes milestones. IPH2102 is an antibody under development for the treatment of cancer, particularly acute myeloid leukemia. 

Trial results for dapagliflozin 

Results are in from a Phase III trial of diabetes drug candidate dapagliflozin from drug makers Bristol-Myers Squibb and AstraZeneca. Over 102 weeks, patients with type 2 diabetes taking dapagliflozin plus metformin experienced ’greater mean reductions from baseline in blood sugar levels’ compared with those taking placebo plus metformin. Dapagliflozin is thought to inhibit proteins that control the movement of glucose into and out of the kidneys. 

Lucentis rejection 

The UK National Institute for Health and Clinical Excellence has decided against recommending Lucentis (ranibizumab) for the treatment of diabetic macular oedema (DMO) - which can lead to blindness - on the basis of its cost-benefit analysis. Lucentis, developed by Genentech (now part of Roche) and marketed in the UK by Novartis, has created debate among eye doctors because of its high cost compared with a similar drug, Avastin (bevacizumab). 

Mice in space 

When the space shuttle Atlantis launched on the final Nasa space mission, it had a group of unusual passengers: 30 mice, onboard to help with bone density experiments. US biotech Amgen and Belgian drug maker UCB have teamed up to test the effects of a sclerostin antibody on the mice while they are in space. Astronauts typically experience loss of bone density in space as a result of reduced gravitational pull, and sclerostin plays a key role in bone formation, strength and flexibility. 

Phosagro IPO

Russian fertiliser company Phosagro has raised $538 million through an initial public offering (IPO) in London, according to news reports. The offer valued the company at $5.2 billion. Phosagro mines two raw materials for fertiliser production - apatite concentrate, which is high in phosphorus and magnesium, and ammonia.

Red mud disaster response

The Hungarian authorities have said that the reconstruction work in response to the ’red mud’ disaster on 4 October 2010 has now been completed. Ten people died and over 400 people were injured when 1.6 million m³ of strongly alkaline liquid red sludge was released after one of the reservoir walls at the MAL Hungarian Aluminium plant ruptured. The government has since built or bought new houses for those who lost theirs, with the help of HUF30 billion (£100 million) put towards reconstruction. 

China bans 10 toxic chemicals

China says it is banning 10 toxic insecticides. Under the plans, sale and use of these insecticides will be prohibited from November 2013. The government will investigate the potential economic impact of a similar ban on a further 12 insecticides that are toxic but currently have no ’suitable’ substitutes. The Chinese authorities say 400 companies have registered 900 products relating to the 22 insecticides, mainly used on rice and cotton. 

Cell reprogramming kit

Laboratory sciences group Life Technologies has launched a product for turning normal - somatic - cells into induced pluripotent stem cells (IPSCs), which mimic embryonic stem cells. The CytoTune-IPS ’reprogramming’ kit uses an RNA virus developed by Japanese firm DNAVec.