Pharmaceuticals

Ben McLannahan

The denial from Chugai Pharmaceutical could hardly have been more emphatic.

No, Japan’s number three drugmaker by market capitalisation had nothing to do with news reports that Roche, its 59.89 per cent shareholder, was weighing a buyout of minorities, it announced on Saturday. Then it went on: “Chugai is in no way in the process of reviewing any plan to become a wholly-owned subsidiary of Roche, nor discussing with Roche about such a transaction.” 

John Gapper

Pfizer has finally made a public announcement of its interest in AstraZeneca. One of the main points of the deal, it turns out, is tax inversion – turning Pfizer into a UK-domiciled company.

Pfizer is making tax inversion a point of the proposed deal Photo: Bloomberg

 

John Gapper

We have been presented this week with two visions for the future of innovation in the pharmaceuticals industry. One is encouraging, the other is not.

What is a doctor’s job? Is it: a) to diagnose illness; b) to treat patients; or c) to persuade other doctors to prescribe a brand-name pill? To those answering c), here is an additional question: do you work for a pharmaceuticals company?

John Gapper

Novartis has done the right thing by scrapping its proposed payment of up to $78m to Daniel Vasella, its outgoing chairman, not to compete against the Swiss pharmaceuticals company. It raises questions not only about Swiss corporate governance but the entire principle of non-compete deals.

Mr Vasella was a dynamic and effective chief executive of Novartis but there is no obvious reason why he needs an extended non-compete agreement any more than another retiring chairman or corporate executive. 

Andrew Hill

I can’t help thinking that Jesse Boot and Charles R Walgreen Senior were destined to meet eventually. With Tuesday’s deal between the UK’s Alliance Boots and Walgreens of the US, the paths of the two pharmacy chains, each founded more than 100 years ago, finally cross. Boot – son of the original founder John – was said to have a “talent for business”; Walgreen, though he built his business more slowly initially, “instituted a level of service and personal attention unequalled by virtually any other pharmacy in Chicago”, according to the company history. 

“You’re going to need a bigger boat,” says the police chief played by Roy Scheider in the film Jaws, when he first catches sight of the shark. Faced with cancer, diabetes and Alzheimer’s, we need a bigger investment vehicle.

Andrew Hill

Harry Potter and Viagra have more in common than you may imagine. They came to market within a year of each other in the late-1990s; they enjoyed enormous success; and what was a boon for the companies that produced and sold them could turn into a bane as their popularity fades and rivals emerge.

Andrew Hill

Old habits die hard in US corporate governance: Pfizer has just announced it will hand chief executive Ian Read the chairmanship. That re-creates the dual chair-CEO role and goes against the slow US trend towards splitting the two top board jobs.

According to Spencer Stuart, the headhunter, 41 per cent of top US companies now separate the roles (though the chairmanship is too often held by the ex-CEO), compared with 26 per cent in 2001. So, as governance expert Lucy Marcus tweeted on Tuesday, Pfizer’s decision is an “astonishing step backward“. 

John Gapper

Whether or not Pfizer’s tactics to preserve Lipitor sales as it loses its patent protection succeed, they are a sobering reflection of the lack of success of big pharmaceutical companies in trying to replicate their past days of blockbuster glory.

Alan Rappeport’s report on how Pfizer is heavily cutting the price of its anti-cholesterol drug to see off generic competition illustrates how important blockbuster drugs from the past remain to Big Pharma.

As Forbes noted in a long piece on Lipitor, this reflects the prolonged squeeze on pharma companies, which have been struggling to come up with new products to replace those now falling off the patent cliff – Lipitor being the prime example. 

Andrew Hill

Andrew Witty, GlaxoSmithKline’s chief executive, won plenty of column inches and airtime on Monday with the UK drug company’s offer to supply developing countries with millions of doses of its vaccine against rotavirus gastroenteritis, at a 95 per cent discount to the western market price.

Your first reaction might well be: if $2.50 a shot still covers GSK’s costs, Mr Witty’s making quite a margin on the $50 he charges the developed world for the drug. 

Andrew Hill

At last, a bit of perspective on tax avoidance.

Andrew Witty, chief executive of GlaxoSmithKline, says something is lost when companies switch tax domicile on a whim. The pharma boss tells The Observer:

One of the reasons why we’ve seen an erosion of trust broadly in big companies is they’ve allowed themselves to be seen as being detached from society and they will float in and out of societies according to what the tax regime is.

 

John Gapper

I am keeping a close eye on my seven New Year predictions – and the fact that The King’s Speech has done so well in Oscar nominations is not a good sign – but one thing which appears to be falling in line is pharmaceutical research.

I stuck my neck out in December and predicted that a large pharma company would drop early-stage research and outsource it instead. Not so far, but Pfizer’s announcement that it will cut back its research operations, including closing its UK research laboratory at Sandwich, is an interesting marker. 

John Gapper

The pharmaceutical industry’s effort to find new ways of discovering and developing drugs has been underway for most of this decade, but it remains a struggle.

The latest sign is the replacement of Marc Cluzel as Sanofi-Aventis’s head of research by Eliaz Zerhouni, an adviser to the company’s chief executive, Chris Viehbacher. 

John Gapper

Avandia, the GlaxoSmithKline anti-diabetes drug that could be taken off the market by the US Food and Drug Administration, is yet another illustration of the difficulties facing pharmaceutical companies in refilling their pipelines with blockbuster drugs.

Avandia’s fate seems already to have been sealed, since sales have been dropping since a 2007 study found an associated risk of heart attacks. If it was removed from the market, it would be the highest profile such event since Merck withdrew its painkiller Vioxx in 2004 on similar concerns.