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Drug Roundup - September 20, 2012
There have been several noteworthy developments in the drug space recently, which will likely have a material impact on the companies in this sector and the markets they serve. Companies mentioned in this review include Pfizer Inc. (PFE - Free Pfizer Stock Report), Johnson & Johnson (JNJ - Free J&J Stock Report), Bristol-Myers Squibb (BMY), Eli Lilly & Co. (LLY), Abbott Laboratories (ABT), GlaxoSmithKline (GSK), AstraZeneca (AZN), and Sanofi (SNY).
“Large Pharma” Teams Up To Improve Testing Process
One of the more noteworthy stories surrounding the Drug Industry in recent weeks has to do with “Large Pharma’s” new strategy to improve the way experimental drugs are tested. Ten of the world’s largest pharmaceutical companies recently announced the formation of TransCelerate BioPharma, a non-profit organization aimed at improving new drug development. Research productivity has declined considerably across the industry over the past several years, despite rises in costs. In fact, current estimates indicate that about 5,000-10,000 potential drugs fail for every one that is actually approved. This large discrepancy has created significant challenges for drugmakers who are looking to bolster their top-lines in the wake of patent expirations. TransCelerate is the industry’s response to the problem. The group will largely focus on shortening the time it takes for drugs to get approved, while also reducing costs along the way. The strategy will include developing standard methodology for collecting data from patients, as well as the clinical sites and the investigators who work on the studies. Eventually, the goal will be to allow all drugmakers to develop new drugs faster and better. Participants in the group include Pfizer, Johnson & Johnson, Bristol-Myers Squibb, Eli Lilly & Co., Abbott Laboratories, GlaxoSmithKline, AstraZeneca, Sanofi, Boehringer Ingelheim, and Genentech.
Pfizer’s Wyeth To Face Class Action
On September 18th, a federal judge granted class-action status to former Wyeth shareholders who were allegedly misled on the risks associated with the company’s antidepressant medication, Pristiq. As a result, shareholders associated with the case can now sue Pfizer as a group, rather than individually, which could potentially lead to larger settlement costs for the country’s largest drugmaker. At the time (July 24th, 2007), Wyeth shares lost more than $7.6 billion in market value after the company announced that the United States Food and Drug Administration would not approve Pristiq. Shareholders allege that Wyeth’s failure to reveal adverse effects of the drug in a timely manner is what caused the stock’s price to be inflated prior to the FDA’s announcement. Shares of Pfizer traded slightly lower on the news.
Johnson & Johnson Focused On Acquisitions
The world’s largest maker of healthcare products recently announced that it is setting up centers around the world with the purpose of seeking out early-stage acquisitions and other investment opportunities. The “innovation” centers will be located in San Francisco, Boston, London, and China, and will help to connect J&J executives with local scientists and various other professionals with the objective of strengthening capabilities to bring more products to market. Management indicated the company will assemble experts on research and development, licensing and investment, business capital and legal intellectual property at the centers to facilitate deal making. Over the past 12 months, Johnson & Johnson has made nine acquisitions.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.