One for a while. In January 2019, the JP Morgan Medical Conference was held in San Francisco as scheduled. At this conference, known as the "Super Bowl for Biomedicine," a huge amount of biomedical technology transactions can be reached between the intertwined and several handshakes.
Two major transactions announced by BMS and Lily have made the atmosphere of the conference high. On the first day of the conference, in addition to the newly-launched new-based pharmaceutical industry, the top executives of Novartis, Pfizer, Gilead, Merck and other giant pharmaceutical companies shared their attitudes toward M&A transactions and the 2019 development strategy.
The arterial network has made the following wonderful views on these big names:
Three reasons why BMS acquired the new base
BMS's acquisition of New Base Pharmaceuticals ignited JP Morgan's first bomb, which amounted to $74 billion.
Why is BMS acquiring new base medicine? As we all know, the main growth point of BMS's future earnings growth is mainly dependent on single drug related Opdivo. BMS has always been a leader in tumor immunotherapy, but there are also strong competitors such as Merck.
In fact, Opdivo's sales in the three quarters of 2018 were $4.9 billion, accounting for about 30% of the company's total revenue. This ratio is expected to rise in the next few years. In addition, Opdivo itself has suffered multiple failures in clinical trials in recent years, and analysts have lowered their peak sales forecasts for drugs. The company needs to diversify, but they currently have only a few compounds, such as TKY2 and NKTR-214.
Looking at Celgene, Revimid, a sensational blood cancer drug, performed well, with sales estimated at more than $9 billion in 2018. Analysts believe that sales in 2022 will exceed $15 billion. However, Revlimid will lose its patent rights by then.
In addition to Revlimid, Pomalyst's annual sales have reached $2 billion in drugs. More importantly, Celgene's advanced product development pipeline is very competitive, such as ozanimod for immunotherapy and inflammatory treatment products, and luspatercept, liso-cel (JCAR017, bb2121, and fedratinib) in hematology products. The company expects its new drug. The potential sales peak will exceed $15 billion.
Of course, the more important content is the promising CAR-T therapy. In 2018, New Base acquired Juno Therapeutics, a leading CAR-T therapy company, for $9 billion. CAR-T cell therapy has a higher efficacy than other cancer therapies and may become a huge market in the next few years, and BMS will gain market access through bb2121 after approval by regulatory agencies.
In general, New Base will help BMS get more combinations outside of Opdivo and Eliquis. The combined entity will have nine drugs with annual sales of more than $1 billion each, and its pipeline sales may reach up to $15 billion in the future.
Compared with profit, Novartis is more willing to pursue curative effect
Novartis CEO Vas Narasimhan said in an interview with foreign media that they are shifting their focus to a new generation of therapies and potential treatment options.
Narasimhan, who was previously the chief medical officer of Novartis, said that the ultimate standard for measuring whether a company is worthwhile would be whether the company could eventually produce a truly therapeutic product rather than a chronic treatment or relief product.
He said at the JP Morgan Conference that Novartis may have to start moving from a profitable drug route. These drugs are indeed profitable, they are slow to manage the disease rather than completely cure them, and they are used frequently. In current drug development logic, chronic disease medications are often (commercially) successful.
Narasimhan also revealed in an interview in February 2018 that Novartis is preparing for gene therapy and cell therapy, and they will seek solutions that are capable of curing patients. "I believe that these technologies can solve many problems." He said, "This is what the society hopes." This is a reminder of Novartis's CAR-T products, but payment is a big challenge. "We believe we can find a payment method, and ultimately these challenges can be solved," he said.
The Swiss-based Novartis City, with a value of $216 billion, has been making portfolio investments to sell non-core assets such as the generics business. It is reported that the generics business segment is about to become its subsidiary, Alcon, with a focus on eye diseases.
Novartis's recent acquisition took place in October 2018, when they acquired Endocyte, a targeted drug company focused on developing cancer treatments, for $2.1 billion. Another important cancer-related transaction occurred in 2017, when Novartis acquired Advanced Accelerator Applications (hereinafter referred to as AAA), a leading French radiopharmaceutical company, for $3.9 billion.
“These acquisitions are all aimed at technology platforms,†Narasimhan pointed out. Novartis is moving to cell therapy and gene therapy business. After the acquisition of AAA, Novartis has acquired a new technology platform called radioligand therapy. In contrast, Endocyte looks more common. But Narasimhan said: "For Novartis, their experience is difficult to replicate in practice."
“We want to be able to develop a truly disruptive drug that is combined with radioactive particles. This radioactive particle is tightly controlled, we take it to the tumor and then destroy it.†Narasimhan: “I He believes that he has an effect on many solid tumors." This method is very effective for neuroendocrine tumors, and Novartis believes that it can also be used to treat prostate tumors.
Lilly came into the tumor circle through the acquisition, but Narasimhan is still very confident. He said that the acquisition of radioligand solutions is not easy: “Need nuclear materials and complex supply chains, which require long-term operations. Through two acquisitions, we have acquired this capability.â€
Novartis mentioned in the third quarter earnings report that management raised its full-year sales forecast and highlighted the strong performance of the company's psoriasis drug Cosentyx and its heart failure drug Entersto.
Pfizer: will do the transaction, but will not distract
In 2018, Pfizer experienced a coaching change. The former CEO Ian Read stepped down and handed the baton to the company's experienced executive Albert Bourla, who is believed to have inherited the most powerful pharmaceutical company for many years. Pfizer has 15 species with the potential for blockbuster, and it faces challenges, especially the continued negative effects of drugs that have or will lose their exclusivity.
Bourla said at the JP Morgan Conference that when Ian Read took over in 2010, Pfizer was facing the biggest challenge and loss of exclusive crisis in the history of the industry. In 2010, Pfizer’s revenue was $62 billion, and after five years it fell to $50 billion. At the same time, the research department's productivity in the first decade of the millennium was not so strong, so its benefits were not enough to offset the negative. As a result, Pfizer's compound annual growth rate has fallen sharply.
When Bourla took over in 2018, the opposite was true. Bourla said they will face the last loss of exclusive crisis. In the next six months, it will be the exclusive crisis of Lyrica.
"Lyrica will affect Pfizer's sales growth this year. Because compared to 2018, Lyrica will lose its exclusive rights for half a year; the same impact will occur in 2020," Bourla pointed out.
But he also stressed that in the second decade of the millennium, Pfizer has a very good productivity in research and development, and currently Pfizer's R&D pipeline is comparable to the best form in history. He believes that the combination of the two can make Pfizer a strong top growth company.
“I don’t underestimate the adversity challenges of price pressures facing the entire industry. But I think that in a new environment with high price pressures, companies that offer breakthrough drugs will continue to thrive,†he said.
Considering this year, Pfizer's strategy for the next few years will be top line growth. He stressed that in this industry with a return on capital, top line growth can only mean the growth of the bottom line, that is, leverage.
Pfizer has been actively involved in business development for the past few years, during which several major deals have been launched, including the acquisition of Hospira and Medivation. In 2016, Pfizer also tried to annex Allergan after the US Treasury Department eliminated the tax benefits of the transaction.
However, in the past two years, the company has not announced any major acquisition news. Bourla said Pfizer will continue to focus on investment opportunities. “We do have the ability, because our balance sheet can almost complete transactions that anyone in the industry can think of,†Bourla said at the meeting.
However, he added that he did not want to be distracted. Instead, Pfizer will focus on incorporating Phase II and Phase III clinical products into its pipeline, with the goal of the company's current therapeutic focus.
Gilead: Focus on mergers and acquisitions, biotechnology companies are the target
After a difficult year, Gilead proposed a big plan in 2019. Their HIV product, Biktarvy, made its debut, and new business executive Laura Hamill called it the "most successful" AIDS treatment product in history. Of course, the company still has high hopes for hepatitis C products, despite the company's wealth in this market.
In 2017, Gilead acquired Kite Pharma, a leading CAR-T drug company, and they became the industry leader in cell therapy. However, because the payment system has not been perfected, Yescarta's sales have not met expectations. But Gilead still intends to continue to add cell therapy through investment.
“We focus on mergers and acquisitions,†said Gilead CEO Robin L. Washington said at the JP Morgan Conference. Washington pointed out that the company can also repay part of the debt and weigh the stock repurchase, but biotechnology companies will be the focus.
Merck: I am trying to find the target
In 2018, Merck had a good harvest, and they had achieved quite good results in the fields of cancer, animal health, hospitals, and vaccines.
Merck's CEO Ken Frazier pointed out that from the perspective of the development of the medical environment, it is increasingly important to have differentiated products. They believe that the existing product mix and pipeline make Merck is in the best development period.
Keytruda is Merck's most successful commercial product ever. From the third quarter, 40% of the product's sales profit came from markets outside the US.
In September 2018, the European Union approved Merck's 189 trial. Not long ago, the 407 trial was approved in Japan. Merck has seen a huge market outside the United States. With only 189 trials, they have tripled their market capacity in the EU. In 2019, Merck began to enter the melanoma market in China, and the market was quite impressive.
There is a lag in market access and substantial business growth in overseas markets, even if Keytruda is no exception. Frazier believes this is a procedure that must be experienced. “In Germany, these countries will be faster, but some countries will be a little longer, 12 months, 16 months, or even 18 months. It all depends on the market.†He said, “But our data is very beautiful. So we also want to simplify the program."
The acquisition and merger of large pharmaceutical companies is the norm, and Merck is no exception. Frazier said that Merck is trying to complete some transactions, but has not yet found a suitable seller, and the asset competition is fierce: "I think that as the valuation declines, it may bring more possibilities."
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