The writing's been on the wall for some time now. It doesn't take a rocket scientist to figure out that if your revenue growth is shrinking (alarmingly), then the best fixit strategy is to go out and buy a competitor - finance the deal through your investment bank buddies on Wall Street, and then add the revenues together and chop the employee strength in the name of cost 'efficiencies'.
Bloomberg has the details of the acquisition(http://bloomberg.com/apps/news?pid=20601087&sid=aBY36rmTcqOk&refer=home), but I do recall a feature on CNN, oh about a year and a half ago where a number of people question the wisdom behind a Pfizer-Wyeth merger.
Here's the link to the article:
http://money.cnn.com/2007/08/24/magazines/fortune/simons_pharma.fortune/index.htm
In summary, its not to going to solve the basic problems faing the drug industry. Wyeth has a troubled pipeline - so there's some common ground already. Wyeth also has some of its bestsellers (depression / heartburn) coming off patent in the 2010 - 2011 window.
So what's the logic? 'Rightsizing'?
Or plain and simple - run out of ideas...
Time will tell, but big mergers are fraught with BIG PROBLEMS - and its difficult to integrate two large companies in any industry. Whether its a good decision to not stick to your core business, accelerate the development of your potential bestsellers in the pipeline - and go after the competion (dog eat dog) remains to be seen.
Where will the 'growth' come from once the dust settles and the cost savings / earnings additions are all realized?
That's the trillion dollar question.
I'm not holding my breath.
Are you?
- oRiOn
Tuesday 27 January 2009
Friday 16 January 2009
4th Quarter Results - Genentech
Genentech profits are up, and US Sales of Avastin are pretty much par-for-course at 731 Million $ against analyst expectations of 740 Million $, but its share price fell by 2% on the street.
Dunno what transpires in the minds of folks who buy stocks these days, but in my book if a company meets expectations, give or take a few - especially in the depressed pharma sector, its reason for optimism.
Here's the report from Reuters: http://www.reuters.com/article/businessNews/idUSTRE50E7XC20090115
Not that this will matter too much to Genentech - as Roche prepares its sweetened bid for the chunk of Genentech it doesn't already own, which I reported a few days ago.
There are some concerned people in the industry who believe that the takeover will spell the end of Genentech's reputation and record for converting scientific innovations into bestsellers. There are a number of drugs in late-stage development in the Genentech pipeline, and Roche would take over the responsibilities for taking the drugs (or not taking them, as the case may be) to market.
Make no mistake - this one is about revenues, and not innnovation (drug pipelines, etc) - Roche clearly has its eyes on the revenues that it would gain from sales of Avastin and its colleagues in lucrative markets instead of the current fractions.
WSJ's Health Blog reports that Genentech's CEO, Art Levinson, at Tuesday's JP Morgan Healthcare conference didn't mention a word about the Roche bid.
Thats pharma business for you!
http://blogs.wsj.com/health/2009/01/14/genentechs-levinson-sets-the-record-straight-on-dna/
- oRiOn
Dunno what transpires in the minds of folks who buy stocks these days, but in my book if a company meets expectations, give or take a few - especially in the depressed pharma sector, its reason for optimism.
Here's the report from Reuters: http://www.reuters.com/article/businessNews/idUSTRE50E7XC20090115
Not that this will matter too much to Genentech - as Roche prepares its sweetened bid for the chunk of Genentech it doesn't already own, which I reported a few days ago.
There are some concerned people in the industry who believe that the takeover will spell the end of Genentech's reputation and record for converting scientific innovations into bestsellers. There are a number of drugs in late-stage development in the Genentech pipeline, and Roche would take over the responsibilities for taking the drugs (or not taking them, as the case may be) to market.
Make no mistake - this one is about revenues, and not innnovation (drug pipelines, etc) - Roche clearly has its eyes on the revenues that it would gain from sales of Avastin and its colleagues in lucrative markets instead of the current fractions.
WSJ's Health Blog reports that Genentech's CEO, Art Levinson, at Tuesday's JP Morgan Healthcare conference didn't mention a word about the Roche bid.
Thats pharma business for you!
http://blogs.wsj.com/health/2009/01/14/genentechs-levinson-sets-the-record-straight-on-dna/
- oRiOn
Wednesday 14 January 2009
Twitter and Healthcare
I came across a fascinating presentation by a health sciences librarian at the University of Michigan about the applications of Twitter in healthcare - therapeutic, doctor-patient dialogue, crisis management et al.
Ever heard of Qwitter - the tool that helps you quit smoking, or for that matter how 'support' from Twitter peer groups helps you embark on that oh-so-hard diet regime?
Here's the presentation and I'm sure you'll gain some fascinating insights from it.
- oRiOn
Ever heard of Qwitter - the tool that helps you quit smoking, or for that matter how 'support' from Twitter peer groups helps you embark on that oh-so-hard diet regime?
Here's the presentation and I'm sure you'll gain some fascinating insights from it.
- oRiOn
Pfizer continues with its downsizing
The bad news coming out of Pfizer just keeps coming. Not a particularly good time to be a scientist, after having invested in so many years of study and research...
Or a medical rep.
Or a pharma CEO.
The healthcare industry is running out of promising careers at this rate. Which is a shame, because they have been one of the highest net job creators for a long, long time.
AP reports a fresh round of job cuts, this time affecting scientists in its 'non-core' areas. The company had earlier announced it would now focus on 6 disease states - Alzheimer's, cancer, schizophrenia, pain, inflammation and diabetes and abandon all other research areas.
One of the areas abandoned is cardiovascular diseases - Lipitor, Pfizer's 13 Billion USD bestseller has already seen revenues dip and it remains to be seen whether Pfizer can somehow fill a gaping hole in its revenues which will start to kick in well before 2011, when Lipitor comes off patent.
Jeff Kindler, their CEO has already gone out on a limb by stating that he is looking for acquisitions which will impact earnings positively, but given Roche's Genentech bid setting a trend in the new year, such acquisitions will not come cheap - recession or not.
Research areas that Pfizer is exiting include anemia, bone health, gastrointestinal disorders, obesity, liver disease, osteoarthritis and peripheral artery disease -
Read the complete story here: http://www.washingtonpost.com/wp-dyn/content/article/2009/01/13/AR2009011301300.html
- oRiOn
Or a medical rep.
Or a pharma CEO.
The healthcare industry is running out of promising careers at this rate. Which is a shame, because they have been one of the highest net job creators for a long, long time.
AP reports a fresh round of job cuts, this time affecting scientists in its 'non-core' areas. The company had earlier announced it would now focus on 6 disease states - Alzheimer's, cancer, schizophrenia, pain, inflammation and diabetes and abandon all other research areas.
One of the areas abandoned is cardiovascular diseases - Lipitor, Pfizer's 13 Billion USD bestseller has already seen revenues dip and it remains to be seen whether Pfizer can somehow fill a gaping hole in its revenues which will start to kick in well before 2011, when Lipitor comes off patent.
Jeff Kindler, their CEO has already gone out on a limb by stating that he is looking for acquisitions which will impact earnings positively, but given Roche's Genentech bid setting a trend in the new year, such acquisitions will not come cheap - recession or not.
Research areas that Pfizer is exiting include anemia, bone health, gastrointestinal disorders, obesity, liver disease, osteoarthritis and peripheral artery disease -
Read the complete story here: http://www.washingtonpost.com/wp-dyn/content/article/2009/01/13/AR2009011301300.html
- oRiOn
Tuesday 13 January 2009
Signs of Life in Pharma M & A
Well, M & A is alive, it seems - and kicking!
Fierce Pharma reports that Roche is considering a sweetened bid of around 44 Billion USD for Genentech (http://www.fiercepharma.com/story/roche-readies-sweetened-genentech-bid/2009-01-12)
FT reports that Roche has access to funding from a JP Morgan / HSBC-led consortium. It also has the option of foregoing this years dividend (but that would run contrary to Roche's assertion last year that it would increase dividends for the next 3 years - i.e. through 2010) and a line of revolving credit.
So money's not the issue here - the valuation is more significant, given Genentech's leadership position in cancer treatment drugs led by Avastin, Rituxan and Herceptin. Cancer is the number two cause of mortality in developed countries and accounts for a hefty chunk of public health expenditure - so Genentech's market is growing, and its revenues remained pretty solid last quarter - even in the current economic climate.
Genentech management, according to the Wall Street Journal's Health Blog have consistently maintained that their company is worth at least 90 USD per share - which Roche are now apparently prepared to pay with the new bid, which values Genentech shares at 95 USD per share.
Watch this space, but this is definitely one of the big deals by size for 2009.
- oRiOn
Fierce Pharma reports that Roche is considering a sweetened bid of around 44 Billion USD for Genentech (http://www.fiercepharma.com/story/roche-readies-sweetened-genentech-bid/2009-01-12)
FT reports that Roche has access to funding from a JP Morgan / HSBC-led consortium. It also has the option of foregoing this years dividend (but that would run contrary to Roche's assertion last year that it would increase dividends for the next 3 years - i.e. through 2010) and a line of revolving credit.
So money's not the issue here - the valuation is more significant, given Genentech's leadership position in cancer treatment drugs led by Avastin, Rituxan and Herceptin. Cancer is the number two cause of mortality in developed countries and accounts for a hefty chunk of public health expenditure - so Genentech's market is growing, and its revenues remained pretty solid last quarter - even in the current economic climate.
Genentech management, according to the Wall Street Journal's Health Blog have consistently maintained that their company is worth at least 90 USD per share - which Roche are now apparently prepared to pay with the new bid, which values Genentech shares at 95 USD per share.
Watch this space, but this is definitely one of the big deals by size for 2009.
- oRiOn
Monday 12 January 2009
Blogs are the future of pharmamarketing
Are they really?
Now, Centocor started its 'corporate blog' (http://cnto411.com/)not so long ago - and after a few posts, the enthusiasm of the corporate communications team seems to have fizzled out. The last post was in October, 2008 - and there have been a grand total of two posters till date - Michael Parks, VP, Corp Commm, and Scott McNealy, presumably a pointman in the same department.
GSK's Alliconnect blog, (http://www.alliconnect.com) launched to promote the user community for Alli, the only FDA approved anti-obesity drug seems to have befallen a similar fate. The last post was in September, 2008. VP Karen Scollick 'took over' the blog a few months ago, supposedly as part of a handover of strategic marketing assets connected with Alli, but there hasn't been much activity since then (2 posts in total).
Alli hasn't really been the blockbuster drug that GSK hoped it would be - but then sometimes, marketers are guilty of over-hype and over-expectation. Perhaps country music singer Wynona Judd will give Alli the boost it needs. See www.myalli.com but its doubtful whether a drug that has total sales of 88 Million US in the first nine months of 2008 will skyrocket simply because of a celebrity brand association. And of course, there are the whispers about side-effects...
Watch this space for further news updates, but in my opinion its rather un-cool to embark on an initiative like a corporate blog and then not update it regularly - it smacks of taking your readers for granted, at the very least.
Thats my two cents on the subject.
- oRiOn
Now, Centocor started its 'corporate blog' (http://cnto411.com/)not so long ago - and after a few posts, the enthusiasm of the corporate communications team seems to have fizzled out. The last post was in October, 2008 - and there have been a grand total of two posters till date - Michael Parks, VP, Corp Commm, and Scott McNealy, presumably a pointman in the same department.
GSK's Alliconnect blog, (http://www.alliconnect.com) launched to promote the user community for Alli, the only FDA approved anti-obesity drug seems to have befallen a similar fate. The last post was in September, 2008. VP Karen Scollick 'took over' the blog a few months ago, supposedly as part of a handover of strategic marketing assets connected with Alli, but there hasn't been much activity since then (2 posts in total).
Alli hasn't really been the blockbuster drug that GSK hoped it would be - but then sometimes, marketers are guilty of over-hype and over-expectation. Perhaps country music singer Wynona Judd will give Alli the boost it needs. See www.myalli.com but its doubtful whether a drug that has total sales of 88 Million US in the first nine months of 2008 will skyrocket simply because of a celebrity brand association. And of course, there are the whispers about side-effects...
Watch this space for further news updates, but in my opinion its rather un-cool to embark on an initiative like a corporate blog and then not update it regularly - it smacks of taking your readers for granted, at the very least.
Thats my two cents on the subject.
- oRiOn
Brand Revitalisation
Given that the global pharma industry is going through a period of significant upheaval, I thought its appropriate to provide a definition of brand revitalisation. Quite a few blockbuster brands are in a period where their marketers try and infuse a bit of extra life into their pedigree creations - to garner some extra revenues and to flog a few extra miles out of a dead / dying horse :)
Here is an excellent summary, courtesy The Value Engineers (http://www.thevalueengineers.com/tve/uploads/40/40_Document_1.pdf)
Brand revitalisation: the business of taking a brand that is losing consumer
resonance and relevance, and re-energising it via a compelling new proposition or
idea.
Key points:
1. Its big business – as the pace of change and weight of competition threatens
longstanding brands with marginisation.
2. It’s generally a cheaper and less risky process than building new brands from
scratch.
3. It can be the first step in a program of “brand turbo charging” – the elevation of a
brand from product–brand to cross–category power-brand status.
4. It’s a complex process involving up to 5 stages: problem diagnosis, startpoint
definition, development option creation, proposition selection/ refinement and
marketplace execution – and then there’s product innovation…
5. Insight is a sine qua non - to get to the heart of the brand and what it stands for,
and to identify new market-led opportunities that the brand can tap into.
6. “Connectivity” is crucial – even when a brand re-orientates to meet a new need,
there should be a line of connection back to the original brand construct.
7. Target markets change with the revitalisation program – this can be either
“modification” or “clean break”.
8. Brand architecture – the structure of brand/sub-brands/products – will probably
require reorganising.
9. Build business assessments into the process – new proposition concepts may
look exciting, but how wide is its appeal and how much volume will it generate?
10. Early steps in market executions are critical – mistakes at a later stage can be
tolerated, but at an early stage they can prove terminal.
- oRiOn
Here is an excellent summary, courtesy The Value Engineers (http://www.thevalueengineers.com/tve/uploads/40/40_Document_1.pdf)
Brand revitalisation: the business of taking a brand that is losing consumer
resonance and relevance, and re-energising it via a compelling new proposition or
idea.
Key points:
1. Its big business – as the pace of change and weight of competition threatens
longstanding brands with marginisation.
2. It’s generally a cheaper and less risky process than building new brands from
scratch.
3. It can be the first step in a program of “brand turbo charging” – the elevation of a
brand from product–brand to cross–category power-brand status.
4. It’s a complex process involving up to 5 stages: problem diagnosis, startpoint
definition, development option creation, proposition selection/ refinement and
marketplace execution – and then there’s product innovation…
5. Insight is a sine qua non - to get to the heart of the brand and what it stands for,
and to identify new market-led opportunities that the brand can tap into.
6. “Connectivity” is crucial – even when a brand re-orientates to meet a new need,
there should be a line of connection back to the original brand construct.
7. Target markets change with the revitalisation program – this can be either
“modification” or “clean break”.
8. Brand architecture – the structure of brand/sub-brands/products – will probably
require reorganising.
9. Build business assessments into the process – new proposition concepts may
look exciting, but how wide is its appeal and how much volume will it generate?
10. Early steps in market executions are critical – mistakes at a later stage can be
tolerated, but at an early stage they can prove terminal.
- oRiOn
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