News & Trends - Pharmaceuticals

2019: The pharmaceutical industry year in review

Health Industry Hub | December 16, 2019 |

As 2019 comes to a close, what were the top news stories shaping the pharmaceutical industry globally?

1. Bristol-Myers Squibb’s $74-billion acquisition of Celgene. Mega mergers represented a leading theme for the pharmaceutical industry in 2019 and on top of the list was the $74-billion acquisition of Celgene by Bristol-Myers Squibb. Announced in January 2019 and completed last month (November 2019), the newly combined company has eight products with more than $1 billion in annual sales in core disease areas of oncology, immunology and inflammation, and cardiovascular disease and near-term launch opportunities representing more than $15 billion in revenue potential, according to the companies.

Not included in the companies’ combined drug portfolios is Celgene’s blockbuster drug, Otezla (apremilast), a drug for treating moderate-to-severe plaque psoriasis and psoriatic arthritis. The companies divested the drug to Amgen for $13.4 billion last month (November 2019) as part of a condition for US Federal Trade Commission approval of the merger.

2. AbbVie’s pending $63-billion acquisition of Allergan. The number two mega merger in 2019 is AbbVie’s pending $63-billion acquisition of Allergan, a deal that was announced in June 2019 and is expected to close in early 2020. Once the deal closes, the combined company would have 2019 annual combined revenue of approximately $48 billion. The deal is important for AbbVie to position itself against near-term generic competition for its top-selling product, Humira (adalimumab). Humira posted 2018 global sales of $19.9 billion. It is now facing biosimilar competition in Europe and other countries. Overall, Humira accounted for 61% of AbbVie’s total revenue in 2018.

3. Takeda’s $62-billion acquisition of Shire. Announced in 2018, Takeda completed its $62-billion of Shire in January 2019, making it the first mega merger of 2019. The deal created a new Top 10 pharma company with annual revenues of $30-plus billion. The deal gives Takeda both reward—increased product diversification and a larger footprint in the US.

Since closing the deal, Takeda has made selective divestments in non-core assets with the most notable being the divestment of Xiidra (lifitegrast ophthalmic solution), a prescription drug for treating dry eye, to Novartis in a $5.3-billion deal that included $3.4 billion upfront and up to $1.9 billion in potential milestone payments.

The combined Takeda and Shire will achieve combined annual revenue exceeding $30 billion, which is mainly derived from the key business areas of oncology, gastroenterology (GI), neuroscience, rare diseases, and plasma-derived therapies and also a position in vaccines. With the acquisition of Shire, Takeda gained complementary positions in GI and neuroscience and provided it with positions in rare diseases and plasma-derived therapies to complement its existing position in oncology, an area that Takeda enhanced with its $5.1-billion acquisition of Ariad Pharmaceuticals in 2017.

Takeda is gaining positions in rare diseases and plasma-derived therapies, a position that Shire strengthened through its $32-billion acquisition in 2016 of Baxalta, the biopharmaceutical company spun off from Baxter Healthcare.

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4. The pending combination of Mylan and Pfizer’s generics and off-patent business to form Viatris. In August 2019, Mylan and Pfizer agreed to combine Mylan with Upjohn, Pfizer’s off-patent branded and generic established medicines business, to form a new pharmaceutical company. The new name of the company, Viatris, will be effective upon closing of the combination, which is expected to occur in mid-2020. The two companies will continue to operate as independent, separate organisations until close. The new company would have pro forma 2020 revenues of $19 billion to $20 billion.

Pfizer is now organized into three main areas: the Biopharmaceutical Group, which includes its prescription, innovator drugs; Upjohn, which includes its off-patent branded and generic established medicines business; and Consumer Healthcare, which includes its over-the-counter business.

5. Investment in cell and gene therapies.Although a niche modality, cell and gene therapies have been a recent active area of investment by pharmaceutical companies to add products to their pipelines and manufacturing capabilities. Facing limited manufacturing capacity, several of the large bio/pharmaceutical companies have added manufacturing capabilities for cell and gene therapies as part of larger-scale acquisitions.

Among the key deals are Roche’s pending $4.3-billion acquisition of Spark Therapeutics, a commercial gene-therapy company based in Philadelphia. 

The acquisition would net Roche Spark’s commercial product, Luxturna (voretigene neparvovec-rzyl), a one-time gene-therapy product indicated for treating biallelic RPE65 mutation-associated retinal dystrophy, a rare form of inherited vision loss as well as a gene-therapy manufacturing facility.

Earlier this year (2019), Novartis acquired CELLforCURE, a CDMO of cell and gene therapies in Europe, from LFB, a French pharmaceutical company. The acquisition included a cell and gene manufacturing facility located outside of Paris in Les Ulis, France and the related adjacent land. The site joins Novartis’ network of cell and gene therapy sites that include sites in Morris Plains, New Jersey and Stein, Switzerland. In 2018, Novartis made a large play in gene therapy with its $8.9-billion acquisition of AveXis, a clinical-stage gene-therapy company. Earlier this year (April 2019), AveXis announced it had agreed to purchase an advanced biologics therapy manufacturing campus to expand its manufacturing capacity for Zolgensma (onasemnogene abeparvovec-xioi).

Following its $11.9-billion acquisition in 2017 of Kite Pharma, a developer of cell therapies, Gilead announced plans earlier this year (July 2019) for a facility in California for the development and manufacturing of viral vectors. Viral vectors are a starting material in the production of cell therapies.

With its $74-billion acquisition of Celgene, Bristol-Myers Squibb also gains cell-therapy manufacturing capabilities and product assets. In 2018, Celgene acquired Juno Therapeutics, a company developing cell therapies and immunotherapies, for $9 billion, which included a cell-therapy manufacturing centre in Bothell, Washington.

In August 2019, Pfizer reported that it is investing an additional $500 million in the construction of its gene-therapy manufacturing facility in North Carolina.

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6. Investment in cell and gene therapies capabilities – CDMOs/CMOs. Adding capabilities in cell and gene therapy production has also been a target of certain contract development and manufacturing organisations/contract manufacturing organisations (CDMOs/CMOs). Key deals completed in 2019 to build manufacturing capabilities in cell and gene therapies are Catalent’s $1.2-billion acquisition of Paragon Bioservices, and Thermo Fisher Scientific’s $1.7-billion acquisition of Brammer Bio, a CDMO of viral vector manufacturing for gene and cell therapies.

7. Changing of the guard at the FDA and the EMA.  Organisational change at the top of the US Food and Drug Administration (FDA) was an important development in 2019 with FDA Commissioner Dr. Scott Gottlieb stepping down from his post in April and with his spot being filled on an interim basis by FDA Acting Commissioner Dr. Norman Sharpless, who served from April 5, 2019 to November 1, 2019.

Under consideration now for the top position at the FDA is Dr. Stephen Hahn, Chief Medical Executive at the University of Texas MD Anderson Cancer Centre in Houston, Texas and Professor in the Department of Radiation Oncology, Division of Radiation Oncology at MD Anderson. His confirmation now goes to the full Senate in a vote that is expected to occur before the end of 2019.

At the same time, the European Medicines Agency (EMA) is moving forward with plans to find a new Executive Director as the term of the current EMA Executive Director, Guido Rasi, is set to come to an end in November 2020.

8. Global shifts: Brexit and China The still-to-be resolved withdrawal of the UK from the European Union (EU) (Brexit) and escalating trade friction with China were two broader policy issues with implications for the pharmaceutical industry in 2019.

Throughout the Brexit process, the UK pharmaceutical industry has maintained a position of the importance of the UK securing a deal to exit the EU, which has seen two missed deadlines for withdrawal: the original withdrawal date of March 2019, an extended withdrawal date of October 2019, and now a further extension provided by the EU to the UK until January 31, 2020.

The UK pharmaceutical industry supports a Brexit deal to mitigate supply disruptions if the UK were to leave the EU without a deal.

Trade talks with China represents another geopolitical concern with potential implications for the pharmaceutical industry. While the bio/pharma industry has largely not been targeted with tariffs or other trade barriers in recent trade actions, the industry potentially has risk because of its broad global network of manufacturing sites and suppliers.

9. Bolt-on acquisitions. While mega mergers dominated the news in 2019, several pharmaceutical companies made key smaller acquisitions to build their pipelines and commercial portfolios. In July, Pfizer completed its acquisition of Array Biopharma for $11.4 billion. Array Biopharma is focused on the development of small molecules for cancer and other diseases.

Eli Lilly made a deal to bolster its oncology drug portfolio with its $8-billion acquisition of Loxo Oncology in a deal completed in February 2019. Loxo Oncology is focused on the development and commercialisation of medicines for patients with genomically defined cancers. With the acquisition, Lilly gained Loxo’s Vitrakvi (larotrectinib), a treatment for adult and peadiatric patients whose cancers have a specific genetic feature (biomarker).

GlaxoSmithKline also added to its oncology drug portfolio with its $5.1-billion acquisition of Tesaro. The deal, which was announced in December 2018, was completed in January 2019. Tesaro is a commercial-stage biopharmaceutical company, with a marketed product, Zejula (niraparib), an oral poly ADP ribose polymerase (PARP) inhibitor, which is approved for use in ovarian cancer.

In July 2019, Merck acquired Peloton Therapeutics, a clinical-stage biopharmaceutical company focused on the development of small-molecule therapeutic candidates targeting hypoxia-inducible factor-2α (HIF-2α) for the treatment of patients with cancer and other non-oncology diseases. Peloton’s lead candidate, MK-6482 is an oral HIF-2α inhibitor in late-stage development for renal cell carcinoma.

Outside of oncology, last month (November 2019), Novartis agreed to acquire The Medicines Company, a biopharmaceutical company focused on cardiovascular diseases, for $9.7 billion. With the acquisition, Novartis would gain The Medicines Company’s investigational twice-yearly administered therapy in Phase III clinical development, inclisiran, for treating atherosclerotic heart disease and familial hypercholesterolemia. The transaction is expected to close in the first quarter of 2020.

10. API patent reform in the EU. In a much-debated move, the European Union adopted earlier this year (2019) manufacturing waivers to supplementary protection certificates (SPCs), a move supported by generics and biosimilars producers and active pharmaceutical ingredient (API) manufacturers. The purpose of the original EU legislation that authorised SPCs was to recompense product-development companies for the time taken to obtain regulatory approval of their medicines and give them longer market exclusivity in the form of a SPC. The SPC regulation, however, had the unintended effect of putting the European generic-drug, biosimilar, and API manufacturing industries at a competitive disadvantage vis-à-vis manufacturers producing in non-EU countries where no similar patent/SPC protection exists.

The European Parliament approved the SPC manufacturing waiver in April 2019, and the European Council formally adopted the measure in May 2019. The waiver came into force in July 2019, and companies will be able to start manufacturing under the waiver from July 2022.


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