Pharma edges its political contributions between Dems and Republicans

According to the Center for Responsive Politics, Pharma edges its 2008 political contributions between Democrats and Republicans. This is a departure from the last 15 years where Republicans have always been favored. It is interesting to note that GSK, Abbott, Schering Plough and Novartis in that order continue to lean Republican while Johnson & Johnson and Roche make 2/3 of their contributions to Democrats.

While pro-business, former Bain Capital top exec, Matt Romney was an early favorite, McCain ambiguous statements toward Pharma, have had the industry hedge its bets toward Democrats. Obama slightly leads Clinton among Democrats.

Healthcare Policy will clearly continue to be high on the agenda of candidates in a year where recession fears and reality make voters very responsive to promises of better health coverage. We shoud therefore expect the debate to heat up and hope the industry can be pro-active in supporting realistic solutions.

Should Pharma vote for McCain, Clinton or Obama?

Traditionally, the Republicans have been more favorable to the Pharma Industry. So, is a McCain vote a no brainer in 2008? Maybe not:  Senator John McCain (AZ) casted the industry in a not-so-flattering light while discussing why Americans can’t import drug from Canada. Mitt Romney jumped in, “Don’t turn the pharmaceutical companies into the big bad guys.” McCain responded: “They are.”Mitt Romney, clearly the candidate with the best understanding of Healthcare and Pharma, has now suspended his campaign, in light of McCain triumph on Super Tuesday.

Let’s turn the table: are the Democrats still the bad guys for Pharma? The first Hillary Clinton Healthcare Plan when Bill was President, has left bad memories. Hillary’s plan in 2008 clearly spells out universal healthcare coverage but with freedom of choice for the insured. Obama is less specific but supports the same principles.

On drug pricing, all three McCain, Clinton and Obama are favoring government regulation. Even Republicans are likely to target drug prices under Medicare part D. For more on candidates position on healthcare, check  Healthcare’08 .

As a result, Pharma is playing a bi-partisan card, evolving from 2/3 donations in 2004 to the Republicans to 50/50 with the Democrats in 2008. This is a pragmatic approach, since Pharma is most likely to have to work with a Democratic President. Only a united and pro-active industry position to address real issues, including that of the uninsured, will save US Pharma from a European or Canadian-style Healthcare System and a rapid decline of the industry competitive position.

Teva Moves into Biologics

Generic Giant, Israel-based, Teva Pharmaceuticals (NASDAQ:TEVA) buys for $ 400 million in cash, CoGenesys, a 2006 spin off of Maryland-based Human Genome Sciences. CoGenesys’s pipeline of biologic drugs includes treatments for cardiovascular disease, cancer and autoimmune disorders.

Teva announced in 2007 his strategic decision to move into biologics. The obvious opportunity is to build an early leader position in Bio-Similars. Europe has already approved Novartis version of J&J’s Eprex ( marketed in the US by Amgen as Epogen). Teva, which has a market cap in excess of $ 30 billion, has clearly the financial resources to step up its investments in follow on biologics and possibly move into more innovative bio-pharmaceuticals. Copaxone, Teva Multiple Sclerosis drug, may actually benefit from CoGenesys albumin technology inorder to improve and prolong its activity.

JP Morgan Update: Vertex: Awaiting Telaprevir

At the JP Morgan Healthcare Conference, Joshua Boger, Founder, Chairman and CEO of Vertex (NASDAQ:VRTX) introduces Kurt Graves, formerly Chief Marketing Officer at Novartis AG and now Vertex’s new Executive Vice President, Chief Commercial Officer and Head of Strategic Development.

Kurt’s presentation focused on Vertex’s commercial strategy to build telaprevir, a breaktrough Hepatitis C (HCV) drug, into a blockbuster. Vertex’s vision continues to be on “transformational innovation”: innovation that redifines health and transforms lives with new medications. Hepatitis C remains a market with high medical unmet needs, large potential for growth and treatment provided by specialists. It is particularly appropriate for the new commercial model that Vertex embraces:emphasis on quality of live outcomes and health economics ( rather than just efficacy and safety), patient centric (rather than just physician centric), focus on Impact of Voice (rather than just Share of Voice), growth through market share and market expansion ( rather than just market share), multi-brand treatment solution ( rather single brand).

Telaprevir is progressing toward phase III. The EMEA has provides scientific guidance to JNJ’s Tibotec unit, Vertex commercial partner in Europe. The FDA’s opinion is being expected by the end of January 2008.

While several of its competitors did bite the dust last summer ( see story on biobusiness.tv) , telaprevir appears to have an exceptional product profile: rapid viral decline, strong efficacy (RVR rate 75-80%, SVR> 60%, relapse<10%), and most importantly shorter treatment duration (24 weeks vs. 48 weeks but current standard of care). This is particularly important when 58% of patients cite treatment duration as a reason to drop out.

Recent market research revealed that 98% of physicians intended to prescribe telaprevir within 12 months of availability. Vertex expects the Hepatitis C market to be $ 4 billion by 2010 and exceed $ 10 billion aftter 2012.

Beyond telaprevir, Vertex remains committed to category leadership through the development of second generation protease inhibitors and later of oral drug combinations, adressing the needs of every patient segment.

The promise is clearly there. However investors continue to be cautious with Vertex trading at $22.60, close to its 52 week-low of $ 20.71 and bearly more than 505 of his 52 week high of $ 41.42. Vertex is a strong buy for all those who believe in the telaprevir promise.

Is Japan Ready for Generic Drugs?

According to the December issue of the McKinsey Quarterly, the Japanese market may soon be ready for generic drugs. Generics represent 59% of the US pharmaceutical market volume but only 17% in Japan. Given the number of major drugs going off patent, the drug spending in Japan could be reduced by $ 26 billion. However, before this happens, both physicians and patients need to become more willing to discuss the generic option and generic prices have to drop to 20-30% of the brand versus only 50% now. Both makers of Generic and and those of Innovative Branded Pharmaceuticals stand to gain from this evolution.

IS THE FUTURE OF PHARMA “NICHE BUSTERS”?

Is the Future of Pharma “Niche Busters”?

Blockbusters have been ruling the world of Pharma for the last 20 years. Primary Care drugs such as Lipitor, Plavix, Prilosec and many others reached multi-billion dollar status thanks to thousands of reps detailing them to doctors and hundreds of million of dollars of Direct To Consumer Advertising. However patent expirations, black box warnings, and the inability of the industry to renew its pipeline may bring this era to an end. New drugs approval by the FDA reached a 20-year low of 16 in 2007. The same year black box label changes reached 69, up from only 15 in 2000. (see graph from Associated Press).
Matthew Perrone writes an interesting article “Analyst Foresee more Boutique Drugs” in the December 30, 2007 Sunday edition of the Washington Post. Perrone quotes WBB Securities analyst Steve Brozak about these alarming trends for the industry: “”No pharmaceutical executive has ever lost his job for saying no to a new drug project, and no FDA employee has ever lost his job for saying no to a new drug application. Christopher Milne, of the Tufts Center for the Study of Drug Development, says “The pendulum at FDA is going to be stuck at the conservative end”.

Is there a remedy for Pharma? Yes, and it is already a proven business model. 20 years ago, Sandoz Pharma (before it became Novartis), flourished with “niche busters” such as Sandimmune for Transplant, Parlodel for Parkinson’s Disease and Infertility and Sandostatin for Acromegaly and GI Tumors. It is likely that Dr Daniel Vasela, CEO of Novartis AG (NYSE:NVS), remembered his days as Sandostatin Brand Manager, when he championed Gleevec against all the “no sayers”. Gleevec has since saved thousands of lives and grown into a Billion Dollar brand. Roche (Swiss:RO.SW), under the leadership of CEO Dr Franz Humer, has increasingly focused on areas of specialty, such as Oncology and Infectious Diseases, regaining its position as one of the most successful of the top 10 Pharma. It is also Roche that had the wisdom to take a majority stake in Genentech, while allowing its management to operate autonomously. Genentech has developed and commercialized several “niche busters” such as Herceptin and Avastin.

So, will 2008 be the year where Big Pharma considers “niche busters” not just as serendipity but as a true Strategic Intent?