Generic drugs

Texas AG goes after generics makers

Tracy Staton — Thu, 10 Jul 2008 10:37:49 -0400

It's not just branded drugmakers who are being targeted for Medicaid fraud. The Texas Attorney General is going after four generics makers for allegedly stating falsely inflated prices for their medications. Watson Pharmaceutcials, Alpharma, Par Pharmaceutical and Barr Pharmaceuticals listed artificially high prices all the way back to the 1990s, the AG claims. Medicaid then reimbursed pharmacies at those inflated prices, giving the pharmacies windfall profits--and "unlawfully" inducing them and other customers to buy more from the drugmakers.

The probe's roots lie in a whistleblower lawsuit that's under court seal. That suit has led to action against several drugmakers for similar pricing schemes, including Schering-Plough, Boehringer Ingelheim, and Baxter Healthcare.

- see the AG's press release
- read the Pharmalot item

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Daiichi buys $4.6B stake in Ranbaxy

Maureen Martino — Wed, 11 Jun 2008 10:06:46 -0400

These days, emerging markets and generic drugs are hot, and Japan's Daiichi Sankyo just landed a deal that capitalizes on both trends. The company is shelling out a hefty $4.6 billion for a majority stake in India generics giant Ranbaxy. The deal values Ranbaxy's shares at 737 rupees a piece, a 31 percent premium over yesterday's close. Ranbaxy will become a subsidiary of Daiichi but Malvinder Singh will remain its CEO. In a statement, the companies outlined several reasons for the merger. Daiichi said the move allows it to diversify into generics; it also gets its foot in the door with the fast-growing emerging markets that so many drug developers are targeting. In addition, Daiichi gains access to the affordable Indian R&D and manufacturing facilities Ranbaxy brings to the table.

"The combination of the two companies will give Ranbaxy access to Daiichi's expertise in research while the Jap anese company will benefit from low-cost production on the sub-continent, amid a deepening profits crisis in Japan's drugs industry," observes the Times Online. Last year Daiichi announced a surprising sales-growth target: a whopping 60 percent over the next three years, based on its hopes for Azor and two other meds coming up the pipeline.

"This complementary combination represents a perfect strategic fit and delivers a considerable opportunity for the future growth of the new Daiichi Sankyo Group," said Takashi Shoda, CEO of Daiichi Sankyo

- check out this release for more on the deal
- read this article for more

Safeway jumps on $4 generic bandwagon

Christe Bruderlin-Nelson — Wed, 11 Jun 2008 03:48:30 -0400

Just two years ago, Wal-Mart started its program to sell a select list of generic prescription drugs for just $4 as part of its entry into the healthcare and pharmaceutical spaces. It looks like the retail giant kicked off a major trend.

Now Safeway plans to follow suit and be the first full grocery retailer to hop on the $4 prescription bandwagon. Target also copied Wal-Mart's assertive sales strategy, and now consumers have access to literally hundreds of generic drugs at the $4 price point, including medications for thyroid disease and hypertension, as well as antibiotics. It's a trend that's sure to please price-conscious consumers, but give headaches to drugmakers already hurt generic competition.

- read the here's the Washington Post article
- get more on this story at MSNBC

Vasella shaking up Novartis ops

Tracy Staton — Tue, 20 May 2008 09:35:49 -0400

Quick, name the top three challenges Big Pharma faces. Generics? Pricing pressure? Tough regulatory environment? If they're not the top three, they're at least significant enough for Daniel Vasella to build his remake of Novartis around them. They've depressed sales and profits at Novartis--and, in turn, the stock has dropped by a quarter over the past year.

So, enter Vasella with his new management team, bureaucracy fighting, R&D restructuring, and diversification projects. Let's take the last one first. Last month, Novartis made a deal for the eye-care company Alcon, and Vasella is also pushing aggressively into generic drugs and vaccines. His new right-hand man Joe Jimenez is slashing 25 percent of the HQ jobs, trying to cut through bureaucracy and red tape that has separated Vasella from his team and hamstrung operations. The R&D group is getting reorganized into small teams of eight people or so; they're tasked with spotting potential safety or regulatory problems early on and working with drug watchdogs to iron them out long before approval applications are submitted. And to tackle insurers' reluctance to pay big bucks for new drugs, Jimenez has started four pilot projects to improve Novartis' relationships with payers.

- read the story in the Wall Street Journal

Generics makers face Chinese threat

Wed, 14 May 2008 06:59:57 -0400

In an interesting twist on the usual generics news, it's the copycat makers who are predicted to suffer as competitors undercut their products. The source of this competition? None other than China, where generics companies are gearing up to supply finished products--rather than just pharma ingredients--for the first time. IMS Health is predicting that the Chinese manufacturers will "undercut all others on price." The result? Pain for international generics companies and, in trickle-up fashion, brand-name players, too.

Meanwhile, Goldman Sachs has downgraded its outlook for the generics sector as a whole, citing weak-to-mixed first-quarter results and fewer big new copycats on the horizon as some brand-name drugmakers ironed out their differences with generics challengers. The only two companies Goldman still favors are Teva and Mylan.

- see the China news at Pharmalot
- check out the downgrade story at CNN Money
- find the Goldman note at Barron's

Study: Costlier drug worked better

Wed, 05 Mar 2008 06:59:56 -0500

Here's some rock-and-a-hard-place news about drug costs. Drug makers raised prices by an average of 7.4 percent on the brand-name meds most often prescribed to the elderly. The increase outpaced inflation by a huge margin. Meanwhile, the government's price index has shown less growth, largely because of generic switching. So branded drugs cost significantly more, but because people are taking more generics, overall drug spending hasn't grown as fast.

But here's the kicker. A new study shows that when people think a drug is more expensive, it appears to work better. Researchers tested two dummy pain pills against each other; one was given a price tag of $2.50 per pill and the other had been "discounted" to 10 cents. More patients taking the $2.50 pill reported pain relief than those taking the cheaper one--85 percent to 61 percent, respectively.

This phenomenon might explain the popularity of brand-name meds over cheaper alternatives--and it may explain why patients report a difference in their response to generics after they switch from a brand-name.

We're left with two questions: In the interest of saving money without losing effectiveness, how can patients' expectations be managed when they switch to a generic? And when drug makers hike up prices, does the price-tag effect make those drugs suddenly more effective? Points to ponder.

- read the Washington Post story on rising prices
- see Pharmalot's chart on brand-name drugs and their prices
- check out the placebo article in the New York Times
- find more on the placebo study in the Washington Post
- see this LA Times column on drug prices

Related Articles:
Insurers pay docs for generic-switching. Report
Drug makers jack prices up 7.8%. Report
Specialty drugs emerge as key price driver. Report
Generics beat down drug price inflation. Report
Report claims generics could save system $20B. Report

ALSO NOTED: Medtronic earnings drop 89%; GSK buys back 2.7M shares;

Tue, 19 Feb 2008 06:59:50 -0500

> Medtronic's third-quarter earnings plummeted by 89 percent to $77 million because of charges on lawsuit settlements and acquisition costs, but even the adjusted profit beat Wall Street expectations. Report

> GlaxoSmithKline bought 2.7 million of its own shares as part of a stock buyback program authorized last May to boost value. Report

> AstraZeneca appointed Jean-Philippe Courtois, president of Microsoft International, as non-executive director. Report

> Ireland's Health Service Executive says it may buy drugs from international suppliers if domestic wholesalers don't absorb the cost of reduced profit margins instead of passing it along to pharmacies. Report

> Denmark's Pharmexa will cut 20 percent of its workforce after finding buyers for just 18.2 million of 69 million new shares of stock. Report

> Endo Pharmaceuticals and Penwest Pharmaceuticals say they will fight a generic version of their Opana ER pain drug planned by Actavis. Report

> Janssen Korea, a unit of Johnson & Johnson, says it plans to expand and modernize its plants in that country; this year it will spend more than $2 million on new equipment. Report

> Mistral Pharma won a deal to distribute six injectable generic drugs in Canada for an unidentified drug maker. Report

> Carl Icahn has cashed in his Genzyme chips and evidently gone looking for another game. Report

> FierceHealthcare asks: Would a new agency curb pharma marketing misdeeds? Editorial

And Finally... Living past 90 isn't rocket science: stop smoking, manage weight, control blood pressure, exercise regularly and avoid diabetes. Report

Novartis CEO's pay drops with profits

Fri, 18 Jan 2008 06:59:58 -0500

Novartis had a tough year in 2007: Its vaunted new diabetes drug Galvus got the stiff-arm treatment from the FDA, so much so that the company may not even try again to get it approved. Its painkiller Prexige ran into reports of liver problems; first withdrawn in Australia, it fell in other countries one after the other, domino-style. Zelnorm caught the FDA fisheye, and Novartis finally agreed to withdraw it for safety reasons. The company managed to report a fourth-quarter profit, but at a level 45 percent less than last year's numbers.

And profits aren't the only thing that fell. So did CEO Dan Vasella's (photo) pay. He took home 17 million Swiss francs ($15.6 million), which is no chump change, but it's 20 percent less than he made last year. It's the first time his pay has dropped since he took over at Novartis over ten years ago. Sometimes pay-for-performance packages really hurt. Other Novartis execs took bigger hits. Thomas Ebeling, former chief of the company's pharma unit (and now consumer health honcho), saw his pay fall by 65 percent to 3.7 million francs, or $3.36 million.

Three guesses which unit delivered its boss more pay this year than last. Hint: its sales grew by 20 percent to $7.2 billion and profits rose by a hefty 41 percent to $1 billion. That's right, generics. Andreas Rummelt, Sandoz's chief, made 5.6 million francs ($5 million), 16 percent more than last year.

- see the earnings news from Novartis
- read the compensation article in the Wall Street Journal Health Blog
- get more about Novartis' rosier outlook for the second half of 2008

ALSO: Take a look at Novartis' pipeline. Report

Related Articles:
CEO: Novartis plans big restructuring. Report
Lagging sales spur Novartis layoffs. Report
Novartis makes a $10B bet on generic drugs. Report

Wanted: Rugged pharmas for tough trip

Wed, 02 Jan 2008 06:59:58 -0500

Batten down the hatches. The voyage ahead is one of Odyssean proportions, with generic drugs ready to suck away sales like the Charybdis maelstrom and biotech bewitching R&D like the irresistible Circe. By year's end, we're expected to see only 5 to 6 percent growth industry-wide. But like all voyages, this one can be a transition, a route from one place to another. The layoffs and restructuring that will play out this year can lead to better, stronger, faster companies--or not. The new execs still gearing up or taking over this year could lead their crews into new, creative passages--or not. Biotech fever could transform pharma into exciting and profitable innovators--or R&D execs could transform into farm animals.

Okay, that's taking the analogy a bit far. But the point is this: Pharma could consider itself embattled, stymied, doomed. It could look back wistfully at the old ways of doing business, at its portfolios of aging meds. Or it could face forward to steer through the tight straits ahead, toward a new, very different destination.

Our bet? A few companies will reinvent themselves. The rest will tack here and there, looking for ways to recapture the cozy past, and founder.

- read the report about Pharma's upcoming challenges
- see this press release from IMS Health on 2008 sales growth
- read The Motley Fool's Big Pharma forecast

Related Articles:
Say goodbye to Big Pharma's gilded age. Report
PwC to pharma: Adapt and invest or die. Report
New drug approval lags in 2007. Report
Lines blur as Big Pharma crosses borders into biotech. Report

Op-Ed: Generics aren't always equal

Thu, 20 Dec 2007 06:59:54 -0500

Now here's an op-ed Big Pharma can unite behind. In the Baltimore Sun, journalist and patient Naomi Wax assails the FDA for calling generic drugs exactly equivalent to their brand-name counterparts. After all, the generics may have the same active ingredients, but they often have different fillers, binders, colorings, etc. They may use different delivery systems. And formulas vary from one generics company to the next.

The variances can cause reactions in some patients, Wax says, citing her own experience with generic Zoloft (sertraline); she did well on one company's version, but not another's. She also recounts a litany of complaints from users of Wellbutrin XL generics, which seemed to time-release in a different way from the branded form; those complaints were passed along to the FDA by health columnists Joe and Terry Graedon. The agency has yet to respond.

The problem, Wax says, is that docs, the FDA, and generics companies all pooh-pooh these complaints; if everyone in healthcare simply acknowledged that generics can be different, those differences might be managed.

- read Wax's column in the Sun

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Analysts get bullish on generics makers. Report
Switching to generic statins not so healthy. Report
Pharma faces "tidal wave" of generics. Report