On New Year’s Day, Sanofi and Boehringer Ingelheim closed a $12.5 billion asset swap that had been in the works for a year, giving the closely held Germany-based BI a suite of drugs to treat farm and companion animals. In return, BI said goodbye to some well-established consumer health products, including Dulcolax and Mucosolv, which are now in the hands of Sanofi.
So what’s next for BI? The company is hard at work establishing research and development priorities for the animal health business, says Joachim Hasenmaier, a member of the company’s board of managing directors who is in charge of animal health. That effort will include strengthening synergies between its human and animal health division, particularly in the arena of chronic disease management, Hasenmaier says.
“BI has a very strong chronic-care disease segment coming from the pharmaceutical side,” says Hasenmaier, a veterinarian by trade who joined BI in 2001 and has held a variety of positions in both animal and human health. Sanofi spent about 7% of its animal health sales on R&D, vs. BI’s 12%, Hasenmaier adds, and he expects the combined R&D investment to be on the high end of that range. “We are absolutely committed to a strong R&D capability.”
Getting the integration of Sanofi’s animal health business right will be critical for BI, which had suffered its share of struggles on the human side of the business prior to the deal. In 2014, its $2-billion-a-year hypertension drug, Micardis, lost its patent protection, causing overall revenues to drop and prompting the company to overhaul its R&D infrastructure. That effort included cutting 720 jobs in the U.S. in 2015, and another 244 this past December. BI has been making cuts in Europe, too.
One of BI’s human health priorities is developing new therapies and technologies for managing chronic diseases. As its blockbuster COPD drug, Spriva, approaches the end of its patent life, BI is counting on newer combination treatments to pick up the slack. And last year, the company made a big push into the smart inhaler space, teaming first with Propeller Health and then with wireless-tech giant Qualcomm to develop inhalers that can track adherence to medication regimens and transmit the data to patients and doctors.
Hasenmaier says BI sees similar opportunities to build up its product line in chronic disease management for companion animals. Prior to the acquisition of Merial, BI was much better known for its livestock products than it was for drugs to treat dogs and cats. The deal brought in a suite of well-known brands for pets, including Heartgard to fend off heartworms in dogs and Purevax vaccines for cats. In addition to building up its selection of vaccines and preventatives, BI plans to boost what Hasenmaier calls its “older dog portfolio,” which includes products to treat congestive heart failure and pain. “We will certainly increase our investment into chronic pet diseases,” Hasenmaier says.
On the livestock part of the business, Hasenmaier says BI will respond to the agricultural market’s movement away from antibiotics by increasing its emphasis on vaccine development. He also sees big opportunities in precision farming—the use of technology to keep tabs on each animal in a herd, collect health data around the clock and use the information to quickly respond to emerging illnesses and improve the overall health of the herd.
“We’re planning investments in diagnostic tools. That will give us better data and improve our knowledge of diseases, so we can develop better vaccines and tailor prevention approaches to specific farms,” Hasenmaier says. “That’s where we believe the future is.”
Hasenmaier also sees opportunities for BI’s animal health division to translate innovations made on the human side of the business into animal health. The company already did that with several products, including Metacam, a non-steroidal anti-inflammatory (NSAID) to treat osteoarthritis pain in dogs. “We are exploiting human pharma molecules in animal health,” he says, “and we certainly will continue that in the future.”