May 25, 2010
Posted by on
I often hear how the upcoming loss of patent protection for current blockbusters creates an insatiable demand at pharma companies for new pipeline products from biotechs. Here’s an example from 2007. Here’s one from last week. This is not true. Upcoming loss of patent protection creates a insatiable demand for revenue, but new products are not the only source of new revenue.
Abbott’s $3.7 billion deal for a unit of India’s Piramal Healthcare last week is a perfect case in point. This deal, which follows Abbott’s license of a slew of products from Zydus Cadila, will feed the company’s new “established products division.” Abbott’s purchase of Solvay in February also built its emerging markets revenue, which now accounts for over 20% of the company’s business.
Abbott is far from alone: Sanofi is the biggest generics manufacturer in Latin America, Pfizer also has an established products division, Novartis is diversifying into eyecare and has long sold generics, Merck is into follow-on biologics and GSK tapped South Africa’s Aspen Pharma for emerging markets growth through branded generics. These alternatives look even better as payors worldwide are setting more demanding standards for reimbursement, the placebo effect is mysteriously strong, and personalized medicine makes clinical trials even more expensive.
My bottom line? Emerging markets and generics opportunities create plenty of growth, thank you very much, with a far lower risk profile than most product in-licenses or biotech acquisitions (even the option deals). As big pharma gets more comfortable with “established products” and biosimilars, biotechs are going to have to demonstrate even higher value. Plenty of companies are being built and funded with that in mind; but anyone counting on pharma’s desperation will be disappointed.
July 9, 2009
Posted by on
In our continuing Trends in 2009 series on shifting IP constituencies, we’ve been following increasing innovative activity in the developing world, and innovator pharma’s increasing moves towards generics and biosimilars. This week saw updates on both fronts:
- PerkinElmer announced plans to open a Bio-pharma Center of Excellence in Hyderabad, India, later this year, citing “growth opportunities in environmental monitoring, neonatal and maternal screening, and pharmaceutical research.”
- In other India news, Mylan, a U.S.-based small molecule generics company, did a deal with Biocon for help with biosimilars.
- On the pharma front, a WSJ post this week explains the attractive economics behind big pharma’s growing investment in the developing world’s generics market. Two words: branded generics.
- Finally, China’s budget saw a huge R&D boost: up over 25% from 2008 (although it still lags Japan’s R&D spend by a third and the spending is heavily focused on applied technologies).