In this week’s bumper New Year edition of Chemistry World ’s business round-up, we cover more pharma deals, more job cuts and further uncertainty in the chemicals production market.
PHARMACEUTICALS
FDA gives Vytorin the thumbs up
The US Food and Drug Administration (FDA) has finally completed its review of the controversial Enhance clinical trial that seemed to show that the expensive cholesterol-lowering combination drug Vytorin worked no better than a cheap, generic statin.
Initial results from the study showed that Vytorin was no more effective at reducing the build up of plaques in neck arteries than Zocor – causing prescriptions of Vytorin to fall by 39 per cent. Valentin Fuster, former president of the American Heart Association and now the director of the Mount Sinai Heart Center in New York, had cautioned there wasn’t enough evidence that the ultrasound technique used to image plaque build up could predict the risk of heart attack or stroke, and that the two year study wasn’t long enough to see the real benefits on a disease that can take 20 or 30 years to develop,
However, the results of the study showed that Vytorin decreased the amount of ‘bad’ LDL cholesterol by 56 per cent, compared to the 39 per cent drop seen in those taking Zocor alone. A statement from the FDA said it still believed that medicines that reduce bad cholesterol benefit patients at risk from heart attacks, strokes or sudden death.
Roche signs up Synta
Pharmaceutical giant Roche could pay Massachusetts, US-based biopharmaceutical firm Synta more than $1 billion (£650 million) as part of a drug development deal targeting the inflammatory disease rheumatoid arthritis. The deal includes an upfront payment of $25 million, which will help fund Synta’s research into compounds that stop immune cells from being activated by blocking calcium release-activated calcium (Crac) signalling pathways.
AZ coughs up for two new deals
Anglo-Swedish pharma giant AstraZeneca (AZ) has signed a deal worth up to $900 million with US formulation expert MAP Pharmaceuticals to commercially develop a more effective formulation of budesonide, the active ingredient in AZ’s asthma treatment Pulmicourt. MAP’s ‘unit dose budesonide’ is currently in Phase III clinical trials for paediatric asthma, and according to the firm has the potential to be nebulised more quickly and can be used at a lower dose than the commercially available product.
AZ has also signed a product development deal worth up to $422 million with UK-based Biocompatibles for a glucagon-like peptide (GLP-1) analogue for treating diabetes and obesity. Much of the preclinical development work will focus on developing the delivery mechanism so that the drug can be taken less frequently, and with less nauseating side effects, than Novo Nordisk’s successful GLP-1 analogue liraglutide.
AZ jumps on ‘biosimilar’ bandwagon
AstraZeneca is also reportedly eyeing a push into biosimilars, or follow-on biological drugs. The move follows recent reports that US rivals Merck and Eli Lilly are looking to cash in on the upcoming patent expiries of blockbuster biological drugs.
Pfizer allowed to correct Lipitor ‘patent defect’
Pfizer has won new protection for the world’s biggest selling drug Lipitor (atorvastatin) after being allowed to correct inconsistent language that a US appeals court had said invalidated the patent. The news comes as welcome relief for the beleaguered pharma giant, which is desperately trying to restock its pipeline of new drugs before many of its largest selling medicines come off patent and succumb to the threat of generic competition.
The decision will bolster Pfizer’s efforts to prevent Apotex and Teva from selling generic copies of the drug before November 2011, when India’s Ranbaxy is scheduled to launch its own copycat version.
Bayer sues Abbott
Germany’s Bayer has filed a law suit against US-based Abbott for an alleged patent infringement relating to Abbott’s top-selling drug Humira. Bayer claims the drug infringes its 1997 patent that covers the use of human antibodies that fight the TNF (tumour necrosis factor) protein that causes the inflammation seen in autoimmune diseases such as rheumatoid arthritis and Crohn’s disease.
Bayer is asking the US District Court for the Eastern District of Texas to determine damages for past and future infringements of the patent by the drug, which Abbott has predicted will have sales in excess of $4.4 billion this year.
Pfizer licenses protein production technology
Pfizer has paid Sangamo Biosciences $3 million to license its zinc finger nuclease technology, which can be used to selectively knock-out genes in mammalian cells. The license granted to Pfizer will enable the pharma giant to eliminate the glutamine synthase gene in Chinese hamster ovary (CHO) cell lines and use the cells to produce recombinant proteins and monoclonal antibodies.
Merck sells lab to CRO
In an unusual twist on the outsourcing trend sweeping through the pharmaceutical sector, Merck has sold a 130,000 square foot vaccine testing laboratory to contract research organisation (CRO) PPD, and then signed a 5 year deal to make use of the facility. PPD has hired the Merck employees who currently work at the facility who will be assisting Merck with assay development and immunogenicity testing services to support Merck’s vaccine development programme.
The deal somewhat mirrors the one struck between Eli Lilly and CRO Covance, which saw Covance buy one of Lilly’s laboratory facilities and agree to provide Lilly with pre- and early-stage clinical testing services for 10 years.
GSK continues inflammatory deals
UK pharma firm GlaxoSmithKline (GSK) has continued its push into the inflammatory disease area by signing a development deal with US biopharmaceutical firm Archemix that could be worth up to $1.4 billion. The alliance will see Archemix develop aptamer (short sequence nucleic acid) therapeutics to treat diseases such as rheumatoid arthritis and inflammatory bowel disease.
GSK will pay Archemix an initial upfront payment of $27.5 million as well as investing $6.5 million in the company. The deal comes less than 2 weeks after GSK signed an $800 million deal with another US-biopharma firm, Dynavax, to develop anti-TNF (tumour necrosis factor) drugs for autoimmune and inflammatory diseases.
Wyeth to become vaccine king with Crucell buyout?
Dutch vaccine expert Crucell has said it is in ‘friendly discussions’ with Wyeth about a possible merger, estimated by the Wall Street Journal to be in the region of $1.35 billion. Crucell has cautioned that the talks, ‘at a preliminary stage’, may not culminate in a deal.
According to Dutch market analysts at SNS Securities, the $1.35 billion figure undervalues Crucell, and the talks could trigger a bidding war between Wyeth and its competitors Novartis and Sanofi Aventis.
Generics giant goes under the hammer
Ratiopharm, the world’s fourth largest generics manufacturer, has been put on the market just two days after its billionaire owner Adolf Merckle committed suicide following the demise of his 120 company empire.
The family’s holding company, VEM, finally got approval for ?400 million (£354 million) bridging loan that buys the family time to work out how to restructure the business empire built up by Merckle over the last 40 years. One of the stipulations of the loan is that VEM sell off Ratiopharm, which has annual sales of around ?1.8 billion.
CHEMICAL INDUSTRY
Dow’s Rohm and Haas deal on the rocks
Despite having cleared European regulatory hurdles, Dow’s takeover of Rohm and Haas is hanging in the balance after state-owned Kuwait Petroleum Company (KPC) scuttled their $17.4 billion K-Dow joint venture deal just days before it was set to close.
Dow was planning to use the $9.5 billion it was set to gain from the joint venture deal to pay a large chunk of the $15.3 billion it has agreed to pay for Rohm and Haas - and has decided to take legal action against the Kuwaiti firm in an attempt to recoup as much as $2.5 billion.
The deal had already been devalued by around $3 billion due to the recession, but pressure from within the Kuwaiti government has caused KPC to walk away from the deal, which would have lessened Kuwait’s reliance on selling oil.
The American chemical giant does have an option to take a bridging loan to pay for Rohm and Haas, but is reportedly loath to do so as it would leave it perilously exposed to the credit markets should the recession worsen. Dow has said that talks with other investors to draw up a similar joint venture deal were already underway, in the meantime the firm looks set to pay Rohm and Haas a ‘ticking fee’ of $100 million a month for every month the deal is delayed.
More production cutbacks
With the recession biting ever deeper and customers using up stocks of raw materials to save costs in the belief that prices will continue falling, yet more chemical companies are being forced to scale back production and cut jobs.
Producers of polystyrene and related styrenic polymers have been particularly hard hit, with Americas Styrenics the Western hemisphere’s biggest producer of polystyrene, being forced to reduce production and cut some 60 jobs.
US-based Kraton has been even worse hit and has suspended production of certain styrenic block copolymers– reducing output by around 50 per cent. According to David Bradley, Kraton’s chief operating officer, the move has been designed to minimise the company’s cash burn during the current slump in demand for plastics from the housing and automotive sectors.
In November, Nova Chemicals decided to idle its styrenic polymers plant in Pennsylvania due to falling demand. In January, the company said it would cut 400 jobs, some 15 per cent of its workforce as well as some 200 contractor positions. Speaking to investors during a conference call, Jeff Lipton, the company’s CEO, said that while the fourth quarter started off badly with polyethylene (PE) prices in free fall it improved dramatically towards the end of the year with its sales in December its second highest in the company’s ten year history. With competitors having taken 20 per cent of North American production capacity offline due to the recession, PE prices are starting to rise again.
India invests ?1 billion in new ethylene plant
Despite the economic downturn, OPAL, a subsidiary of India’s state owned Oil and natural Gas Corporation, has awarded the Linde Group and Samsung Engineering a ?1 billion contract to build India’s largest ethylene production plant.
The plant will be part of a new petrochemical complex being built in the Indian state of Gujarat and is expected to produce 1 million tonnes of ethylene, 400,000 tonnes of propylene, 150,000 tonnes of benzene and 115,000 tonnes of butadiene each year.
Cracker cracked
Japan’s largest petrochemical company, Mitsubishi Chemical, has shut down its naptha cracker at the Mizushima Plant after ‘trouble’ at the facility that produces 450,000 tonnes of ethylene per year. After a series of inspections, part of the facility has been scheduled for repair and the company plans to restart the plant on January 14.
Evonik catalyses growth in China
German chemical giant Evonik has started building a precious metal catalyst manufacturing plant in China so it can supply its customers in the region more efficiently. The catalysts are used in the synthesis of pharmaceuticals and fine chemicals where high selectivity, activity and ease of separation are key selling points to customers.
The company expects the plant to start production of the catalysts towards the end of 2009.
