Consolidation in the Pharmaceutical Industry Charles Baum, MD, MS, FACG Vice President and Head US...
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![Page 1: Consolidation in the Pharmaceutical Industry Charles Baum, MD, MS, FACG Vice President and Head US Medical Affairs Takeda Pharmaceuticals USA.](https://reader033.fdocuments.net/reader033/viewer/2022051401/5697bfa71a28abf838c98a83/html5/thumbnails/1.jpg)
Consolidation in the Pharmaceutical
IndustryCharles Baum, MD, MS, FACG
Vice President and Head US Medical AffairsTakeda Pharmaceuticals USA
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Bio-Pharma M&A History
• 30 y consolidation: ~110 companies >>> 30• Early – national consolidation (e.g., Glaxo, Welcome and Smith/Kline)• Later
– US market serves as nidus for small overseas companies– Multinational consolidation
David Davidovic, http://www.pm360online.com/the-history-of-bio-pharma-industry-mas-lessons-learned-and-trends-to-watch/
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The History of Bio-Pharma M&A's: Pfizer
David Davidovic, http://www.pm360online.com/the-history-of-bio-pharma-industry-mas-lessons-learned-and-trends-to-watch/
10 companies >>>>> 1
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The History of Bio-Pharma M&A's: Sanofi
David Davidovic, http://www.pm360online.com/the-history-of-bio-pharma-industry-mas-lessons-learned-and-trends-to-watch/
18 companies >>>>> 1
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Historical Drivers of M&A• 1980's (profit pressure)
- Rising R+D costs- Passage of Waxman Hatch Act- Price competition from generics
• 1990's (declining profits)- LOE and end of blockbuster era- Rise of buyer-side market power (MCOs/PBMs)
• 2000's (single digit growth)- Shrinking Pipelines and Emergence of bio-techs- Overcapacity drives branded pharma M&A- Eliminating competition drives generics manufacturers M&A
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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140
5
10
15
20
25
Annual Number of Pharmaceutical Mergers (2004-2014)
Num
ber o
f Dea
ls o
ver $
1 Bi
llion
https://www.levinassociates.com/dealsearch
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Overcapacity Drives M&As
• M&As result in cost savings of 30-40% appeasing investors• Restructuring of Development and Commercial functions
- Strategic shift from "me too" to novel specialty and orphan indications- New commercial models that leverage lower cost multi-channel/digital
marketing- A shift from salesforce to value-based contracts with payers and health
systems (IDNs)- Reduce research investment in favor of biotech partnerships and acquisitions.- Outsourcing
William Pursche: The McKinsey Quarterly, 1996
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M&As Drive Global Footprint:Example -Takeda and Nycomed Merger
Low Interest Rates Favorable Exchange Rates
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Medicaid Spending and Prescriptions for Albendazole (Amedra Pharma) and Mebendazole (Terminated by Teva)
High Cost Generic Drugs – Implications for patients and policymakers. Alpern et al., NEJM 371;20:1859-1862
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Generics Manufacturers and Pricing
• Turing Pharmaceuticals- Martin Shkreli raises price of generic Daraprim (pyramethamine) from $13.50 to $750 per tab – used to treat life threatening toxoplasmosis infections in HIV and cancer patients
• Valeant has acquired 100 drugs and increased price of 56 drugs by average of 66%- The case of Isuprel and Nitropress (525% and 212% increases)- Ascension health has calculated cost impact for its system of ~$8 M.
• PhRMA speaks out
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Despite Several Bad Actors Generic Drug Prices Continue to Fall
http://www.aarp.org/content/dam/aarp/ppi/2015/trends-in-retail-prices-of-generic-prescription-drugs.pdf
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Impact of Consolidation for InnovatorsFinancial• Reduction in competition drives bargaining power with payers• Tax implicationsEfficiency• Greater expertise, deal making agility, regulatory successInnovation• Focused pipelines – specialty pharma, oncology and orphan
indications• Emphasis on Inorganic Growth
- Increase in venture capital and fostering of biotech- Academic partnerships
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FDA Approvals Indicate M&As Have Positive Effect on Pharmaceutical Innovation
http://www.fda.gov/drugs/developmentapprovalprocess/druginnovation/ucm20025676.htm
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Number of US Biotech Companies is Growing
27% Increase
since 2012
Public Co. Private Co. Total
http://www.statista.com/statistics/197930/number-of-united-states-biotech-companies-by-type/
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Looking Beyond M&A
• Partnerships (basic and foundational research, co-promotion and co-development/commercialization arrangements)• Spinoffs and divestitures• Asset swap deals• ACA is helping drive alignment between payers, healthcare and
pharmaceutical manufacturers• Moving "beyond the pill" is driving non-traditional business
development