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Eastern Europe targeted

Takeda's acquisition of Nycomed and Stada's deal with Gruenthal show the popularity of gaining a position in this region
Eastern Europe

This review of key deals in the pharmaceutical and biotech sectors focuses on the deals announced in May 2011. Table 1 captures the top 15 deals by value where financial terms were publicly disclosed and Table 2 lists transactions where they were not, as these add to the overall picture of trends.

Although not included in Table 1, the biggest headline deal for May was the acquisition of Nycomed by Takeda. After several weeks of consistent denial, this deal, with a price tag of €9.6bn on a cash free debt free basis, which excludes Nycomed's US dermatology base, was announced.

This gives Takeda a really strong European presence and brings the pipeline to Nycomed's business which had been lacking in the past. Nycomed has shown particularly strong performance in Russia and Northern Europe, areas which feature strongly in this month's deals.

Stada has followed Takada's lead in buying into this region with its acquisition of a range of brands from Grunenthal. At an estimated value of €360m in cash Stada has gained a branded portfolio which includes sales infrastructures in certain national markets in Central and Eastern Europe as well as the Middle East. The brands include several from Grunenthal's pain franchise, including Tramal (tramadol), for example. The markets include Russia, Czech Republic, Slovakia, Slovenia, Romania, Bosnia, Serbia, Croatia, Latvia, Estonia, Ukraine and Hungary.

In a similar vein, Valeant, clearly not deterred by being unable to acquire Cephalon, consolidated its position in this region with the purchase of a controlling interest in Sanitas. Valeant is now in a position to tender to acquire the full share capital in the company. Valued at €314m in cash, Sanitas is based in Lithuania and has a portfolio of some 390 products marketed in nine territories in Central and Eastern Europe, mainly focused on Poland, Russia and Lithuania.

Table 1

Licenser Acquired/Licensee Acquirer

Product/Technology

Deal type

Headline ($m)

Elan Drug Technologies/Alkermes

Drug technologies and focus in CNS

Merger

960

Advanced BioHealing/ Shire

Dermagraft and tissue generation technologies

Acquisition

750

Glenmark/Sanofi

GBR500 in Crohn's disease

Licence

663

Specifar/Watson

Greek generic business

Acquisition

562

Aveo/J&J Centocor

Antibodies targeting the RON (Recepteur d'Origine Nantais) receptor

Strategic alliance

555

Grunenthal/Stada

Branded product portfolio for national markets in Central & Eastern Europe and Middle East

Acquisition

513

Taiyo/Teva

Japanese generic business

Equity investment

460

Sanitas/Valeant

Generics business in Central & Eastern Europe

Acquisition

448

Molecular Partners/Allergan

MP0112 in ophthalmic indications including wetAMD

Licence

420

Allos/Mundipharma

Folotyn - approved for relapsed or refractory peripheral T-cell lymphoma

Licence

361

J B Chemicals & Pharmaceuticals/J&J

OTC brands in Russia

Acquisition

260

PharmaEngine/Merrimack

MM398 in oncology

Licence

220

CytRx/Orphazyme

Molecular chaperone assets for rare genetic lysosomal diseases

Divestment

120

ViroPharma/Halozyme

Drug delivery platform using recombinant human hyaluronidase enzyme (rHuPH20) technology

Licence

 83

Proteostasis/Elan

Discovery of disease-modifying small molecules for the treatment of neurodegenerative disorders

Equity investment

 50



Cilag in Russia
Building presence in generics is almost always by acquisition rather than individual product licensing, as is the case in the OTC field. Russia is clearly a hotbed of activity as Cilag GmbH International (Johnson & Johnson [J&J]) announced the acquisition of two leading cough/cold OTC brands from J B Chemicals in Russia, adding to its footprint there. The price tag for these market-leading brands (Rinza and Doktor Mom) was $260m in cash.

The build in the generics sector via acquisitions continues apace. Teva seems to have a limitless shopping list as the company bought into the Japanese market via the acquisitions of 57 per cent of the share capital in the privately owned company, Taiyo. Taiyo is Japan's third largest generic pharmaceutical company and had sales of $530m reported for 2010.

The largest licence deal in May, financially, was that reported between Glenmark and Sanofi. Under the terms of the agreement, Sanofi gains development and marketing rights to GBR 500, a novel anti-inflammatory for the treatment of Crohn's disease. With an upfront payment of $25m, a further tranche of $25m and potential milestone payments of $613m, this is a good price tag for a product that has completed its US phase I study. 

In addition, Sanofi has exclusive marketing rights for North America, Europe, Japan and certain countries in South America. In keeping with current trends for licensers to retain some marketing rights, GBR 500 will be co-marketed in Brazil, Australia, New Zealand and Russia. Glenmark is retaining the Indian market rights.  Glenmark has a track record of securing solid deals for its NCEs, this being its sixth major partnership.

Table 2 captures some of the deals where no financial terms were released. Interestingly, this month saw the announcement of three commercialisation deals, for either co-promotion or co-branding. As a general rule, most co-promotions operate on a national basis and these are no exception to the rule.

The appointment of a local partner to assist in Japan has been standard practice for many years as a means to ensure the maximum return. Interestingly this time, the asset is owned by Daiichi Sankyo, which acquired the rights to denosumab in 2007 from Amgen. AstraZeneca (AZ) will bring its AZ oncology expertise to the co-promotion post approval, adding weight to the promotion of the product.

Table 2

Licenser/Licensee

Product/Technology

Deal type

Almirall/Nycomed

Roflumilast for chronic obstructive pulmonary disease (COPD)

Co-branding in Spain

Merck/Roche

Victrelis in hepatitis C as triple combination therapy

Co-promotion

Rigel/Pfizer

Inhaled allergic asthma therapy R343

Termination

Metabolex/Sanofi

MBX-2982, an orally active GPR119 agonist for the treatment of type 2 diabetes

Termination

S*Bio/Onyx

JAK2 inhibitors SB1518 for the treatment of myelofibrosis (MF) and SB1578

Restructuring of option

AstraZeneca/ Daiichi Sankyo

Denosumab for the treatment of bone disorders stemming from bone metastasis

Co-promotion in Japan

Targacept/AstraZeneca

TC-5619 in schizophrenia

Decline of option

Heptares Therapeutics/Shire

Novel adenosine A2A antagonist in preclinical development with potential for treating symptoms of Parkinson's disease

Exclusive option



Local expertise
Again accessing local expertise, Almirall and Nycomed opted for a co-branding strategy in Spain for Roflumilast, a phosphodiesterase (PDE) IV inhibitor, in chronic obstructive pulmonary disease (COPD). As Almirall will be developing its own brand, this deal is more like a licence and as such commanded an undisclosed upfront fee.

In a broader commercial arrangement, Merck added Roche to its campaign to market its new drug for hepatitis C, Victrelis. As a pre-emptive strike, this should quickly establish Victrelis ahead of the soon-to-be-approved Incivek from Vertex Pharmaceuticals and J&J. The aim is to build the concept of triple therapy adding to the interferon injections Peg-Intron and Pegasys, already marketed by Merck and Roche, respectively. Currently, Pegasys is the dominant product, with a market share of approximately 75 per cent in hepatitis C.

Several options featured in the list are a usual means of limiting risk in a future investment. Heptares signed an exclusive option to a worldwide licence with Shire for its adenosine A2A antagonist, which is in preclinical development. 

Inhibition of the A2A receptor has been proved to be clinically effective in treating symptoms of Parkinson's disease and this reflects a new approach to this GPCR target. Although not disclosed, Heptares received an upfront payment and will, on exercise of the option, be eligible for milestone payments and royalties. Of course the exercise will be dependent on good preclinical studies and there is no guarantee that the option will be exercised.

Table 2 includes several 'declines of options' and terminations, the latter sometimes for strategic reasons, as in the case of Pfizer, rather than scientific failure. Re-partnering of assets post return is always a difficult challenge; in the case of S*Bio, the company has elected to continue development, which, for SB1518 in an orphan indication, may be a good cost-effective option. 

 

Sharon Finch


The Author

Sharon Finch is a consultant at Medius Associates 


 




Country Reports Live

Acknowledging the rise of Eastern Europe as a market of growth for the pharmaceutical industry, PMGroup is hosting a live Country Report on Russia on November 2-3, 2011.

The event offers delegates the chance to meet experts who understand both the challenges and opportunities of operating in the Russian market, which has grown nearly 20 per cent in recent years.

Find out more about Country Reports Live, and register your interest for Russia:The Inside Story.

13th July 2011

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