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Pharma news in brief

Our weekly round-up of news affecting the industry.

Drug execs to face fraud charges

The Serious Fraud Office (SFO) plans to bring criminal charges against senior pharmaceutical corporate officials and directors later this year in connection with a suspected drugs price-fixing fraud on the NHS, according to a High Court judge. The civil claims against several generic drug companies, brought by Health Secretary, John Reid, allege that the companies colluded to manipulate and inflate the prices of three sets of drugs: blood-thinner, warfarin, penicillin-based antibiotics and ulcer drug, ranitidine, resulting in alleged losses to the NHS of £130m. Although the companies deny any illegal activity, a separate criminal case would involve further allegations of conspiracy to defraud on the part of corporate individuals. No final decision about the criminal charges has been made, although Mr Justice Lewison, who gave a ruling on procedural matters in an associated civil damages case, indicated that the SFO was likely to charge a number of individuals.

Cash blow for Phytopharm

Phytopharm, which specialises in developing medicines from plants, reassured investors that finances were still strong, following the abrupt end to a £24m fund raising deal. The drug maker pulled the placing and open offer yesterday morning after its Japanese partner, Yamanouchi Pharmaceuticals, warned executives that a licensing agreement to develop Cogane, an experimental drug for Alzheimer's, was under review with the possibility of termination. Lawyers then advised Phytopharm to cancel the deal. Shares fell 19 per cent to 151.5p on the news. However, Richard Dixey, Phytopharm's chief executive, emphasised that its finances remained on a sure footing. The company expects Yamanouchi to make a £4m milestone payment under the existing contract as safety standards were met.

DTC can worsen poor industry image

Pharmaceutical senior executives have expressed their concern regarding the impact of direct-to-consumer (DTC) advertising on the industry's already jaded image. Some feel that the tone and content of some consumer ads undermine industry objectives, suggesting that profits and innovation are put ahead of safety issues, according to reports. The Food and Drug Administration recently attacked drug makers for using heavy marketing to push drugs to inappropriate patients, following a safety review of COX-2 inhibitors.

Robert Essner, chairman and chief executive for Wyeth, believes the time has come for the sector to reassess its approach. Some adverts, he said, made light of serious issues and failed to convey the risk of treatment. Jean-Pierre Garnier, chief executive for GSK, added: ìI would like to spend less on promotion and marketing Ö I'm trying to reduce consumer advertising, but there is no first mover advantage.î In 2003, drugmakers in the US spent about $3.3bn in DTC advertising compared to $33.2bn in research and development costs, according to industry lobby group, Pharmaceutical Research and Manufacturers of America.

BMS predicts better health by 2007

Bristol-Myers Squibb, currently awaiting the approval of three experimental new drugs, is hoping to make a comeback by 2007, following its downturn in misfortune three years ago. The US regulator is expected to give its verdict on a diabetes drug, a hepatitis B drug and a treatment for rheumatoid arthritis. Another two drugs, for cancer and vein graft failure, could also be approved by the end of 2006, which could help the company combat the loss of patent on its cholesterol drug, Pravachol. The company, which admitted in 2002 to inflating revenue by $2.5m and profits by $1m over a three-year period, has seen earnings fall three out of four years.

Yet, BMS has focused its resources on ten niche disease areas of the market, re-organised its sales force and predicts a return to growth in 2007. However, many investors feel the company still has too much uncertainty hanging over it to draw in new investment. Analyst, Jon Lecroy from Natexis Bleichroeder noted that once the court battle over the patent of blood-thinner Plavix, and the patent loss of Pravachol is out of the way, ìBristol is one of the few companies that will make a good acquisition targetî.

30th September 2008

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