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Pharma news in brief

Our weekly round-up of news affecting the industry.

Japanese merger will increase competition

Sankyo and Daiichi Pharmaceutical, two of Japan's leading drugs groups, have signed an agreement to merge their operations, in a deal which will create Japan's second-largest pharmaceutical company. It is also hoped that the deal will increase competitiveness amid falling drug prices and growing R&D costs. Daiichi Sankyo will be the holding company, although both firms will continue to co-exist as two separate subsidiaries until April 2007, when it is expected that the prescription drug businesses will become integrated. The future of over-the-counter and non-pharmaceutical businesses will be decided at a later date.

The move comes under pressure for the sector to consolidate as the government reduces drug prices and competition from global pharma firms intensifies. Takeda is Japan's largest pharma company, yet it is not in the top ten global pharmaceutical firms. Shares of Daiichi closed 0.4 per cent higher at Y2,485, while Sankyo shares gained 2.1 per cent to Y2,450.

Share placing will raise £30.3m for Vernalis

Biotech firm, Vernalis, plans to raise £30.3m in cash, by selling shares, to establish a sales force in the US and to strengthen its financial position. Some of the cash will be used to set up an American subsidiary to promote migraine treatment, Frovatriptan, which is currently Vernalis' best-asset. Half of the proceeds will go to making the company's balance sheet more robust as it awaits a $40m (£21m) initial payment, due in 2007, regarding a potential $400m deal with Endo Pharmaceuticals, to co-market the drug. The share placing will offer 43.25m shares at 70p each. Shares closed up 3.5p at 77.5p.

SA to strengthen in '05

Sanofi-aventis predicts strong earnings per share growth of some 18 per cent for 2005, with net sales expected to outstrip those of the market as a whole. The recently merged company reported a net loss of Ä3.61bn in 2004, against a profit of over Ä2bn in the previous year, and earnings per share fell at a loss of Ä3.91. However, the company said a better indication of its performance could be seen by moving costs related to the merger to 2003 accounts, therefore showing that group sales rose 4.6 per cent to Ä25.4bn and operating profit was up Ä12.5 per cent at Ä8.16bn. The company said synergies were growing faster than expected and the debt of the acquisition would be repaid within five years from the close of deal.

Roche to provide stockpiles

Roche is preparing for a major order of antiviral drug, Tamiflu, after both the UK and the US governments said they are considering ordering extra stockpiles to protect against a potential bird flu pandemic. The World Health Organisation (WHO) has recommended the use of Roche's drug over its competitors, for its ability to reduce symptoms and prevent the spread of infection. Analysts predict Britain will purchase enough of the drug to treat a quarter of the UK population, following the WHO's prediction that a maximum of one in four could be affected in a possible outbreak. Roche said discussions are continuing with both Britain and America. Revenues for Tamiflu in 2004 proved disappointing for Roche when a mild influenza season meant demand declined from 2003 levels.

Trouble looms for AZ over rejected Exanta

UK pharma giant, AstraZeneca (AZ), is facing a class action lawsuit relating to its unapproved blood-thinning drug, Exanta. A class action was filed against the firm last month on behalf of shareholders in the state of Massachusetts, alleging that AZ chief executive, Sir Tom McKillop, and former chairman, Percy Barnevik, had made ìfalse and misleading statementsî about clinical trials and the status of the company's application for approval from US regulators, the Food and Drug Administration (FDA). ìAstraZeneca denies the allegations and will vigorously defend the action,î said the company. It also stated it believes the FDA decision was wrong. AZ shares were hit hard with £2.5bn taken off the company's value in one day, when the FDA rejected Exanta last year.

30th September 2008


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