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Pharma news in brief

Our weekly round-up of news affecting the industry.

Sankyo/Daiichi deal under fire

Investors in Sankyo are proving tough to talk round to the proclaimed benefits of the merger with smaller Japanese firm, Daiichi, due to the seemingly unfair merger ratio set by the firm - 1 Sankyo share to 1.159 Daiichi shares. Daiichi share value had already increased in the lead up to the merger announcement on speculation, though Sankyo investors are objecting to paying a premium. The two companies tried to rally troops on Friday by unveiling cost cuts (to the tune of $468m) and sales synergies (of •17bn by 2007) as well as an ambitious boost in operating margins (from 16.8 per cent to 27.4 per cent) in their plans for the merger. However, many of the benefits were seen to be too far into the future. ìIn this industry environment, talking about what they will do in 2010 is not convincing,î commented Fumiaki Sakai, analyst at Deutsche Securities.

Scrushy decision looks imminent

The fate of Richard Scrushy, former HealthSouth CEO and accused architect of a $2.7bn fraud, may be decided upon in a matter of days with closing arguments in the ongoing trial expected to be made by the middle of this week. Scrushy is charged with more than 30 offences relating to scandal with one charge under the anti-fraud Sarbanes-Oxley law - knowingly filing false financial statements. He is said to have led to an artificial inflation of HealthSouth's value, using the proceeds to fund a luxurious lifestyle, including buying boats, expensive cars and paintings. While Scrushy denies masterminding the fraud, all five of his chief financial officers have testified against him. Jurors in Alabama are expected to begin weighing up his fate later this week.

Pharmacists pressured to provide `no-scrip drugs'

Pharmacists should be imbued with supplementary or first-contact prescribing powers to bridge the treatment gap left by a deficit of out-of-hours GP cover. This is the view of Steve Dunn, managing director at UK wholesaler and distribution firm AAH Pharmaceuticals, who said his firm had received record levels of enquiries from pressured pharmacists concerned about the situation. Under current rules, pharmacists are permitted to issue prescription drugs without a doctor's instruction, but only in an emergency. However, patients who receive ìemergencyî drugs and then promise to bring in a prescription at a later date, when a GP has become available to write one, are putting pharmacists at legal risk. ìIt is an act that could land the pharmacist in hot waterÖ [being accused] of providing an illegal supply,î Dunn noted.

Bill Gates digs deep

Bill Gates, co-founder of IT giant Microsoft, has pledged to boost the level of his financial support of new medicines and health tools for the developing world to approximately $500m. Speaking at the World Health Assembly in Switzerland, Gates criticised the lack of action from wealthy national governments in eradicating the ìneglectedî diseases that affect parts of the world other than their own countries. He noted that patent protection is the driving force behind pharmaceutical companies' incentives to innovate, while their motivation to take on certain diseases and not others was due to a visible return on investment in the future. ìThe private sector is not developing vaccines and medicines for the [ìneglectedî] diseases because developing countries can't buy them,î he stated.

Plant product firm reaches milestone

Biotech company Phytopharm, which specialises in generating medical products from plant extracts, has achieved its first interim profit as milestone payments from licensing partners rolled in. However, the position is expected to be temporary and thereafter be an intermittent occurrence as biotech firm dip in and out of profitability over the year depending on whether licensing payments or R&D spending were at the fore, said CEO Richard Dixey. Phytopharm had received a £4m milestone payment from Yamanouchi, yet the Japanese firm's subsequent decision to merge with rival Fujisawa saw it cancel a regional licensing agreement with Phytopharm for Alzheimer's treatment, Cogane. Phytopharm was also compelled to ditch a planned £24m funding earlier this year, yet managed to raise £9m through a placing in April this year.

30th September 2008

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