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Pharma's biggest news stories in 2011

What were the key events over the past 12 months for the pharmaceutical industry?

2011 proved to be another busy 12 months for the pharmaceutical industry and as the seasons unfolded a few key themes emerged.

Chief among these were the austerity-driven reforms and cost-cutting measures across the European market - not to mention the reforms and cost-cutting taking place across pharma. This was closely followed by a raft of mid-sized and smaller-scale mergers and acquisitions - though the industry has yet to see another 'mega-merger' of two top ten companies, though speculation about the next to join forces surfaces from time to time.

The impact of emerging markets on pharma's business model also continued to gather momentum during 2011, and of course another area gaining speed were industry moves - now more leaps than steps - off the edge of the 'patent cliff'.

EMA Road Map to 2015

But perhaps one of the most significant stories in terms of how pharmaceutical companies carry out business in Europe came at the beginning of the year with the launch of the European Medicines Agency's (EMA) 'road map' to 2015.

The plan, which outlined the agency's plans for the next five years, had three priority areas to focus on - addressing needs in public health, facilitating access to medicines and making sure use of medicines is safe.

Aspects of the road map emerged over the course of the year, including the adoption of legislation against counterfeit drugs; updating the format by which pharma companies submit information on medicines registered in the EU; and the publication of standards in pharmacoepidemiology.

Access was also increased to the EMA's EudraGMP database, which keeps track of data on all manufacturers of human and animal medicines located in the European Economic Area.

Co-operation was key to the Agency over 2011, with plans recently announced to set up a network of European healthcare professional organisations and partnership moves with its US counterpart, the Food and Drug Admisnitration (FDA) as their collaboration efforts in shared inspections passed the pilot stage. Manufacturing inspection will now be shared between the two regulators from next year in a move that is expected to allow them to shift resources to other regions, including emerging markets.

The development of such alliances was part of the FDA's strategy to ensure the safety and quality of imported products, announced in June this year.

A new head for the EMA was also appointed following Thomas Lonngren's departure in December, 2010, with former director-general of the Italian Medicines Agency, Guido Rassi, finally taking over in November 2011.

Lonngren found himself in the news again rather recently though, with a conflict of interest complaint made about a consultancy business he set up before leaving his position.

Regional policies also had their effect on the industry throughout the year, including the UK coalition government's controversial Health and Social Care Bill to reform the NHS in England and Wales.

Reform in Europe

The consequences for pharma of European reform measures, many put in place in response to the worsening economic situation, were significant.

Two examples were seen in Spain, which passed regulation enforcing the prescribing and dispensing of generic drugs over branded medications, and in Greece, where Roche suspended delivery of medicines over unpaid bills.

A timeline also slowly emerged for the UK's forthcoming switch to a value-based pricing (VBP) format to reimburse drugs, a variant of which has also been adopted by Germany.

Job losses

It wasn't just governments that faced economic woes – the industry saw the loss of thousands of jobs across the globe as companies introduced 'cost-cutting' measures in response to shrinking healthcare budgets and product pipeline problems.

Companies affected included AstraZeneca, which cut 1,150 sales jobs in the US as well as 400 positions at its headquarters in Delaware.

Pfizer closed its plant in Kent, England, with the loss of 2,400 jobs, and Novartis got rid of 2,000 jobs and three facilities in Italy and Switzerland to focus on low-cost countries.

Teva also laid off 1,500 Cephalon staff after its takeover of that firm, and Amgen saw the loss of 380 R&D staff in the US.

The biggest cuts were announced by Merck, however, with around 12,000 jobs to be cut worldwide by the end of 2012.

Emerging markets

It was the opposite story in China this year though, which looks set to continue its run as the emerging market of most interest to pharma, as many of the industry's biggest players signed up to collaborate with domestic companies or increased their investment in the company.

There was a $1.5bn investment from Merck to expand its R&D programme in the China and AstraZeneca made several investments in the country throughout the year, including an agreement to buy generics firm Guangdong BeiKang Pharmaceutical Company; a $200m manufacturing plant in China Medical City, Taizhou, Jiangsu, and most recently, two deals to improve its oncology and diabetes pipeline prospects.

Boehringer Ingelheim also made a €70m investment in its Shanghai manufacturing facility and Pfizer announced plans to work with both Zhejiang Hisun Pharmaceuticals and Shanghai Pharmaceuticals Co.

Acknowledging increasing interest in its healthcare market, there was new pharma legislation in China, with the country facing what officials said was a 'high risk stage' in drug safety.

Mergers, partnerships and acquisitions

Partnerships and acquisitions played a major role in the past year, as companies looked for new ways to cope without a sure-fire blockbuster in their portfolio.

One of first major acquisition of the year, and 2011's single biggest buy, was Sanofi's purchase of Genzyme. The deal had dragged on since summer 2010, before the French pharma company finally took control of the US biotech in April this year at a cost of $20.1bn.

Other big spenders were Takeda, with the Japanese company taking control of Switzerland-based Nycomed for €9.6bn.

Generics firm Teva was also behind one of the more sector's larger deals, picking up  US biopharma Cephalon for $6.8bn.

US-based Pfizer and Canadian pharma firm Valeant were two of the most prolific companies when it came to purchasing other firms.

Valeant focused on its dermatology business, acquiring AB Sanitas for €314m, Afexa Life Sciencesfor around C$76m, PharmaSwiss S.A. for €350m and Sanofi's dermatology unit Dermik for $425m. Valeant also launched a hostile bid for eye-care company Ista Pharmaceuticals as the year drew to a close in December.

Meanwhile, Pfizer was able to complete deals for Ferrosan Consumer Health and skin specialists Excaliard Pharmaceuticals as well as US biotech Icagen.

The patent cliff

But the biggest news for Pfizer, and one of the drivers behind its acquisition spree, was not so welcome, as its biggest-selling drug, the cholesterol lowering Lipitor (atorvastatin), finally lost US patent protection at the end of November.

Despite a series of measures to mitigate the loss in sales, generic competition from Ranbaxy has already made its mark.

The company still has patent protection in Europe until May 2012, however, due to an extended license for a paediatric version of the drug.

Other companies to face up to patent losses over 2011 include Novartis, which lost exclusive rights to market its blood pressure drug Diovan (valsartan), although the drug remained its biggest seller for the first nine months of the year, with sales of $4.48bn.

Eli Lilly & Company's blockbuster schizophrenia drug Zyprexa (olanzapine) also began its battle with generic competition, with Teva and Dr Reddy's having their version of the drug approved in the US.

And 2012's biggest stories?

To get the inside track on pharma's biggest stories in 2012 subscribe to our daily and weekly email newsletters, follow us on Twitter or join the discussion on our LinkedIn group.

See you next year!

23rd December 2011


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