This was posted on the BTA forum, it has perhaps even more relevance for AVX, especially given the emphasis on HIV in the last paragraph.
Glaxo Search for Acquisitions Hampered by ‘Desperate’ Rivals
Sept. 25 (Bloomberg) -- GlaxoSmithKline Plc’s search outside its own laboratories for new drugs is getting more difficult because of increased competition from rivals “desperate” for novel treatments, according to the company’s head of research and development.
Glaxo has done about a dozen acquisitions or development partnerships since Chief Executive Officer Andrew Witty took over in May 2008 in an effort to replace revenue that will be lost to rival generic treatments. The London-based company would do more of these deals except that prices have been driven up, said Moncef Slaoui, Glaxo’s head of research.
“Some of our competitors are desperate because they pay just an incredible price for some medicines,” Slaoui said in a telephone interview. “And if it’s a matter of life or death for them, then maybe it makes sense for them, but not to us. So sometimes we may lose some partnerships for financial reasons, which is frustrating.”
Slaoui did say that Glaxo will announce next month a move into drugs for rare diseases. He declined to name diseases that the company will target. So-called orphan medicines currently exist to treat illnesses including the genetic disorder Gaucher disease.
His comments about acquiring new treatments and building an orphan-drug business underscore the pressure facing drugmakers, which aren’t developing products fast enough to offset the revenue they’re losing to lower-priced copies. Drugs generating $187 billion in sales are threatened by generics between 2011 and 2014 as patents expire, according to EvaluatePharma, a London-based consulting firm.
Approval Target
Glaxo shares have fallen 6.1 percent this year, giving the company a market value of 62.6 billion pounds ($92 billion). The Bloomberg Europe Pharmaceutical Index is up 2 percent.
The drugmaker aims to double the number of treatments approved by regulators between 2006 and 2015 by looking outside the company. About half of the medicines in Glaxo’s labs came from partnerships and acquisitions, Slaoui said. He declined to name therapeutic areas the company is targeting in its search for licensing and partnership deals.
Witty has overhauled internal research to try to make it more efficient, shedding unfruitful projects that once made up 25 percent of Glaxo’s pipeline. He’s also trying to fuel innovation by forcing the company’s scientists to compete with one another for funding as if they worked at start-up companies.
Waiting for Results
“They definitely are shaking up R&D and streamlining it, but I don’t think they’ve done any particularly amazing deals in the R&D area,” said Simon Mather, a London-based analyst for WestLB AG who has an “add” rating on the stock. “Witty is reorganizing the whole of R&D; now we’re just waiting for the fruits of that. It does take time.”
About 80 percent of projects that Glaxo has licensed since 2003 are “progressing,” compared with 40 percent of those that the company decided against pursuing, said the executive, who declined to elaborate on which competitors were desperate.
Besides licensing drugs from other companies, Witty has made some acquisitions. Glaxo paid $57 million this year for Genelabs Technologies Inc., which had no products on the market, to gain experimental treatments for hepatitis C.
Witty is pushing the company to pursue drugs that it wouldn’t have in the past, said Slaoui. “Early next month we will be announcing us entering into orphan or even super-orphan medicines,” he said.
Regulators award the orphan designation to treatments aimed at rare diseases, giving the medicines a speedier review and up to seven years of market exclusivity in the U.S.
HIV, Red Wine
Shire Plc, based in Basingstoke, England, is one of Europe’s biggest makers of orphan drugs, but Slaoui ruled out an acquisition without elaborating. “We are not going to buy Shire,” he said.
A review of early Glaxo projects in May identified especially promising drugs in HIV, inflammation and sirtuins, enzymes found in red wine that are thought to slow the effects of aging, Slaoui said. Glaxo last year paid $720 million for Sirtris Pharmaceuticals Inc., which is developing sirtuin-based drugs in mid-stage clinical tests for cancer, diabetes and other diseases.
“We expect late 2010 or early 2011 is going to be quite an interesting time” for sirtuins in “several indications,” he said.
Not everything makes the cut. Under Witty, Glaxo scrapped development of a diabetes drug that was in a family of medicines called SGLT2-inhibitors that Slaoui said proved “very successful” in mid-stage trials. AstraZeneca Plc and partner Bristol-Myers Squibb Co. developed the first SGLT2 drug, called dapagliflozin, which is in late-stage tests that will be reported next week at a European diabetes conference.
Halting a Project
“We were No. 3 or No. 4, two to three years behind the leading companies,” said Slaoui, who halted the project in June. “Normally, we would have continued to progress that molecule. It would have had no differentiation and some disadvantages over the leading molecule. So we dropped it.”
Witty is also forging new types of deals in the industry, such as announcing in April that Glaxo and U.S. rival Pfizer Inc. will combine their HIV-drug units into a new company. The deal combined Pfizer’s marketed HIV drugs with Glaxo’s early stage assets.
“There will be other deals of that type, either when our discovery is too rich and too risky to ask all the questions in the clinic, or when our commercial pipeline is reasonably dry,” Slaoui said. “We will look for partners to help us bridge that gap.”
