Tag: Pfizer

Crucial weeks ahead for Biocon amid growing competition in trastuzumab market, regulatory inspections

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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February and March are going to be important months for Biocon when it comes to news flow and triggers for the stock. One of the near term events will be pharma giant Pfizer launching its version of cancer biosimilar trastuzumab on February 15. Biocon in partnership with Mylan launched its version of trastuzumab, branded as Ogivri, in December 2019 in the US. Trastuzumab is the biosimilar version of breast cancer drug Herceptin by Roche. Pfizer’s launch will mean additional competition for Biocon in the trastuzumab market which has already seen Amgen launch its version ‘at-risk’ in July 2019.

Analysts believe Amgen has around 15 percent market share in the trastuzumab market and besides Pfizer more competitors are expected in 1HCY20. Other companies that have filed for the drug besides Pfizer are Celtrion, Teva, Samsung and Merck. Despite the impending competition, analysts are confident about Biocon ramping up the trastuzumab market share. Estimates are Biocon-Mylan could gain 6-9 percent share in the first year and 14-15 percent in the second year. The primary reason for the optimism is because trastuzumab is a large market with a limited number of players. The market size is $2.5 billion with around 3 to 4 companies selling the drug. According to them, how much Biocon can make will depend on how much the prices will reduce. Estimates are prices can reduce up to 30-40 percent in the first year, followed by 50 percent plus in the second year. The range on how much Biocon can make in the first year is wide from $60 million all the way to $120 million.

Regulatory inspections 

The other important triggers to watch for will be on the regulatory front. Biocon had communicated to investors and analysts in the Q3 earnings call that the firm is expecting its Malaysian facility to be reinspected by the USFDA in February 2020. This inspection is particularly important as insulin glargine, a biosimilar drug for diabetes, branded as Semglee by Biocon, is filed from the Malaysian plant. The Malaysian facility was earlier inspected by the USFDA on account of approval for insulin glargine in July 2019. The USFDA in July 2019 issued 12 observations to the facility. The observations resulted in queries from the USFDA in the form of a Complete Response Letter (CRL) to the company on insulin glargine. The CRL mainly pertained to the observations issued to the Malaysian facility as per analysts. This meant that in order to receive approval for insulin glargine the USFDA would have to clear the Malaysian facility mostly with a re-audit. This reinspection is now expected in February making it crucial to the future of insulin glargine.

The Target Action Date or the time by which USFDA is going to reach a decision on Biocon’s application for the diabetes drug is June 2020, another important month to keep in mind. The company is confident of a mid-2020 launch and says it has been working with the USFDA on the approval and the Malaysian plant clearance. Biocon has launched Insulin glargine in other markets such as Australia in October 2019.

Lastly, the other important piece of news to watch for in the next few weeks will be the details of five observations issued to Biocon’s API facility in Bengaluru. The inspection was both a Pre-Approval Inspection that is specifically for a product and a general inspection of the facility. The inspection was conducted from January 20 to 24. While Biocon has generally had a good track record when it comes to compliance, analysts are particularly keen on knowing about these observations.

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Corporate tax cut: Here’s how pharmaceutical companies will benefit

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Finance Minister Nirmala Sitharaman on Friday announced that the government proposed to cut corporate tax rates to 22 percent for domestic companies provided they will not avail exemptions or incentives and 15 percent for new domestic manufacturing enterprises as part of a raft of measures to boost economic growth.

The effective tax rate cut is going to benefit the pharmaceutical companies. Companies that have a 100 percent domestic focus or a majority domestic focus will benefit more. The case in point for this would be Dr Lal Path Labs. The diagnostic company pays a tax rate of around 35 percent. It is expected to probably reduce by 9 percent to around 26 percent.

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The other example would be a lot of the multinational companies (MNC) focused pharmaceutical companies which derive majority of their revenues from India. GlaxoSmithKline, which pays around 35 percent in terms of a tax rate is probably expected to see its tax rate reduced by around 10 percent. Similar case for the other such as Pfizer, Sanofi etc.

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In terms of the other companies however, it depends on the proportion in terms of the US business as well as the kind of R&D incentives etc. For example, Cipla, Aurobindo Pharma probably pay taxes anywhere between the range of around 22-27 percent. Within this entire gamut, Sun Pharmaceuticals is one of the lowest taxpayers at around 15 percent in terms of a tax rate. So the biggest beneficiaries from this particular tax cut would definitely be the domestic focused pharmaceutical healthcare companies but the other companies such as Cipla and the others would benefit as well.

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Popular brands help pharma majors post robust India business growth in Q1FY20

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The first quarter of FY20 seems to be showing a positive trend for the India business of pharmaceutical companies that have reported numbers till now.

Barring the likes of Cipla that was impacted due to restructuring in its trade generics segment, most companies have shown 8-9 percent growth. For example, Lupin, which gets 30 percent of its sales from India, saw revenues rise 9.7 percent to Rs 1,307 crore versus last year. Similarly, Torrent Pharma that had Unichem’s portfolio integrated into its domestic business saw sales grow 9 percent year on year (YoY) to Rs 907 crore. Similarly, Eris Life, that gets 100 percent of sales from India, saw its sales grow 9.4 percent YoY to Rs 274 crore.

The stronger India sales were also reflected in Indian multinational companies (MNCS), the Indian arms of large foreign pharmaceutical firms. These companies include GSK Pharma, Pfizer, Astrazeneca and Abbott. India comprises majority of sales for these Indian arms with most of them performing above or in line with their Indian peers. For instance, AstraZeneca reported a revenue growth of 26.7 percent, EBITDA up 283 percent with margins of 17.4 percent and profit growth of over 200 percent. Abbott saw an 18 percnt growth with EBITDA up 57 percent, margins improving to 17.5 percent vs 13.2 percent and profit growth of 42 percent YoY.

On the other hand, Pfizer, Sanofi and GSK all grew in single digits, in line with its Indian peers. Pfizer saw sales up 6.3 percent YoY, Sanofi saw a 9.4 percent YoY growth while GSK saw a 7.1 percent YoY growth in sales. While sales were in single digits, barring Sanofi, both Pfizer and GSK saw improvement in operations. Pfizer EBITDA was up 27.8 percent YoY to Rs 166.2 crore with margins improving 500 bps to 30.5 percent and GSK EBITDA jumping 21 percent with margins of 20 percent vs 18 percent YoY.

Pricing for many of the drugs sold by MNCS are under price control, hence brands become critical. This is most reflective in sales of multinational companies that have a strong brand recall. For example, GSK’s portfolio in India contains household brands such as antibiotic Augmentin, anti-infective cream Betnovate and painkiller Calpol. For Q1FY20, GSK’s key drugs such as Augmentin saw 19.4 percent growth and skin drug T-Bact saw 32 percent growth. Betnovate N sales, however, fell by 4 percent.

Similarly, Pfizer’s portfolio includes multivitamins Becosules, antacid Neksium and digestive drug Gelusil. That is one of the reasons why according to analysts Abbott is expected to have shown strong numbers. Its portfolio includes the popular digestive and gastro drugs such as Digene and Cremaffin and commonly used thyroid drug Thyronorm. While the breakup of Astrazeneca numbers is not known, according to analysts the company’s tie-up with Sun Pharma on key cardio drugs Axcer and Brilinta is expected to have helped.

Multinationals such as GSK are also are undertaking portfolio rationalisations to protect margins, hence aiding profitability. For example, GSK’s gross margins in Q1FY20 improved by 170 bps YoY to 58 percent due to rationalising products leading to a margin expansion of over 21 percent. On the other hand Sanofi, saw its 550 bps YoY and 250 bps QoQ decline in gross margins. Margins were impacted by raw material costs outpacing revenue.

While growth is strong for multinationals, the street is cautious. Headwinds such as adverse impact of companies offering generic drugs and Jan Aushadhi initiative by the government do pose a risk.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Pfizer-Mylan deal will not impact Biocon’s business, says CMD Kiran Mazumdar Shaw

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Global pharma giants Pfizer and Mylan have announced that they are combining two of their businesses: Pfizer will spin off its generics drug business and combine it with Mylan, which has a tie-up with India’s Biocon. Kiran Mazumdar Shaw, CMD of Biocon, assessed the impact on Indian pharma.

“Certainly nothing changes for us in terms of our business with Mylan because this actually offers us a much larger opportunity. In yesterday’s presentation, you can see that the combined entity actually is going to rely on a pretty decent contribution from biosimilars and they have mentioned the biosimilar that we are currently commercialising with Mylan, which is Ogivri that is our biosimilar trastuzumab, fulphila, biosimilar pegfilgrastim and semglee glargine and the biosimilar adalimumab,” Shaw told CNBC-TV18 on Tuesday.

“As far as we are concerned, the way they have projected, the contribution of biosimilars to their 2020 estimates is very reassuring that they expect this to be a large earnings contributor as well to this business. So for us, it is a larger global reach and it is a much larger company and therefore we believe that biosimilars will have an even bigger opportunity with this combined entity,” she added.

When asked if at any point Biocon will look to extend its partnership with Mylan, she replied, “We have already indicated that we have added a few biosimilars to the existing Biocon-Mylan partnership and of course there are a few others in late-stage clinical trials. So that will also be commercialised at the earliest.”

“We have also indicated that we would like to pursue the biosimilars opportunity on our own. So we will look at developing a portfolio of biosimilars under the Biocon banner and even if we choose to enter into any select marketing partnerships, of course, we will look at that,” she said.

“The biosimilar opportunity is huge and of course the Pfizer biosimilar portfolio is not parked with Upjohn. However, at the same time you do know that Pfizer has discontinued its biosimilar pipeline. So I think you will have to wait and see how this pans out. Needless to say that biosimilar is a very large opportunity and there is plenty of space for many players at this point in time,” Shaw said.

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Pfizer to spinoff, merge off-patent drugs unit with Mylan

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Pfizer Inc has agreed to spin off its off-patent branded drugs business and combine it with generic drugmaker Mylan NV, a move that leaves Pfizer with its more profitable innovative drugs, including cancer treatment Ibrance and pneumonia vaccine Prevnar.

The move, which brings blockbuster treatments Viagra and Lipitor under one umbrella with Mylan‘s EpiPen, is part of a years-long effort by Pfizer to split into three parts – innovative medicines, lower margin off-patent drugs facing generic competition and consumer healthcare. Pfizer agreed in December to combine its consumer health business with GlaxoSmithKline Plc’s.

The combined company, which will get a new name, is expected to have 2020 revenue of $19 billion to $20 billion, with free cash flow expected to be more than $4 billion.

The pharmaceutical industry has been under intensifying pressure from lawmakers, including President Donald Trump, to keep prices down for U.S. consumers, which has limited profits and led to recent deals, such as Bristol-Myers Squibb Co’s plan to buy Celgene Corp and AbbVie Inc’s acquisition of Allergan Plc.

The new company, to be based in the United States and incorporated in Delaware, will be led by Michael Goettler, president of Pfizer’s Upjohn unit, which sells Pfizer’s older drugs that have lost patent protection.

Upjohn will issue $12 billion of debt at or before the separation, with proceeds going to Pfizer. Pfizer said it plans to use that cash to pay down its own debt.

Mylan said Chief Executive Heather Bresch, who took the helm in 2012 and faced intense political pressure over the high price of EpiPen, will retire after the deal closes. Mylan Chairman Robert Coury will become executive chairman of the new company.

“We think it is clear Mylan needed to do something to change direction,” Wells Fargo analyst David Maris said, adding that the deal is also recognition that Pfizer wanted out of generics.

Pfizer’s older drugs business has a much higher operating margin than Mylan‘s, Maris added.

Mylan, which had a market value of $9.5 billion prior to Monday’s announcement, last year said it would review its business as it grapples with lower prices of generic drugs and declining sales of its EpiPen emergency allergy treatment.

In 2015, Mylan fended off a takeover attempt from rival Teva Pharmaceutical Industries that would have valued the company at around $40 billion. Based on Monday’s share price, the company is worth around $11 billion. EpiPen sales fell sharply after Mylan was heavily criticized for steep price hikes on its device that delivers life-saving shot epinephrine to treat severe allergic reactions. Bresch was called to testify before Congress in 2016, as the controversy put Mylan at the center of the ongoing U.S. debate over the high cost of prescription medicines.

Mylan‘s shares have lost about a third of their value in 2019 through Friday’s close. The stock was up more than 12.9% at $20.84 on Monday, while Pfizer slipped 2% to $42.23.

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Pfizer CEO Albert Bourla and his predecessor Ian Read have been saying for more than a year that the company would eschew large, transformative deals because of confidence in the strength of its pipeline.

But if the Mylan and GSK deals both close, the company will have shed two large businesses to tighten its focus on newer, patent-protected innovative medicines.

Pfizer CFO Frank D’Amelio said on a conference call that the streamlined company will grow sooner and faster beginning in 2020 than it would have otherwise.

Under terms of the agreement, Pfizer shareholders will own 57% of the new company and Mylanshareholders the rest. Each Mylan share will be converted into one share of the new company under the all-stock deal.

Revenue from the Upjohn unit in the second quarter was $2.81 billion, accounting for a fifth of Pfizer’s total sales. Mylan brought in revenue of $2.85 billion in the same quarter.

Pfizer, which acquired Upjohn as part of its 2002 purchase of Pharmacia for $60 billion, will separate Upjohn in a tax-free spinoff and combine with Mylan.

Once the deal closes, the new company will have about $24.5 billion of total debt outstanding.

Separately, Pfizer reported its quarterly results on Monday, a day earlier than planned. The company cut its profit and revenue forecast for the year, largely due to the joint venture with GSK last year.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Govt likely to fix trade margins on expensive life-saving drugs, says report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In a bid to provide some relief to patients burdened with exorbitant treatment costs, the health ministry may fix trade margins on 50 ‘orphan’ drugs that are used to treat rare diseases, reported Mint .

The move could likely hurt global pharma companies like Pfizer, Sanofi Genzyme and Shire USA, who make these drugs, said the report.

The ministry has identified drugs that are used to treat 21 rare diseases and 39 cancer drugs, a health ministry official told the newspaper, adding that the department of pharmaceuticals is examining the possibilities of fixing a trade margins for such drugs, making it easily available to patients.

Some of the diseases mentioned in the health ministry communication to the DoP are Gaucher Disease, Hunter Syndrome, Pompe Disease, Fabry Disease, Lysosomal acid lipase deficiency, Type 2 cerliponase, Duchenne muscular dystrophy, spinal muscular atrophy and cystic fibrosis, the report added. For a long time now, the health ministry has been raising concerns over the exorbitant cost of life-saving drugs, the report said.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Pfizer looking to sell Chennai, Aurangabad plants: report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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US pharma major Pfizer might look for buyers for its Chennai and Aurangabad manufacturing plants it has decided to shut due to falling demand, Business Standard reported. 

The company, in a correspondence to 1,700 employees at its two factories, promised a generous severance package as well, the report said citing the firm’s spokesperson.

Employees enrolling for the financial scheme early will get packages higher than the legal requirements, said the report.

Pfizer acquired the two sites as part of its $15 billion purchase of Hospira Inc in 2015, to boost its portfolio of generic injectable drugs and copies of biotech medicines.

The two factories are part of Pfizer Healthcare India, which is a subsidiary of Pfizer, USA.

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Pfizer to shut two manufacturing plants in India

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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US drugmaker Pfizer Inc said on Wednesday it was shutting down two manufacturing plants in India that make generic injectables like penicillin as a response to falling demand.

Indian financial newspaper Business Standard reported the news on Tuesday, saying over 1,700 employees would be impacted by the closure of the two factories in the states of Tamil Nadu and Maharashtra.

The factories employ nearly 6 percent of Pfizer‘s global workforce.

“Pfizer has conducted a thorough evaluation of the … sites in India and concluded that due to the very significant long term loss of product demand, manufacturing at these sites is not viable,” the company said in an emailed statement.

Pfizer acquired the sites as part of its $15 billion purchase of Hospira Inc in 2015, to boost its portfolio of generic injectable drugs and copies of biotech medicines.

The plant in Chennai makes generic injectable cephalosporin, penems and penicillin. The Maharashtra plant supplied the Chennai unit with certain products.

Both plants do not manufacture products for the India market, Pfizer said, adding that it is expanding operations in its Visakhapatnam facility.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow