GlaxoSmithKline and Pfizer announce innovative agreement to create a new world-leading, specialist HIV company
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Two of the world’s largest pharmaceutical groups on Thursday said they would spin out their entire portfolios of HIV medicines into a jointly controlled company, heralding a radical new approach to the sale and development of drugs.
GlaxoSmithKline and Pfizer will contribute 11 marketed medicines and a further six that are currently being tested in patients into the new company with initial gross assets of £250m, annual sales of £1.6bn and operating profits of £870m, and a 19 per cent market share.
The move marks a way for the two companies to pool efforts in a therapeutic area with tough scientific challenges that has come under intense pricing pressure and in which they have been outstripped commercially by rivals led by Gilead, the US biotech company. Others such as Roche of Switzerland have pulled out of HIV research.
The new structure may pave the way for further similar actions by the companies and other large pharmaceutical groups - to create more innovative, tightly focused spin-offs in a range of therapeutic areas, allowing them to share the high risks and costs of drug development.
Andrew Witty, GSK’s chief executive, said: ”This reinvigorates GSK’s presence as one of the largest companies operating in the field [of HIV] ... This is a new and unique way of incentivising research success and deciding how to allocate research and development capital.”
Jeff Kindler, Pfizer’s chief executive, said: ”We are creating a new global leader in HIV and reaffirming our ongoing commitment to the treatment of the disease.”
In the complex deal, GSK will initially control 85 per cent and Pfizer the remaining 15 per cent of the equity, with GSK’s share rising as high as 91 per cent or falling to 69.5 per cent depending on the relative success of the two companies’ drugs in meeting mutually agreed ”milestones” for future development. Differential performance will also trigger payment of preferential dividends.
The new company - which has yet to be named and is expected to be formally launched later this year - will have the rights to license in promising earlier stage HIV research still being conducted by GSK and Pfizer, as well as from third parties.
It will allow cost savings by 2011 of £60m a year. GSK said the transaction would dilute earnings per share by 1-2 per cent in 2010, 1 per cent in 2011 and then reverse as the spin-off creates new sales. Pfizer said it would be neutral to earnings in 2009 and slightly accretive in 2010 and 2011.
Gbola Amusa, pharmaceuticals analyst with UBS, the investment bank, in London, said the move could herald a wave of collaborative transactions leading to company break ups and sales: ”We’ll look back in a few years and highlight this deal as being industry-shifting.”
http://www.ft.com/cms/s/0/5327ff12-2aaa-11de-8415-00144feabdc0.html?ncli...
Drug companies should give up their patent rights to HIV medicines to help prevent the deaths of millions of people in poor countries, a British government minister will say this week.
The international development minister, Mike Foster, will call on pharmaceutical companies to put lives before profits, as the all-party parliamentary group on Aids publishes a report this week detailing the scale of the "treatment timebomb". By 2030, they estimate, 50 million people will need new drugs, which are currently prohibitively expensive, to keep them alive.
Three million people are on cheap, basic HIV drug combinations, but they are only a third of those in need and resistance is growing to these drugs both in the developing world and in the west.
New and improved drugs are urgently required, but they are expensive, and cheap generic copies of the newest drugs can no longer easily be made and sold because of tightened intellectual property rules in India and China.
The UK generally has a very close relationship with the drug companies, which regard patents as the means of recouping the substantial costs of researching and developing new drugs.
But Foster says they must change their stance on HIV. He wants companies to contribute to a "patent pool", which the international drug-purchasing facility, Unitaid – set up by a number of donor countries, including the UK – is trying to establish.
"While it is absolutely vital that we work to reduce the human cost of HIV by focusing our efforts on preventing new infections, we must also face up to the stark reality of the treatment challenge we face. The pharmaceutical industry has an opportunity to act now to help prevent future human catastrophe. It is time for them to state their clear commitment to make new HIV medicines affordable to those who need them most."
According to the all-party report, if HIV patents are put in a pool, generics companies – which make the cheap combinations now used in Africa – will be permitted to make low-cost copies of newer drugs and devise new combinations in a single pill, which is important for people living in poverty.
The report lays out in stark terms the coming crisis. "It took political activism almost a decade ago to make life-saving drugs available to the poor in developing countries," it says. "Only a third of those who need it are on treatment and this treatment will not work for them forever. Political activism is needed once more to ensure that the next generation of drugs is available to the world's poorest in future."
MP David Barrow, who chairs the group, said: "We are sitting on a treatment timebomb. We must reduce the price of second-line medicines and less toxic first-line medicines before millions need them. We cannot sleepwalk into a situation where we can only afford to treat a tiny proportion of those infected."
The only way to end the HIV/Aids epidemic is to prevent infection, the report says, but because the drugs suppress the virus, those receiving treatment are much less likely to pass it on.
http://www.guardian.co.uk/world/2009/jul/12/hiv-medicine-patents-drugs-c...
One of the whistleblowers in the Pfizer healthcare fraud scandal has said he felt he was "swimming upstream" when the firm was illegally promoting drugs.
"It's hard to do what's right when everyone else around you is following management sales directive," John Kopchinski told the BBC
's World Today.
Mr Kopchinski was awarded $50m (£31m)for helping expose Pfizer's wrongdoing.
Pfizer is paying $2.3bn after promoting four drugs for conditions different to those for which they were approved.
Ray Kerins, a spokesman for Pfizer, said the company had a strong commitment to compliance transparency.
"We're looking towards the future and seeing what can we learn from this situation and ensure we have the best policies and practices in place," he said.
Increased dosages
Mr Kopchinski described how Pfizer's 3,000 sales representatives were told to promote Bextra in areas of medicine where the use of the drug had not been studied.
"They tried to have orthopaedics use Bextra pre-surgery and post-surgery. Bextra hadn't been studied in that area," he said.
"If I were going into surgery I wouldn't want to use a drug that had not been studied for that cause."
He also described how they were told to push the dosage up when promoting the drug to physicians, in some cases up to eight times the recommended dosage.
"At that particular dosage you're subjecting patients to a host of side effects and other areas that have not been studied scientifically, so literally you have no idea what's going to happen," he said.
http://news.bbc.co.uk/1/hi/business/8235550.stm
http://www.telegraph.co.uk/finance/newsbysector/pharmaceuticalsandchemicals/5167111/GSKs-HIV-deal-with-Pfizer-to-land-UK-company-with-a-fifth-of-global-market-share.html