Social Media takes the FDA by storm

Today, the FDA began a two day session on social media. The agenda is both a fact finding mission for the FDA and a voice for social media experts from across the industry to make their case for how the healthcare products industry should be using social medial to promote its products. This meeting, the first of its kind for the FDA, begins the process of suggesting guidelines around this type of direct-to-consumer marketing. Over 60 speakers from pharmaceutical companies, media companies, agencies, and others have been asked to offer their opinion.

As you can imagine the conference is being covered heavily through Web 2.0 and social media channels, including Facebook, Youtube, & Twitter. Most of the coverage is available through www.fdasm.com.

Piecing together the puzzle at Pfizer & Wyeth

While the cuts have been known for months, Pfizer has started to announce specifics regarding how they will integrate with Wyeth’s organization.  The company expects to trim 15% off its global workforce to streamline the organization and help pay for the merger.

Yesterday, the company announced that it will move employees from facilities in Collegeville (PA),  Pearl River (NY), and St. Louis to other locations.  More significantly, the new company will cease operations at Princeton, two facilities in the UK, three facilities in New York, and two facilities in North Carolina.   Finally, the R&D teams in New London, CT will be shifted to Groton.

It seems the overall plan is to build strategic R&D centers of excellence around the world (a la Novartis).  While Pfizer will maintain more than a dozen R&D locations, most of its R&D employees will operate at Cambridge (MA), Groton (CT), La Jolla (CA), Pearl River (NY) and Sandwich (UK).  The reaction from employees has been muted as news has been slow to filter down from the new corporate leadership.

No one claimed that merging two life sciences behemoths would be easy.  Here’s proof that the job is just as challenging as advertised.

For life sciences companies, a showdown in the Senate

U.S. drugmakers & medical device companies are beginning to hit the panic button with regards to the provisions enacted upon them in healthcare legislation approved by the House of Representatives. Still, the debate is not over as the industry has one final chance to flex their collective influence as the bill reaches the floor of the Senate.

For the medical device industry, it all hinges on a provision that will impose $20 billion in fees over 10 years on medical-device makers. The good news is that the Senate provision had suggested doubling that amount to $40 billion. Still, from Stephen Ubl, President of AdvaMed, “There are provisions that are of great concern to the medical technology and diagnostics industry.”

Equally as active these days is Billy Tauzin from PhRMA, as drugmakers had already agreed to contribute $80 billion toward the overhaul in return for averting further challenges to their profits.   Apparently $80B does not necessarily buy you immunity as the bill includes a provision for the government to negotiate prices directly with pharmaceutical companies, something industry would like to avoid.

A showdown is set in the coming months as the Senate works to pass its version of the bill. Once complete, the two will be ‘merged’ and the measure complete for approval by President Obama. The industry has known all along that it must contribute to this bureaucratic process. The argument remains over just how much…

Another big offspring, courtesy of Pfizer & GSK

 

2009 seems to be the year of the ‘over-developed offspring’ in the life sciences industry.   Much like the freakish 18lb babies born to diabetic mothers in third world countries, we’ve seen some biggies this year.

Let’s start with CareFusion, the multibillion dollar hospital products spinoff from Cardinal Healthcare.  Follow that with the IPO of Talecris (formerly a division of Bayer) with over $1.5B in revenue as of its opening day of trading.  Far from a traditional IPO in our industry.

Well, again we have another major commercial entity formed overnight at the whim of two leading life sciences companies.  In April, GlaxoSmithkline and Pfizer announced their intent to combine & separate their product & research assets related to HIV.   Today, ViiV Healthcare was officially launched. Dr Dominique Limet, ViiV’s new CEO, can be seen in this video highlighting his new organization.

Far from a startup, the new company has ten (10) medicinces currently available with combined revenues of over $2B. The company also has a portfolio of 17 molecules to develop as potential new HIV treatments. Dr Limet stated that ViiV Healthcare had the potential to “re-energise” the pharmaceutical industry’s participation in HIV. Truth is that both Pfizer & GSK realized the difficulty in leading this therapeutic category on their own, a lesson soon to be realized by those at the ‘new’ Merck.

ViiV Healthcare will have worldwide headquarters in London and US headquarters based in Research Triangle Park, North Carolina. GSK owns 85% of the company; Pfizer the other 15%.

J&J makes a bold move, will others follow?

 

 

In what should go down as the most significant employment announcement of the year from the life sciences industry, J&J announced this morning that the company will eliminate up to 7% of its global workforce. In cutting 1 out of every 15 employees, J&J hopes to streamline its operations & management as well as make it easier to maintain profitability in the face of challenging revenues.

In a conference call this morning that lasted almost an hour, CEO Bill Weldon & his leadership team shared some insights into their decision making:

• The moves are designed to promote operational efficiency by reducing layers of management. Cuts will come from across all businesses at J&J (over 250) but cuts will most likely be deeper with international employees.
• Changes also include reduction in overall R&D expense, particularly in the pharmaceutical business.  Also of note is J&J’s newfound enthusiasm for partnerships & alliances as opposed to complete acquisitions.  They’ve touted this model in their most recent deal with Elan.  Time will tell whether that philosophy rolls into medical devices and consumer products or simply acts as a hedge for pharmaceutical deals that bring high levels of risk & exposure.
• Communication with employees began last evening, although details from affected companies/employees have been slow to come. J&J’s social media team, usually very active & chatty, has been silent on both the company’s blog & on Twitter. Conversations with J&J’s HR executives has led to insight that employees are on ‘pins & needles’ trying gather as much information as they can about their fate.

This decision represents sweeping change for J&J in the light of challenges related to revenues & profitability. While the company’s medical device & diagnostic (MD&D) businesses are holding up OK, the pharmaceutical & consumer sectors are not. The former due to a challenging business model & risky product development costs, the latter due to the global economy. Weldon also mentioned pressures on products related to elective surgery within the MD&D portfolio. While this decision may sting for a few days, it does make J&J a more lean, efficient global organization.

Overall, Weldon called the decisions a move toward ‘discipline’ in J&J’s business.   In a recent interview with Fortune, he foreshadowed decisions like one announced today:

“If you manage the business well throughout the good times, then the bad times are not quite as pronounced or profound. But it’s more difficult to manage during the good times. Make sure that you’re being fiscally responsible because if you aren’t, then the tough times become much more difficult. If you look at J&J, whether it’s our acquisitions or the way that we manage our business, we’re a fiscally conservative company.”

While the news from J&J will dominate the day, one has to wonder how many other leading life sciences CEO’s are today looking in the mirror wondering if they should consider following suit with their own organizations?

Sanofi Aventis CEO looks to animal healthcare dominance with Merck

The shuffling of businesses in the life sciences industry has become commonplace in the past few years. Pfizer sold its consumer products business to J&J in an attempt to provide focus to its business model…only to acquire another in its deal with Wyeth. Now, CEO Jeff Kindler loves the concept of diversification & balance in Pfizer’s structure.

Another example, Merck was forced to sell its 50% stake in animal healthcare business Merial to its partner, Sanofi Aventis, to avoid antitrust issues in its merger with Schering Plough. But in doing so, it jumped right back into the animal healthcare market through a division acquired in the same deal.

Just like consumer products, the animal healthcare business fits well within most Big Pharma model. Revenue streams are reliable, and animals don’t complain as much about side effects. And when you’re human drug pipeline hits a snag, products for dogs, cats & livestock can provide stability to an otherwise turbulent financial forecast.

Seems the CEO’s of Merck & Schering Plough now have their sights set on combining the two businesses as part of a separate transaction.  The result would be a $6B business with almost 25% market share, something that might again have regulators taking a closer look.  According to Sanofi Aventis CEO Chris Viehbacher during a discussion with the Wall Street Journal Health Blog: “I would say it’s more likely than not.”

The House offers Device Industry a ‘50% off’ Coupon

The healthcare reform debate on Capitol Hill has become tough to follow. With a new iteration proposed seemingly every week, the bill now has even its close followers confused.    At Beaker, we’re doing our best to keep up. Here’s what we understand to be the latest.

As of late this week, there are two primary versions of the bill in play, one in both the House and the Senate.  Each chamber is trying to pass its own bill, which they would (theoretically) then reconcile into a single piece of legislation.

The Senate bill has a $40 billion tax over ten (10) years on the medical device industry. That tax would be shared by companies across the industry based upon market share. In layman’s terms, Medtronic would foot much more of the bill than a Minneapolis-based startup down the road. The size of the tax has Advamed, the Congressional leaders from regional life sciences hubs and most every device CEO screaming at the top of their lungs.

The House bill presents more problems for drug makers but cuts a break to the medical device industry, with the following details:

• A proposed medical device industry tax of only $20B, half of what the Senate has proposed. This tax would be levied at the point of sale according to revenue, not by market share.
• A Medicaid provision forcing drug makers to lower prices for senior citizens.
• Freedom for the government to negotiate drug prices directly with the pharmaceutical companies.
• A positive move in protecting biogenerics with a 12-year patent term and the ability to protect updated version of legacy products.
• A potential $140B cost to drug manufacturers in total.

For certain, this debate is not over.  However, the both device & drug manufacturers are accepting the reality that they will be asked to fund a portion of healthcare reform in the U.S.   While the government argues that more insured Americans will lead to great product consumption, the industry claims that the ‘Innovation Tax’ will force spending cuts in R&D and thus stifle advancement across the industry.

GlaxoSmithkline CEO offers his report card…via Youtube

GSK CEO Andrew Witty followed a legend in the world of Big Pharma, Jean Pierre Garnier. In doing so, he brings a dramatically different style and way of doing business at one of the world’s largest pharmaceutical companies. He is direct, open, accessible, communicative and very adopting of new methods & technologies. In communicating with his employees (and whomever else is interested), he uses new media (video) and new channels (Youtube) to relay his message.

While many traditionalists may look at him with a cockeyed furrow, the methods seem to serve the intent of reaching those most important to Mr. Witty, as opposed to serving the mainstream media. In this recent quarterly video posted on GSK’s own intranet, Witty offers a summary of Q3 and the progress the company is making in its goals to transform the GSK business model. While we don’t expect all life sciences CEO’s to adopt a similar strategy, they will certainly take notice of how GSK’s leading executive is managing his company in this new digital age.

Should vaccine makers be heralded or criticized?

The H1N1 virus and our efforts to eradicate it have certainly brought heightened attention to the life sciences industry…both good & bad. At the center of discussion are players like the FDA, CDC, HHS, Roche (Tamiflu) the medical product companies making preventative products (masks, gloves, bacterial gels, etc.), and the vaccine makers.

In this latest video from a government commission on terrorism (?), two former Senators take a direct swipe at the leading vaccine manufacturers & their ‘archaic’ production methods. GSK, Novartis, CSL, Bayer, MedImmune & Sanofi Aventis must be pretty unhappy that as they try to save the planet from a massive pandemic, some choose to ostracize their work rather than support it.

A scary….but fun week ahead

 

Happy Halloween from the crew at Beaker!

 

At Beaker, we’re always looking for the most informative & entertaining content for those across the life sciences industry.

With Halloween week upon us, we know of no better team building exercise than the video above from JibJab. We’re challenging our users to put one together with a group of coworkers. Once you do, send the link to beakerbeat@beaker.com & we’ll highlight it in this week’s Beakerbeat along with your company.