The spotlight continues to shine on the life sciences as the world has called on our industry to develop and distribute enough vaccine to stem the tide of a spreading H1N1 virus.
In the face of an accelerating infection and under the skeptical eye of US bureaucrats, production at Novartis & Sanofi Aventis is already several weeks behind schedule. As of this week, the US government had promised 120 million doses; only 13 million have been delivered.
Why the delay? Well, making vaccines is no easy process. There’s a reason only a handful of the world’s largest pharmaceutical companies have vaccine divisions. Truth is the manufacturing process is slow, antiquated and riddled with obstacles.
Flu vaccines are manufactured in chicken eggs. In layman’s terms, eggs are injected with the flu virus. After a waiting game for the virus to replicate, the eggs are cracked, the fluid removed & purified, and the vaccine tested.
Ground zero for H1N1 production in the US is a peaceful enclave in the Pocono mountains. Here in the tiny Pennsylvania town of Swiftwater, Sanofi Aventis has two production facilities that rely upon 30 farms of over 10 million birds to provide the eggs needed for nature to run its course.
Apparently, the H1N1 vaccine is reproducing much more slowly than predicted. While waiting for nature to run its course, lots of people are asking questions and holding people responsible for delays. Many are calling for newer technology that won’t come fast enough. Meanwhile, the virus is killing people, including 800 in the U.S. Almost 100 of those were children.
The lesson is that while the life sciences industry is leading the fight, Mother Nature is in charge. And, officials at HHS, the FDA and Congress need to learn not to count their chicken eggs before they hatch.
Categorized in Life Sciences
It’s actually quite rare that we get a good solid look at the leaders of our industry. Most cable news organizations limit our access to 60-second soundbites pre-scripted by the Investor Relations department. This video is the rare exception when Dan Vasella of Novartis sat down during the Medical Innovation Summit at the Cleveland Clinic last week.
Over the course of this discussion he covers a variety of topics including:
- The future of small biotech
- The benefit of product diversity
- A new molecular diagnostics division at Novartis
- The difference between San Diego, San Francisco & Boston as ‘talent hubs’
- The possibility that Novartis would ever move into the medical device sector.
He also comments on healthcare reform in the most insightful response we’ve seen yet from an industry CEO. Instead of proclaiming ‘Woe is me’, he offers a logical, well thought alternative to how the government should be thinking.
Finally, one statement stuck out as keepsakes from this interview that shows both his intelligence and understanding of how our industry really works: “My heart beats for innovation….We can think much faster than we can act in our industry. We can deduct from knowledge what may happen, but to do it is damn difficult.”
He has to be considered among the upper echelon of CEO’s in our industry, not just for the company he leads but for the way he leads it. To watch the video, click here.
Who do you think is the best CEO in the life sciences industry? Click above to leave your reponse.
Categorized in Life Sciences
Tags: Healthcare reform, Novartis
Three big warnings signs emerged on the employment front within life sciences industry over the past few days.
First, Pfizer finally completed its deal with Wyeth and started making sweeping decisions about which sites and which employees will remain with the combined organization. Overall, it’s ‘walking on eggshells time’ at WyPfi as everyone awaits their fate and expects that up to 15% of the company may be dismissed. Pfizer is no stranger to the process of trimming the fat post-acquisition. Heck, former employees in Ann Arbor made a music video about it.
Secondly, AstraZeneca offered a buyout package to some employees. This wouldn’t be out of the ordinary except they offered it to their entire sales force. Roughly five to six thousand employees will have a chance to ’self identify whether they are interested in leaving the company.’
Finally, there are rumblings of changes afoot at Johnson & Johnson. J&J made earnings but missed revenues in quarterly financial reporting. From those J&J employees connected to Beaker, there are additional headcount decisions coming from New Brunswick as the company further reduces operating costs.
From Beaker’s perspective, hiring trends have jumped significantly in the past six weeks with new light appearing to end the employment doldrums of the past 9 months. Yet it seems that among a few of the industry’s biggest employers, there still may be decisions to be made in building a sustainable and efficient workforce.
Categorized in Life Sciences
Medtronic brought the most entertaining news of the week in the life sciences industry. The Minneapolis medical device maker announced it will begin clinical studies on a pelvic stent for the treatment of erectile dysfunction (ED). Fifty lucky guys around the country will be the first recipients, as an alternative to traditional drug therapy for ED.
The basic principle of stents includes using small tubes to prop open clogged arteries. As such, the research will study stent use in pelvic arteries for determining whether a new treatment approach may provide and enable better response compared to drugs like Levitra, Cialis or Viagra.
Good to see the device makers using their technology to compete for market share with their pharmaceutical brethren!
Categorized in Life Sciences
Tags: Medtronic, Technology
Having just finished his summer internship with Genentech in South San Francisco, this young aspiring life sciences professional might see some different components in his Genentech offer letter once he graduates.
Earlier this week, Severin Schwan, Roche’s CEO, said that a review of pay at Genentech will be one of his top priorities next year. Apparently, Roche is intent on motivating its newest employees by setting much of their future compensation in the form of long-term stock options.
According to insiders, during the M&A discussions, Roche conceded in those negotiations that they would leave Genentech’s compensation system alone until 2011, while also promising that after that date Genentech staff would continue to have access to a much more incentive-based compensation program than Roche employees in other countries.
A clever exception to allow Genentech to maintain its entrepreneurial spirit within the Roche corporate infrastructure or a reason to rein in an inflated pay scale? Too early to tell.
Categorized in Life Sciences
Hosting the BIO2009 convention may have been the pinnacle of the life sciences industry in Georgia. Recently, the state cannot seem to catch a break in its attempts to emerge as a serious life sciences industry hub.
Stiefel Labs, recently acquired by GSK, will close its entire operation in North Atlanta & move the employees to Research Triangle Park in North Carolina. This announcement comes on the heels of the expected loss of Solvay Pharmaceuticals after its $6 billion acquisition by Abbott labs. More so than the almost 500 jobs, that announcement costs Atlanta a high profile US headquarters within the life sciences industry.
Beyond the tenured cities, there are a half dozen or so intermediary regions competing to become the next emergent life sciences hub. Raleigh, Atlanta, & Seattle fall into that mid-majors category who face an uphill battle in prying new & existing companies away from the traditional stalwart locations. And, the lessons they are learning are difficult ones. Companies are not only tough to build but tough to retain as acquisition looms across the industry.
Certainly the news is not all bad. One out of every 68 jobs in Georgia owes its existence to either the life sciences industry or to life sciences research and development. Japan’s Shionogi recently chose Atlanta for its US headquarters. Dendreon announced a new facility in Georgia to employ more than 500. Still, Georgia is facing both a challenge and a threat as the industry consolidates and competition for life sciecnes companies reaches a fever pitch.
Categorized in Life Sciences
Months ago, we reported on the cream of the crop of the life sciences industry. Two companies we lauded in that post were J&J and Abbott Labs, mostly for their global focus, corporate strategy & product diversity. Novartis was the other. Backing our grade was Pfizer CEO Jeff Kindler who hailed J&J’s model and publicly shared his ambition that his own company head in that same direction.
Well, again its earnings season. And, again the industry looks to Abbott and J&J as the bellwethers of the life sciences industry. Abbott reported today, J&J yesterday. Both surprisingly had good news to share.
Abbott’s profit was up almost 40% from a year ago. J&J’s profit rose as well, mostly due to well-timed cost cutting across the board to offset lower quarterly revenue that surprised many. Although Abbott reported higher overall revenue, U.S. pharmaceutical revenue was off rather sharply.
Both companies are incredibly diverse in their focus, with well-heeled medical device & diagnostic revenues to prop up their pharmaceutical business. Lessons learned? Life sciences companies continue to keep a watchful eye on their operating expense line. Revenues may be returning as the economy recovers, yet it would be foolhardy to again return to their free spending days of 2008. J&J is even rumored to be facing more layoffs as it trims its global headcount to sustain profitability in the face of a market that is recovering but still far from healthy.
Categorized in Life Sciences
All of a sudden, life sciences industry executives are getting in hot water in a very public way.
Lars Bildman, is the former CEO of Astra USA (now part of AstraZeneca). Back in the 1990s, he was accused of harassing employees and using company money for personal use. Now AstraZeneca will be recovering nearly $7 million in salary and bonuses paid to Bildman between 1991 and 1996.
In the same week, the former CEO of Intermune in California has been convicted of wire fraud in marketing of the drug Actimmune. A federal jury in San Francisco convicted Scott Harkonen after a seven-week trial. The conviction was founded on a press release that misstated the results of a clinical trial. But in short, the government said the company, led by Harkonen, crossed the line in its off-label marketing of Actimmune and benefited from those revenues. Three years ago, the company reached a financial settlement on the civil claim. Now their CEO at the time faces a potential 20 year sentence following his conviction.
CEO’s beware. October is the witching hour.
Categorized in Life Sciences
In this rabid debate on health care reform, no one in our industry has more to potentially lose than hospital products-based companies like Hospira. Hospira is nothing more than the former Hospital Products division of Abbott Labs, spun off into its own corporate infrastructure. Heck, its even still managed by the same executive who led the group at Abbott, Chris Begly, a wily veteran of the industry & now CEO of Hospira.
Hospitals are driven primarily by cost. As such, hospital products is considered a commoditized market with razor thin margins and only the slightest opportunity for real corporate profits. Other than traditional medical products or disposables, the greatest opportunity for Hospira lies in generic drugs, commonly used in the hospital setting and distributed through their existing hospital channel. In this sit down with CNBC, Begly discusses his viewpoints on health care legislation, drug patents & exclusivity and the the move to biosimilars.
Categorized in Life Sciences
The past few months have been a strained relationship between the White House & the life sciences industry. First there was the PhRMA debacle, which has Bill Tauzin trying to negotiate a side deal to protect Big Pharma companies from any imposed penalties in a new healthcare reform package. This week, the industry is in an uproar over a proposed $40B tax on medical device manufacturers as part of the Baucus bill. But now, President Obama is making gestures in favor of the life sciences industry.
Speaking at the National Institute of Health, President Barack Obama announced a plan to spend $5 billion on medical and scientific research. The funds, to come from the $787 billion economic stimulus package, will pay for “cutting-edge medical research in every state across America.”
According to Obama the money will be funneled directly toward new jobs in research, manufacturing and supplying medical equipment and building and modernizing laboratories and research facilities. The biggest beneficiaries appear to be NIH and NIH-funded programs across the country, conducting basic discovery research in hopes of new therapies & treatments. However, there is sure to be a trickledown effect for all those medical product & laboratory equipment companies that enable research labs across the NIH spectrum.
Categorized in Life Sciences
Tags: Economy, Healthcare reform, Obama
