J&J versus Medtronic: Anything you can do, I can do better…. June 11, 2010

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Last week, Johnson & Johnson held an event for analysts & investors where it announced an expectation of more than 80 “significant” regulatory submissions in the next two years within its medical device business.  In the device category, J&J has received more than a dozen regulatory approvals in 2010.  But the highlight will come with J&J’s new biodegradable heart stent, called Nevo.

Not to be outdone, Medtronic held its own event with a very similar message. The company expects to release 60 “major” products during the fiscal year that runs through next April, seeming to trump J&J. Furthermore, Medtronic’s CEO & Chairman Bill Hawkins (who has become a CNBC favorite over the past year) announced the company isn’t eying any large-scale acquisitions, instead relying upon this product development pipeline to fuel its growth.Minneapolis-based Medtronic expects to spend $8-10 billion research and development over the next five years.

At Beaker, we expect Medtronic to remain out of contention for any significant acquisitions, instead relying upon product licensing, internal development or smaller scale deals that have been the companies trademark for the past decade or so.  What do you think?   Is there another med-deal on the horizon within the medical device industry?

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Severin Schwan plays industry oracle, predicts dramatic changes June 1, 2010

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Roche CEO Severin Schwann is playing industry oracle and predicting a dramatic path forward for the life sciences industry in Europe. From a news conference held last week, here is what he’s predicting: healthcare spending cuts in Europe, triggered by the debt crisis in Greece will flush out the industry, leaving global generic as well as innovative drug makers among the survivors.

“We will see dramatic changes in the industry,” according to Schwann. “If pressure increases you will have suddenly winners and losers and you have a lot of enterprises that will be squeezed out.”Survivors would be generic drugmakers with economies of scale needed to handle the volumes of the cheaper copies of branded drugs, as well as drugmakers that find medicines with improved outcomes compared with available drugs. Those in the middle, with little differentiation, would be wiped out. “I’m sure of that,” Schwan said.

Unlike Sanofi Aventis, Merck, Astrazeneca & Novartis, Roche has not (yet) entered biosimilars market. Schwan’s opinion is that biosimilars are less of a threat than pharmaceutical generics because the barriers to entry are much higher, in terms of cost, production and science. “It’s a different ball game and we expect a much lesser penetration of biosimilars,” Schwan said.

BIO Convention gets underway in Chicago May 3, 2010

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It’s that time of year again! The BIO International Convention & Exhibition starts today at McCormick Place in downtown Chicago and will continue until Wednesday of this week.

The BIO convention has evolved from its early roots as an intimate gathering of CEO’s & decision makers into a massive, all-encompassing throng of ‘all things biotechnology’. Watchful eyes are looking to see what effect the economy has on turnout. And, there are a number of pressing issues the industry faces (economy, healthcare reform, etc.) that will dominate the headlines.

Beaker is doing its part to support BIO by exhibiting in the North Carolina Pavilion. And, we’re working with a variety of our clients to capture their presence at BIO. As a result, Team Beaker will be buzzing around all week. If you see us, be sure to stop us for a quick chat. And, we’ll have more throughout the week.

Charles River Labs: A bold move into China with Wuxi April 28, 2010

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Charles River Labs will acquire WuXi PharmaTech in a deal valued at approximately $1.6 billion.  Touted as a merger, the deal is really an acquisition of Wuxi by CRL.  The company will retain the name Charles River and the Chairman & CEO will be CRL’s James Foster.  Wuxi’s CEO will essentially lead the current Wuxi organization as a division of CRL with an Executive Vice President title.

Both companies are in the business of early-stage drug development services (chemistry, biology, toxicology, formulation, etc.) to Big Pharma and other drug developers.   Much has been communicated about the strategic breadth of services this creates for CRL in offering a complete spectrum of testing services from the lab to the clinic.  However, the real strategy behind the deal is Wuxi’s infrastructure in China, through which CRLwins two victories:  a much larger channel into China compared to the CRL organization and a lower-cost alternative for delivering many of its services.
Jim Foster has never been one for the media. His last major TV interview was two years ago.  We can’t blame him as he leads a company that can be polarizing to many in society. Remember, that the core of pre-clinical testing in the industry is lab animals, always sparking a charge from impassioned protesters.  In the video above, he makes late reference to China and its strategic importance to the company.  Those words (over a year ago) were an early foreshadow into this deal to acquire Wuxi.
The future has been bright for CRO’s for quite a while.   Big Pharma wants to lower its headcount and run leaner, and outsourced providers like CRL offer a perfect alternative.  With this deal, a guarded & private leading player has made a bold move in the global market.

Celgene: The new ‘Big Kid’ on the block April 13, 2010

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Celgene announced that it expects its blood cancer medicines, long the core of its business (Revlimid, Thalomid & Vidaza), to bring in $6 billion by 2015. Beyond the earliest product approvals which sparked its ascension, the company says a new psoriasis treatment could easily exceed $2-3 billion per year in revenue. Finally, CEO Sol Barer speaks to CNBC about the future & early progress in developing a stem cell treatment for Crohn’s disease.

The rise to dominance in the biotechnology industry continues for Celgene, a company that was not in the discussion with Amgen, Genentech, Chiron & Immunex less than ten years ago.

Medtronic CEO gets specific on the ‘Medical Device Tax’ April 12, 2010

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With the debate & passage of healthcare reform now in the rear view mirror, all that is left is to sift out how it will affect each of us….as individuals and professionals working in the life sciences industry.

Perhaps earlier than expected, medical device CEO’s are taking to the airwaves to outline how the new legislation, and specifically the ‘excise tax’, will reap $20 billion in healthcare savings from the pockets of the medical device industry starting in 2013. Medtronic CEO Bill Hawkins spoke to CNBC late last week, with very specific insight into how the tax will affect the company’s business.

Best we can tell, this is the first CEO publicly announcing specific financial estimates of how the tax will be paid. Will it affect R&D and lead to layoffs? Each CEO will have to make their own decisions, yet the money will have to come from somewhere.

Barron’s annoints a single life sciences CEO as the cream of the crop April 7, 2010

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Barron’s recently released its roster of the Most Respected CEO’s in Business. There are about a half dozen such lists that come out regularly each year. Most are designed to sell newspapers or magazines. Each has its own spin: Most Respected, Best of, Most Admired, etc.

The only surprise this year came that only one CEO from the life sciences industry made the grade. Not surprising is that it is Miles White, who leads one of Beaker’s Big Four in the life sciences industry. While the Boards of Directors at Novartis, J&J, and Roche may like to see their Chief Executives on the list, they’ll have to wait at least another year.

As for White, he is not often interviewed. He’s not a recluse, just a private man who gives more face time to his employees than the popular media. In this interview from over a year ago, you can see a glimpse of the only man in our industry that Barron’s chose to recognize.

Why did he make the cut? Most are suggesting that White has directed Abbott into a rare position of diversity among drugmakers. Problem is that the media still considers Abbott a drugmaker. In truth, they are a diversified life sciences giant that only recently became more well-known for its pharmaceuticals (re: Humira) compared to the products that actually led them to almost $17B in annual revenue (re: hospital products, medical devices, diagnostics, etc.) Yes, Abbott has made some bold moves in the past few years, most notably entering the drug-eluting stent market by picking up the extra pieces of Guidant & the eyecare market with Advanced Medical Optics (the old Allergan eyecare franchise).

But remember, the category is Most Respected…which may be exactly why Mr. White made the cut.

Where, oh where, did Roche Diagnostics go? March 30, 2010

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Roche CEO Severin Schwann talks with CNBC about U.S. health care reform, R&D prospects for Roche Pharmaceuticals and potential future deals for Roche as they continue to expand as one of the largest life sciences companies in the world.

On a side note, it is amazing that the world’s most well-known & powerful diagnostics business (for years, the foundation of Roche) goes largely ignored now that the company has added Genentech to its pharmaceutical portfolio. Most in the media and those new to the industry forget that just 3-4 years ago, Roche Pharmaceuticals played a very secondary role to a dominant diagnostics business for the Swiss conglomerate.

Stryker’s CEO puts a bow on healthcare reform March 26, 2010

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This is only one CEO’s opinion, but Steve MacMillan from Stryker offers a popular opinion following passage of healthcare reform legislation this week.

For the past few months, everyone realized Big Pharma & the medical device industries were going to be asked to pay a penance & experience ‘some pain’, as MacMillan puts it, as part of this bill. At stake was how much.

Kudos to Stephen Ubl at Advamed, Jim Greenwood at BIO, and Billy Tauzin (formerly) at PhRMA for protecting the interests of the life sciences industry through such a complex and lengthy negotiation of the bill. Again, Steve MacMillan is only one voice, yet he offers a referendum that is consistent among most medical device industry CEO’s.

AdvaMed introduces its next Chairman March 8, 2010

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AdvaMed, the leading medical device trade association, has announced that Jim Mazzo of Abbott Labs’ Advanced Medical Optics (AMO) will be its new chairman.

Advamed places a high ranking industry CEO as its Chairman every two years, while Stephen Ubl serves as its permanent President and unofficial ‘Chief Lobbiest’.

James Mazzo recently led AMO through its acquisition by Abbott Labs, following a period of significant growth for the maker of contacts lenses and vision products. Most will recall that AMO is the southern California-based contact lens and vision products company born from the spin-off from Allergan in 2002.  Mazzo can be seen in the first moments of this corporate video highlighting the Abbott/AMO integration.

Past Advamed Chairman include the Who’s Who of the industry: Mike Mussallem from Edwards, Ed Ludwig from Becton Dickinson, Art Collins from Medtronic and Ron Dollens from Guidant.