Patricia Van Arnum was executive editor of Pharmaceutical Technology.

Patricia Van Arnum

As the pharmaceutical industry begins another year, an issue of central importance is on the pharmaceutical majors’ strategies for growth. Mergers and acquisitions (M&A) are a strategic remedy to deal with revenue declines or slowing revenue growth, but which companies are likely to take the plunge and which companies are in the best financial position to do so?

A recent analysis by the management-consulting firm Ernst & Young says that the widening growth gap faced by Big Pharma increases the likelihood on increased M&A activity, but that prospect is tempered by competition for attractive acquisition targets and diminished resources (1).

“While the dynamics of the pharma industry remain fluid, the deal environment in 2013 and beyond will be more complex and competitive,” said Glen Giovannetti, Ernst & Young’s global life sciences leader, in a recent Ernst & Young press release. “Life sciences companies that are positioned appropriately should benefit from increased competition and see higher premiums. However, the finite resources of many Big Pharma companies and the need to make prudent acquisitions to address the immediate growth gap mean they will likely be even more selective about the targets they pursue.”

With continued flat sales in mature markets Big Pharma, defined as the 16 largest US, European, and Japanese pharmaceutical companies measured by revenue, has increasingly looked to emerging markets to drive overall revenue growth. A slowdown in these markets as a result of various factors has widened the “growth gap” facing the industry, according to the Ernst & Young report. By comparing the gap between IMS Health’s forecast for the global drug market and industry analysts’ estimates of Big Pharma sales during the next three years, Ernst & Young estimates that this growth gap will reach approximately $100 billion by 2015. This situation means that Big Pharma will need an additional $100 billion in revenue in 2015 just to keep up with overall market growth, according to the Ernst & Young analysis.

Due to a flat outlook in developed markets—in part a result of stagnation in the euro zone—and a slowdown in emerging markets, sources of organic growth are under pressure, according to the Ernst & Young analysis. As a result, many Big Pharma companies are likely to accelerate their search for inorganic growth through M&A in 2013.  The financial capacity of Big Pharma to conduct such deals, however, has diminished in recent years due to less available operating cash resulting from slower revenue growth, attributable partly from continued pressure on drug pricing, and increased borrowing to fund higher dividends, stock repurchases, and previous transactions. According to Ernst & Young, the financial capacity or “firepower” of Big Pharma to conduct deals declined by 23% between 2006 and 2012.

Even as Big Pharma’s deal-making ability has shrunk, the firepower of Big Biotech and specialty pharmaceutical (including generic-drug) companies has increased. According to Ernst & Young’s Firepower Index, between 2006 and 2012, the “firepower” of Big Biotech increased by 61% while specialty pharma’s firepower was up 20%. As a result of these shifts, Big Pharma’s share of the combined acquisition capacity of these three segments fell from 85% in 2006 to 75% in 2012.

In addition to a more competitive and complex deal environment, the Ernst & Young report identifies several key trends for transactions in the coming months and years as follows:

. Only a handful of Big Pharma companies now have the firepower to pursue M&A targets above $60 billion. With Big Biotechs and specialty pharmaceutical companies having joined Big Pharma in their capacity to engage in smaller deals, more bolt-on acquisitions are anticipated.

. As pharmaceutical companies look to boost firepower and sharpen their strategic focus, it is likely they will consider more divestures of non-strategic assets. Both corporate investors and private equity are seen as likely acquirers.

More offshore deals and emerging markets deals

. The need to address the growth gap will drive pharmaceutical companies to look for attractive acquisitions everywhere. For US buyers, high tax rates in the United States may increase the attractiveness of using offshore cash reserves to buy non-US companies. With 2012 emerging-market sales growth rates for Big Pharma declining by about 50%, many companies will need to close this gap through more deals in emerging markets, according to the Ernst & Young analysis. 

“With fewer options for organic growth, pharma companies will need transactions and, more than ever, measures to build and conserve firepower are vital,” said Jeffrey Greene, Ernst & Young’s global life-sciences transaction advisory leader. “Pharma companies addressing the growth gap through M&A will seek to increase and preserve their firepower by improving working capital management, divesting non-strategic assets, conducting more careful strategic diligence to ensure targets are valued appropriately in the face of stiffer competition, and employing novel deal structures to mitigate risk.”

Ernst & Young, “Closing the Gap? Big Pharma’s Growth Challenge and Implications for Deals” Report, January 2013.

Articles

As a new year begins, what may be on the horizon for 2013 for the biopharmaceutical/pharmaceutical companies and their suppliers? A look ahead into what issues are shaping the industry.

2013: The Year Ahead

Technology plays an important role not in the development of drugs to treat diseases in the developing world but in building healthcare capacity, enhancing the supply chain in delivering drugs to remote areas, and in patient compliance and education. GlaxoSmithKline (GSK) recently partnered with the mobile communications giant Vodafone to use innovative mobile technology to help vaccinate more children against common infectious diseases in Africa. The recent partnership is part of GSK’s efforts to improve access to vaccination.

Despite major advances in the funding and availability of vaccines worldwide, it is estimated that up to one-fifth of children worldwide still do not receive basic vaccines, according to a recent GSK press release. The proliferation of mobile phones in Africa offers an opportunity to create innovative and cost-effective ways to address barriers to universal vaccination.

The initial focus of the new partnership will be a one-year pilot vaccination project in Mozambique, supported by Save the Children and to be run in collaboration with the Mozambique Ministry of Health. This project aims to use technology solutions to increase the proportion of children covered by vaccination in Mozambique by an additional 5–10% by helping to encourage mothers to take up vaccination services, support health workers, improve record-keeping, and enable better management of vaccine stock. If successful, the project can create a model that can be replicated throughout Mozambique and scaled across Africa, according to the GSK release. 

“Innovative technologies, whether mobile devices, medicines or vaccines, are helping to transform global health,” said GSK CEO Andrew Witty in the GSK release. Organizations, such as UNICEF and GAVI, have played a key role in making vaccines much more accessible in Africa, but barriers still exist that stop children from benefiting from basic immunization. This new partnership combines GSK’s expertise, knowledge and resources with those of Vodafone with the potential to deliver life-saving vaccines to tens of thousands more children in Mozambique. Our hope is that together we will create a sustainable and scalable model that could ultimately be replicated to help more children live healthy lives across developing countries.”

The pilot will use mobile technology to address barriers to increased take-up of vaccines in Mozambique in three key ways. First, mothers and caregivers will be registered on a Mozambique Ministry of Health database and alerted by short message service (SMS) to the availability and importance of vaccinations against common childhood diseases. Mothers will be able to schedule vaccination appointments by SMS and receive notifications of past and future vaccinations to ensure children complete the full schedule and become fully immunized.

Secondly, health workers will be provided with smartphones with software allowing them to contact mothers, view and record vaccination histories, schedule vaccinations and report on follow-up visits. Thirdly, healthcare facilities will be prompted to regularly report on crucial vaccination stock levels by SMS. These efforts will enable critical supply-chain management and the availability of vaccines when and where they are needed, particularly in rural areas, notes GSK in its release.

The pilot will include up to 100 clinics and will be independently tested to prove its impact, effectiveness, and cost benefits. To ensure open access, the platform will be available to caregivers across any mobile network and can be used to increase take-up of any selected vaccine.

GSK’s vaccines are included in immunization campaigns in 173 countries worldwide, and of the 1.1 billion vaccine doses delivered in 2011, 870 million doses (more than 80%), were shipped for use in developing countries. In 2010, GSK created the dedicated Developing Countries and Market Access operating unit, which is focused on expanding access to medicines for people in the developing countries. In least-developed countries, GSK focuses on increasing the volume of medicines supplied rather than revenue generated. It caps the prices of GSK patented medicines and vaccines at no more than 25% of developed-world prices and reinvests 20% of profits back into projects that strengthen healthcare infrastructure in these countries. Vodafone has experience in developing commercial mobile-health solutions in other African countries. Five thousand clinics across Tanzania currently use Vodafone’s mobile stock-management service to track malaria treatments, and more than 1800 remote community healthcare workers in South Africa are using a mobile solution to access and update patient records.

Since 2011, GSK has been involved in an initiative using mobile technology to help tackle the issue of counterfeit medicines in Africa, where 10–30% of all medicines sold are thought to be counterfeit, notes the GSK press release. In collaboration with the National Agency for Food and Drug Administration Control (NAFDAC) in Nigeria, GSK introduced packs of antibiotics that contain a scratch-off panel that reveals a unique code that can sent by text message to verify a product as genuine. Following this successful pilot, NAFDAC has mandated that a similar technology be applied to all antibiotics and antimalarials in Nigeria from next year. GSK is introducing similar programs in Kenya and Tanzania, with the hope to scale up such program across East Africa. In Rwanda, GSK has a partnership with the private enterprise One Family Health Foundation, Ecobank, and the Rwandan Ministry of Health to establish up to 250 health posts across Rwanda over the next three years. Funded through low-interest loans, community nurses set up their own clinics in areas of low healthcare infrastructure to deliver essential medicines and basic healthcare in remote locations. Nurses are provided with Internet-enabled mobile phones, thereby allowing them to access patient records and monitor stocks of medicines in real-time. This approach not only increases access to healthcare but also provides a sustainable income for the healthcare workers involved.

GlaxoSmithKline partners with the mobile telecommunications company Vodafone to tackle common infectious diseases in Africa.

GlaxoSmithKline Uses Mobile Technology to Advance Vaccinations in the Developing World

Synthetic organic chemists in the pharmaceutical and fine-chemical industries seek advances to help improve yield, purity, and stereoselectivity of intermediates and APIs. This goal takes route in a multitude of ways from general advances in organic chemistry to reaction-specific gains. Advances in asymmetric synthesis are of particular importance given the prevalence of chiral compounds as potential drug candidates and the attendant interest in producing single enantiomers. This objective has to be met with the ability to scale up any given stereoselective synthesis for commercial manufacture, and several interesting developments have made in this area. Production economics also are a consideration as well in scaling up reactions to commercial levels. A cost-effective route to the antimalarial drug artemisinin, and a biocatalytic route for aromatic nitration reactions are some recent developments. 

Enantioselective imine-cyanation/Strecker reaction

. Researchers at the Institute of Chemical and Engineering Sciences, a national research institute under Singapore's Agency for Science, Technology and Research, recently reported on a robust new catalyst that selectively generates amino-acid precursors from cyanide at room temperature at an industrial scale. Specifically, they reported on a new catalyst more amenable to scale-up in the asymmetric Strecker reaction, a heterogeneous self-supported chiral titanium cluster (SCTC) catalyst in the enantioselective imine–cyanation/Strecker reaction used in both batch and continuous processes (1, 2). A limitation in the asymmetric Strecker reaction is the lack of availability of efficient and reusable heterogeneous catalysts that work at room temperature. The researchers took advantage of the hydrolyzable nature of titanium alkoxide to synthesize a SCTC catalyst by the controlled hydrolysis of a preformed chiral titanium–alkoxide complex (2). The researchers reported that the isolated SCTC catalysts were stable and showed up to 98% enantioselectivity with complete conversion of the imine within two hours for a wide variety of imines at room temperature. Moreover, the heterogeneous catalysts were recyclable more than 10 times without any loss in activity or selectivity (2). 

The researchers reported that the catalyst was used in a packed-bed reactor to carry out the cyanation under continuous flow with up to 97 % enantioselectivity under optimized flow conditions at room temperature in the case of benzhydryl imine. A three-component Strecker reaction also was performed under continuous flow by using the corresponding aldehydes and amines instead of the preformed imines under which good product distribution was obtained for the formation of amino nitriles with enantioselectivity values of up to 98% (2).  

All-carbon quaternary stereogenic centers in acyclic systems

. A team of researchers led by Ilan Marek, professor at the Technion–Israel Institute of Technology in Haifa, described their work in forming all-carbon quaternary stereogenic centers in acyclic systems from alkynes (3). Construction of chiral all-carbon quaternary centers had been limited in previous aldol-based methodologies, according to a Nov. 28, 2012, Technion–Israel Institute of Technology press release. The researchers used a single-pot operation, starting from classical hydrocarbons, to form aldol products containing the desired all-carbon quaternary stereocenter through the concomitant formation of three new bonds, according to the release. A challenge in forming the all-carbon quaternary stereocenters in acyclic systems had been the preparation of all-carbon quaternary stereocenters in aldol adducts (3). The main problem that limits the formation of these stereocenters is the absence of an efficient method of preparing stereodefined trisubstituted enolates in acyclic systems. The researchers developed a different approach that involves the formation of two new stereogenic centers, including the all-carbon quaternary one, through a combined carbometalation–oxidation reaction of an organocuprate to give a stereodefined trisubstituted enolate (3). The researchers used this method to generate a series of aldol and Mannich products from ynamides. For his work in organic synthesis, Marek received the Royal Society Chemistry Organometallic Award in 2011 and the Janssen Pharmaceutica Prize for Creativity in Organic Synthesis in 2012. 			

Asymmetric carbon–hydrogen functionalization

. Researchers at the Ecole Polytechnic Fédérale de Lausanne, School of Basic Sciences, Institute of Chemical Sciences and Engineering, Laboratory of Asymmetric Catalysis and Synthesis, in Lausanne, Switzerland,  recently reported on the development of chiral cyclopentadienyl ligands as stereocontrolling elements in asymmetric carbon–hydrogen functionalization. The researchers sought to tackle a limitation in the application of metal complexes coordinated by a single cyclopentadienyl ligand as a catalyst in asymmetric reactions (4). The difficulty, they reported, has been designing cyclopentadienyl substituents that bias the coordination sphere. The researchers developed a class of C

-symmetric cyclopentadienyl derivatives that control the spatial arrangement of the transiently coordinated reactants around the central metal atom by developing rhodium (III) complexes with these ligands as highly enantioselective catalysts for directed carbon–hydrogen bond functionalizations of hydroxamic acid derivatives (4). 

A cost-effective, large-scale synthesis for the natural product artemisinin, an antimalarial treatment, has been elusive, but researchers at the Indiana University (IU) developed a new approach that is moving toward that goal. The World Health Organization has set a target-per-gram cost for artemisinin of 25 cents or less, but the current cost is about $2.40 per gram, according to a Sept. 12, 2012, IU press release. "In 2005, the WHO claimed that the structure of artemisinin was too complex for cost-effective synthesis," said IU Bloomington College of Arts and Sciences chemistry professor Silas Cook, in the IU release.  

Silas and other IU researchers' cost-effective approach to artemisinin uses cyclohexenone as a key starting material and basis for developing reaction cascades in producing artemisinin in a five-pot sequence on a gram 

scale (5). "The key to the ultimate success of synthetic artemisinin will be the large-scale production of the drug," Cook said in the IU release. "As such, we had to completely rethink what qualified as suitable starting materials for this synthesis and invent new chemistry." The next challenge will be to move from gram-scale to kilogram-scale production. 

Biocatalysis can play an important role in synthetic chemistry by providing more efficient chemical transformations and improving  process conditions. Such is the case for chemists at the University of Warwick in the United Kingdom, who in collaboration with researchers at Cornell University in New York, recently reported on the discovery of an enzyme in the bacterium 

 that catalyzes an aromatic nitration reaction (6). 

The researchers assert that TxtE, a cytochrome P450 enzyme, is the first example of an enzyme that has specifically evolved to catalyze an aromatic nitration reaction, according to a Sept. 21, 2012, University of Warwick, press release. It does this by using the gases nitrogen monoxide, generated from the amino acid arginine by the nitric oxide synthase partner enzyme txtD,  and dioxygen. Engineering of the TxtE enzyme may allow it to be developed as a nitration biocatalyst for the production of industrial chemicals without the need to use nitric acid.  

Cytochrome P450 enzymes are widespread in living organisms. Usually, they are responsible for hydroxylation and other oxidative reactions, but this is the first time that they have been reported to catalyze a nitration reaction, according to the researchers. TxtE catalyzes the introduction of a nitro group into a specific position of the aromatic ring of the amino acid tryptophan. This is the first key step in the biosynthesis of thaxtomin A. 

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Process chemists employ a variety of approaches to improve yield, purity, and stereoselectivity.

Strategies in API Scale Up

The year 2012 proved to be a good one for FDA approval of new molecular entities (NMEs) and new biologic license applications (BLAs) by FDA’s Center for Drug Evaluation and Research. For the month of December 2012 (as of Dec. 31, 2012), FDA approved seven new drugs to bring the total of NMEs and BLAs approved by FDA’s CDER through Dec. 31, 2012, at 39, outpacing the 30 NME and BLAs that FDA’s CDER approved in 2011.

December is typically an active month for FDA approvals, and December 2012 was no exception. For December 2012 (as of Dec. 31, 2012), FDA’s CDER approved seven new drugs. Ariad Pharmaceuticals received approval for Iclusig (ponatinib) for treating adult patients with chronic, accelerated or blast phase chronic myeloid leukemia that is resistant or intolerant to prior tyrosine kinase inhibitor (TKI) therapy or Philadelphia chromosome-positive acute lymphoblastic leukemia that is resistant or intolerant to prior TKI therapy. Novartis received FDA approval for Signifor (pasireotide diaspartate) for treating adult patients with Cushing's disease for whom pituitary surgery is not an option or has not been curative. NPS Pharmaceuticals received FDA approval for Gattex (teduglutide [rDNA origin]) for injection for subcutaneous use for treating adult patients with short bowel syndrome who are dependent on parenteral support. Aegerion Pharmaceuticals received approval for Juxtapid (lomitapide) capsules as an adjunct to a low-fat diet and other lipid-lowering treatments to reduce low-density lipoprotein cholesterol, total cholesterol, apolipoprotein B, and non-high-density-lipoprotein cholesterol in patients with homozygous familial hypercholesterolemia.

 At year-end, FDA approved three additional new drugs. Bristol-Myers Squibb received FDA approval for Eliquis (apixaban), an oral Factor Xa inhibitor anticoagulant to reduce the risk of stroke and systemic embolism in patients with atrial fibrillation that is not caused by a heart-valve problem. In 2007, Pfizer and Bristol-Myers Squibb entered into a worldwide collaboration to develop and commercialize Eliquis, which was discovered by Bristol-Myers Squibb. Johnson & Johnson’s Janssen Therapeutics received FDA approval for Sirturo (bedaquiline) as part of a combination therapy to treat multidrug-resistant tuberculosis. FDA also approved Salix Pharmaceuticals’ Fulyzaq (crofelemer), a drug to relieve symptoms of diarrhea in HIV/AIDS patients taking antiretroviral therapy. 

Also, GlaxoSmithKline (GSK) received FDA approval for its BLA for raxibacumab, a monoclonal antibody to treat inhalational anthrax (see related story, “

”). Raxibacumab was developed by Human Genome Sciences (HGS) in conjunction with the Biomedical Advanced Research and Development Authority of the Office of the Assistant Secretary for Preparedness and Response, US Department of Health and Human Services. HGS was acquired by GSK  in July 2012, making raxibacumab part of GSK’s portfolio. HGS received approval for raxibacumab as a new manufacturer based on its BLA submission earlier in 2012. 

In addition to the new drug approvals in December 2012,  FDA’s CDER approved  on Nov. 29, 2012, Exelixis’ Cometriq (cabozantinib), a kinase inhibitor to treat progressive, metastatic medullary thyroid cancer. Through Nov. 20, 2012, FDA’s CDER had approved 31 NMEs and BLAs (see related story, “

The Class of 2012 for New Molecular Entities and Biologics

”). The addition of the approval of Cometriq and the additional new drug approvals (excluding raxibacumab) for December 2012  (as of Dec, 31, 2012) brought the number of NME and BLA approvals by FDA’s CDER to 39  for 2012 (as of Dec. 31, 2012).

 This story was updated on Jan. 2, 2013, to reflect additional year-end approvals.

Additional approvals in December have helped to outpace a recent high set in 2011.

FDA Approvals of NMEs and BLAs Increased in 2012

FDA issued earlier this month final guidance, 

Limiting the Use of Certain Phthalates as Excipients in CDER-Regulated Products

. The guidance provides FDA’s Center for Drug Evaluation and Research’s (CDER) current thinking on the potential human health risks associated with exposure to dibutyl phthalate (DBP) and di(2-ethylhexyl) phthalate (DEHP). In particular, the guidance recommends that the pharmaceutical industry avoid the use of these two specific phthalates as excipients in CDER-regulated drug and biologic products, including prescription and nonprescription products.

The recommendations in the guidance do not address the use of DBP or DEHP in other types of FDA-regulated products or exposure to DBP or DEHP due to the presence of any of these compounds as an impurity, including as a result of leaching from packaging materials and delivery systems. Phthalates are found in certain pharmaceutical formulations, primarily as a plasticizer in enteric-coatings of solid oral drug products to maintain flexibility, but they also may be used for different functions in other dosage forms.

In its guidance, FDA notes that phthalates have been studied extensively in animals, and some phthalates have demonstrated no appreciable toxicity. Certain phthalates, however, have been shown to be developmental and reproductive toxicants in laboratory animals. These phthalates are endocrine-disrupting chemicals in animals and may interfere with the production, secretion, transportation, metabolism, receptor binding, mediation of effects, and excretion of natural hormones that regulate developmental processes and support endocrine homeostasis in the organism. These same phthalates are suspected of being endocrine-disrupting in humans, and effects would depend on the systemic exposure. DBP and DEHP have been shown to be developmental and reproductive toxicants in laboratory animals. While the data in humans are less clear, epidemiological studies suggest that certain phthalates may affect reproductive and developmental outcomes. Other studies have confirmed the presence of DBP and DEHP in amniotic fluid, breast milk, urine, and serum.

The agency recommends to avoid the use of to dibutyl phthalate and di(2-ethylhexyl) phthalate in CDER-regulated drug and biologic products, including prescription and nonprescription products.

FDA Issues Final Guidance on Limiting the Use of Certain Phthalates as Excipients

FDA has issued a draft guidance relating to electronic submissions. 

Guidance for Industry: Providing Submissions in Electronic Format—Summary Level Clinical Site Data for CDER’s Inspection Planning

 is one in a series of guidance documents intended to assist sponsors and applicants making certain regulatory submissions to FDA in electronic format. 

The draft guidance describes FDA’s recommendation that applicants submit summary-level clinical-site datasets in a standardized electronic format. This guidance generally applies to submissions of summary-level clinical-site datasets for new drug applications (NDAs), biologics licensing applications (BLAs), and NDA and BLA supplemental applications containing new clinical-study reports that are submitted to FDA’s Center for Drug Evaluation and Research (CDER). The purpose of the guidance is to assist applicants in the submission of a clinical dataset that describes and summarizes the characteristics and outcomes of clinical investigations at the level of the individual study site (summary-level clinical-site data). The summary-level clinical-site dataset is intended to facilitate the use of a risk-based approach for the timely identification of clinical investigator sites for on-site inspection by CDER during the review of marketing applications. The guidance refers to a number of technical specification documents and other resources. These technical specification documents and resources are available online to make them more accessible to applicants.

Specifications for Preparing and Submitting Summary Level Clinical Site Data for CDER’s Inspection Planning

, which provides current FDA specifications for preparing and submitting a summary-level clinical-site dataset in electronic form for NDAs, BLAs, and NDA or BLA supplemental applications submitted to FDA’s CDER.

FDA has issued a draft guidance to assist applicants in the submission of summary-level clinical-site data.