Aug 11, 2010



Genzyme Corp., which is locked in merger talks with French drug maker Sanofi-Aventis SA, is not the first major Massachusetts biotechnology company to be pursued by a major pharmaceutical company. And it likely will not be the last.

Analysts and industry executives note that drug makers and other life sciences companies have engineered a flurry of billion-dollar merger deals over the past few years as they try to expand their product lines, acquire cutting-edge technologies, and move into new markets — a trend that does not show any signs of letting up.

Last year alone, Thomson Reuters, a business information firm, tracked more than 1,400 life sciences mergers worldwide. They totaled about $206 billion, including 46 deals worth more than $5 billion in Massachusetts. In October, for instance, Japanese drug maker Dainippon Sumitomo Pharma Co. scooped up Sepracor Inc., the Marlborough company behind the Lunesta sleep aid, for $2.4 billion.

“It’s reality,’’ said Robert Coughlin, president of the Massachusetts Biotechnology Council, a trade organization based in Cambridge. “The industry is going through a roll-up and a consolidation.’’

And the deals keep coming. Last month, German pharmaceutical giant Merck KGaA completed its purchase of Millipore, a Billerica life sciences company, for $6.9 billion. Genzyme, the Cambridge company which has also reportedly received inquiries from other potential suitors, could ultimately fetch more than $20 billion.
Many of the biggest potential deals, such as Sanofi’s pursuit of Genzyme, involve giant pharmaceutical companies trying to buy mid-to-large biotech firms to lift their product portfolio as patents on blockbuster drugs expire.

“They have a lot of cash, but they are running out of product,’’ said Simos Simeonidis, a biotechnology analyst with Rodman & Renshaw LLC in New York.

Simeonidis predicted that pharmaceutical companies are most likely to buy companies that already have products on the market, such as Biogen Idec Inc. of Weston, or those that are close to winning approval for major drugs, such as Vertex Pharmaceuticals Inc. in Cambridge. Other prominent local firms with drugs on the market include Alkermes Inc. of Waltham, Amag Pharmaceuticals Inc. in Lexington, and Cubist Pharmaceuticals Inc. in Lexington.

Amag chief executive Brian J.G. Pereira said his company, which markets a treatment for iron deficiency in patients with chronic kidney disease, wants to build “a strong and vibrant company for the long run,’’ rather than look for a quick sale. But like other publicly traded companies, Amag has an obligation to shareholders to consider any offers that come along, Pereira said. The other companies declined to comment or could not be reached.

In addition to Sanofi, Simeonidis said a number of other drug companies could potentially be interested in a large acquisition, including European firms such as GlaxoSmithKline PLC, Novartis AG, AstraZeneca PLC, and Bayer AG, as well as American companies, such as Pfizer Inc., Bristol-Myers Squibb Co., and Eli Lilly and Co. GlaxoSmithKline, Pfizer, and Johnson & Johnson have all been cited as potential buyers for Genzyme if talks with Sanofi break down.

Still, the majority of biotech companies, such as Alnylam Pharmaceuticals Inc. in Cambridge, are years away from bringing a drug to market, making them less attractive to bigger firms looking to boost sales.

Cowen & Co. analyst Eric Schmidt agreed that large pharmaceutical companies will continue to buy promising biotechs but doubted there would be a sharp increase in acquisitions because of a Genzyme deal.

That is because, Schmidt said, a lot can happen between initial talks and final approval. Last month, Charles River Laboratories International Inc., a Wilmington company, abandoned its $1.6 billion bid for a Chinese drug research company, WuXi PharmaTech Inc., after shareholders objected.

“There’s no such thing as a wave of mergers and acquisitions,’’ Schmidt said. “For this thing to happen, it almost has to be a perfect storm.’’

In addition to the interest in Genzyme, takeover speculation has swirled around Biogen Idec because of activist investor Carl C. Icahn’s involvement in the company. Icahn successfully prodded Biogen Idec into briefly putting itself up for sale two years ago, though the company later said it could not find a buyer. Icahn’s team has since won three seats on Biogen Idec’s board, leading to speculation that it could be ripe for a takeover.

Jan Wald, a Boston analyst for the Noble Financial Group, said there will also likely be more acquisitions of medical device makers as companies try to expand by moving into new areas or buying competitors. “With the stock market the way it has been, there are a lot of cheap companies and larger companies can take advantage,’’ Wald said.

In particular, Wald sees potential for more consolidation among companies that make lasers and other devices to treat cosmetic conditions, such as Palomar Medical Technologies Inc. in Burlington. Palomar did not respond to a request for comment.

Some investors have also questioned whether Boston Scientific Inc. in Natick, one of the largest medical device makers in the state, might also be acquired because its stock has declined sharply over the past few years. Boston Scientific declined to comment.

But Wald said Johnson & Johnson, the most likely buyer, is unlikely to launch a bid because the two firms have become such fierce rivals. “I think it’s a cultural mismatch,’’ Wald said.

August 5, 2010

Piramal Healthcare, which is sitting on a huge cash of nearly 19,000 crore after selling its two businesses, today said it is looking at various options to utilise the cash.

The company said it is looking to grow its healthcare business which consists of contract research and manufacturing (CRAM), Over-the-counter (OTC) and critical care segments through acquisitions as well as normal expansion.

"We would like to do a combination of both organic and inorgnic... actually that have been our model across the globe," Piramal Group chairman Ajay Piramal said in an interview .

Piramal Healthcare is set to get USD 3.72 billion (about Rs 18,000 crore) from US-pharma major Abbott for selling its Healthcare Solutions business in May this year and the company is looking at various options to invest this money.

Last month it had sold its diagnostics business to Super Religare Laboratories Ltd (SRL) for Rs 600 crore.

Speaking about investing in healthcare segment, he said that the decision will depend on the inorganic opportunities available in the segment.

“It will depend on the inorganic opportunities that would be available in health sector obviously that will get first priority, that is the sector that we understand the best, we can make sound decision in this space," he said.

Piramal further said that they were still to decide regarding foraying into the insurance sector.

"We haven't yet decided yet on insurance. We are ourselves debating upon it whether it makes strategic sense or not. Its one of the several other sectors we are looking at," Piramal said.

Speaking about merging Piramal Life Sciences with the parent company, he said that it could happen in the future.

"That is a possibility that the boards of the two companies have to look at. But it could be a real possibility and if we do it, we will keep the interests of all the shareholders in mind and only then do it," Piramal said.

He said the company is also looking at foraying into the education sector. "Whether we will look at it as a profitable venture is again one of those areas that we are studying," Piramal said.

Mumbai outpaced Bangalore, with a small margin of about Rs. 200 crore, to become India’s Top Biotech City in terms of revenue while Bangalore-based biopharmaceuticals firm Biocon, known for insulin and cancer drugs had the highest revenue in 2009-10.

Biocon topped the Biospectrum-ABLE list of 'Top 20 Biotech Companies' after a gap of four years growing at 29.34 per cent to record revenues of Rs. 1180 crore.

The Indian biotech industry has grown 3-fold in just 5 years to report revenues of US$3 billion in 2009-10, a growth of 17 per cent over the previous year.

This has been revealed in the 8th annual survey conducted jointly by the Association of Biotechnology Led Enterprises (ABLE) and monthly journal, BioSpectrum, from the CyberMedia group, based on inputs from over 150 biotech companies.

The Biopharma sector contributed nearly three-fifth to industry’s revenues at Rs. 8829 crore, a growth of 12 per cent followed by Bioservices at Rs 2639 crore and Bioagri at Rs. 1936 crore. The remaining revenue came from the Bioindustrials segment with a contribution of Rs 564 crore and Bioinformatics at Rs 231 crore.

The sunrise sector earns a little more than half its revenue from exports. Biopharma and Bioservices sector contributed 63 per cent and 33 per cent to the total biotech exports respectively. The Bioagriculture, Bioindustrial and Bioinformatics Sectors remained focused on domestic operations bringing in nearly 90 per cent of their revenues from India.

The BioSpectrum study notes that the biotechnology ecosystem has become strong with technology providers and the biotech education sectors playing a key role.

“Overall, there is cautious optimism within the biotech industry and the recent government efforts to boost the infrastructure and support for various industry initiatives will bring succor for the industry,” says Narayanan Suresh, Group Editor of BioSpectrum.

Biocon, Serum Institute top biotech companies

Bangalore-based biopharmaceuticals firm Biocon, known for insulin and cancer drugs had the highest revenue in 2009-10. It topped the Biospectrum-ABLE list of Top 20 Biotech Companies after a gap of four years growing at 29.34 per cent to record revenues of Rs. 1180 crore.

Pune-based Serum Institute of India, that makes one out of every two vaccines produced in the world, slipped to No. 2 position with revenues of Rs. 850 crore. Last year, Serum was the first company in India approached by the World Health Organization to develop and manufacture the H1N1 vaccine to fight the swine flu pandemic.

Panacea Biotec, Nuziveedu Seeds and Reliance Life Sciences were ranked No 3, 4 and 5 respectively.

The New Delhi headquartered pharmaceuticals, biopharmaceuticals and vaccine maker, Panacea Biotech, played a key role in eradicating polio by supplying over six billion doses of oral polio vaccine to the Government of India and UNICEF.

Nuziveedu Seeds Limited (NSL), the largest hybrid seed company in India, sold nearly 7 million packets of BT cotton seeds in 2009-10 giving it a market share of 36 per cent as also the number one supplier of rice seeds status in the private sector.

Reliance Life Sciences, earned 70 per cent of its topline growth from biopharmaceuticals. The company has set up the first cord blood repository in South Asia and offers cord blood banking services to public.

The next 5 positions went to Quintiles, Rasi Seeds, NovoNordisk, Shantha Biotech and Mahyco.

Mumbai outpaces Bangalore

Mumbai outpaced Bangalore, with a small margin of about Rs. 200 crore, to become India’s Top Biotech City in terms of revenue.

Western India continued to dominate India’s biotech industry with 46 per cent share in the overall revenues of Rs. 14,199 crore. The 137 companies in the region clocked Rs. 6,631 crore during the year increasing the region’s share in the overall revenues by 3 per cent over 2008-09, thus gaining a lead of 6 per cent over the South.

Gujarat’s share in the total revenue grew by about 50 per cent to cross Rs 1100 crore.

Pune’s contribution went down as Serum Institute of India suffered contract set backs.

The West is home to top Bioagri companies such as Monsanto, Mahyco and Ajeet Seeds and MNCs like GlaxoSmithKline, Roche, Aventis Pharma, Wyeth, Quintiles.

Four of India’s top 10 services companies (CROs) are also based out of West, including the No 1 CRO in the Indian industry – Quintiles India (Rs 375 crore).

According to the ABLE-BioSpectrum survey South continues to remain India’s largest Biotech cluster in terms of the number of companies adding 9 new biotech companies, highest in the country during the year. The region has 172 biotech companies (compared to 137 companies in the West) which posted revenues of Rs 5537.68 crore during the year making up 39 per cent of the overall revenues.

The Northern biocluster - National Capital Region (NCR) - is home to the top 3 companies, Panacea, Jubilant and Eli Lily, contributing 56 per cent of the revenues from North and about 15 per cent of the overall industry revenue. This cluster is better known for its research institutes and of course, government bodies.

Bangalore-based biopharmaceutical start-up Biovel Lifesciences is looking to exit from the life sciences space and is keen for an early outright buyout. Biovel has been in dialogue with several companies including Ranbaxy, Avesthagen, Shantha Biotechnics Ltd and Orchid Chemicals, it is learnt.