Healthcare Newsletter – March 2019

Faster generic approvals and even faster building competition – Trump Budget Implications
Home-Health The Trump administration released its 2019 US Government budget proposal which includes clear focus on addressing the problem of high drug prices. It specifically highlights enabling the US FDA to bring new generic drugs to the market faster and making safe, high – quality and affordable drugs more accessible. It emphasizes continued price reduction of generic drugs by fostering increased competition among generic manufacturers by addressing ‘gaming’ by innovators. The budget document includes specific reference to plugging certain loopholes in how the 180 day exclusivity operates, specifically on forfeiture of exclusivity in the case of a deficient first application.

This continued policy emphasis on a generic focused environment implies lower risk to generics industry from any change in the FDA operations after resignation of Commissioner Dr. Scott Gottlieb. While faster pace approvals of generic drugs is expected to continue, on a corollary, intense competition will also continue along with the related price pressures. This double-edged sword is here to stay in the foreseeable future; and the current intensity of competition and pricing pressures are indeed the New Normal in US generics.

MedTech: Expanding access to underserved diagnostics with high throughput automation
Home-HealthWith human lives sometimes at stake, quality, reliability and repeatability are critical factors for diagnostic testing. Meeting these crucial parameters have driven the medical device manufacturers to orient towards automation and IoT. In this regard, it is encouraging to note the FDA clearance of OPTIGEN AP 3600 from Hitachi Chemical Diagnostics. The device is the first fully automated multiplex allergy testing platform that works with proven technology from OPTIGEN Allergen-Specific IgE Assay, a patented panel format serum test for allergy and offers high capacity throughput.The device is a modification of its predecessor which was a semi-automated platform. The new device comes with fully automated processor and eliminates the need to remove the pette for optical reading, making the process completely automated. It can process as many as 3,600 individual allergen results in a single day without any human intervention.

Over the years, allergy testing has continued to remain as a niche segment and currently available approaches for interpreting patient diagnostic information rely heavily on human inputand are not suited for high-volume clinical testing. By offering high throughput automation with a multiplexed panel, this product holds substantial potential to drive cost effectiveness, wider access and more informed clinical decision makingin a specialized high need indication.

Big M&A in bio-processing segment – Integration strategycritical for unlocking potential
Interests Spike March heralded in positive developments for GE with Danaher Corporation entering into a definitive agreement to acquire their biopharma business for $21.4 billion. GE’s bioprocess business is primarily comprised of process chromatography, hardware, single use technologies, cell culture media and development instrumentation. This win – win deal adds substantial muscle to Danaher’s offerings in the biopharma equipment and consumables space and allows GE to pare down its overbearing debt. Adding to the momentum in M&A transactions in the bioprocess segment, Thermo Fisher Scientific announced the acquisition of Brammer Bio for $1.7 billion. Brammer Bio is a leader in contract viral vector development and production; and the acquisition empowers Thermo Fisher to participate with more specialized offerings in the rapidly evolving and transformational landscape in cell and gene therapies.

The transactions allude to expanding focus from bioprocess input and service providers on strengthening offering across the spectrum of biologicals and next generation therapies. While the Danaher – GE transaction emphasizes benefits of scale in this industry, the Thermo Fisher deal points to value in niche applications, especially in areas of cell and gene therapy. While we are highly enthused by the momentum, we believe that realization of deal potential in the former case will heavily depend on integration strategy. Danaher has pioneered the holding company model with subsidiaries operating on a stand-alone basis and pursuing individual go-to-market efforts. While Danaher has very successfully implemented this operating model in the past; today, synergies in the broader bioprocess offering could be at stake if not integrated into a common platform.

Strategic expansion of tailored offerings in EHR & software applications - PointClickCare acquires QuickMAR
Private Vaccines Market in IndiaWith overall life expectancy of human population growing, there is stark increase in the number of adults aged 65+. With this population cohort expanding, the long-term care industry will also grow significantly. This ‘aging boom’ will require the industry to buckle up and provide easy-to-adapt and efficient solutions to manage basic problems in the long-term post-acute care (LTPAC) and senior living industries such as billing, care planning, inventory tracking, and clinical support. Merit in EHS providers strengthening presence with niche offerings in evolving opportunity areas is emphasized by this month’s acquisition of QuickMAR by PointClickCare.

PointClickCare, an eHR (electronic health record) SaaS platform, announced its acquisition of QuickMAR, an electronic medication administration platform designed for use in institutional pharmacies, assisted living, long-term care, and rehab facilities. The software automates the process of distributing, tracking, and re-ordering medications and treatments safely. With this acquisition, PointClickCare has enhanced its integrated medication management system and expanded their portfolio with which they will be able to serve a wider and more diverse set of senior living communities. As we look forward, we anticipate more consolidation in the EHR and software providers segment where more integrated and sophisticated product offerings will be critical for sustenance and scaled-up success.

Breakthrough therapy for postpartum depression and evolving drug administration landscape
Home-Health The month of March witnessed a substantial breakthrough in the field of postpartum depression when FDA approved the first ever prescription drug for the disorder. The drug Zulresso (brexanolone) was developed by Sage Therapeutics and was approved by FDA after a delay of three months that involved risk evaluation and mitigation strategies (REMS) program. The drug carries a black box warning for loss of consciousness events and extreme sedation and has a list price of USD 34,000. Though, REMS and black box warning can act as safety concerns impeding adoption, the most limiting challenge appears to be the price.

The drug holds substantial potential to provide respite in a highly underserved indication. It is notable that postpartum depression is often undiagnosed and untreated in most of the cases. Hence, the success of this drug will heavily hinge on market creation. In addition to the looming challenge of creating awareness about the indication and expanding the pool of diagnosed and treated patients, it also has to overcome the challenge of price and administration mode. The hefty list price is a significant cause of concern and calls for entirely rethinking pricing and drug development models. Finally, the hurdle of administration mode is a critical one as well as the drug requires continuous IV infusion for over 60 hours. An exciting development but one that again serves as a reminder of commercialization challenges that are critical to overcome to realize potential of the science.

Oral GLP-1 formulations set to topple market equation in anti-diabetics
Home-Health Over the past several years, the DPP-4 inhibitors dominated the type 2 diabetes market in several geographies due to ease of use as oral solids. DPP-4 inhibitors like Januvia (Merck), Galvus (Novartis), and Onglyza (AstraZeneca), and Tradjenta (BoehringerIngelheim) gained greater adoption across the world resulting in a more dominant market share in the type 2 diabetes space vs their GLP-1 counterparts that suffered from being injectable peptide formulations. This ease of delivery for the oral solids served as a greater market propellant as compared to literature support for relatively superior profile of GLP-1 agonists.
The last high impact development was the November 2016 FDA approval of insulin-GLP-1 combination injectable from Sanofi (Soliqua) and Novo Nordisk (Xultophy). As a combination this approval negated the disadvantage of an additional poke in an already insulin dependent sub-population and offered potential to tilt the balance between GLP-1 agonists and DPP-4 inhibitors. However, there has been a more transformative development this month with Novo Nordisk submitting an NDA for its Oral semaglutide (GLP-1) to FDA. This could substantially reshape the balance in anti-diabetic therapeutics with GLP-1 agonists no more carrying the baggage of being inconvenient to deliver. With mode of delivery being common, the future adoption balance should be more defined by clinical merit. This also opens doors to more peptide drugs potentially being delivered as oral solids in the future.

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