Healthcare Newsletter – May 2017

Contract Services-An Attractive Acquisition Target for End-to End Solution Building
Interests Spike Thermo Fisher has acquired dutch Contract Development and Manufacturing Organization (CDMO) Patheon NV in a $5.2 billion deal this month in an aspiration to become a one-stop shop for drug development needs. With global drug development costs escalating north of $ 2 billion per new drug, there is an increasing need for early stage engagement and end-to-end solutions from contract service providers that could enable companies in accelerating time to markets. This preference has resulted in most Contract Manufacturers (CMOs) wanting to engage with clients as early on as possible, with the most aggressive going as far as providing seed funding to university researchers to start with projects right from the womb. At the other end, in the current fragmented landscape of the global multi-billion dollar CDMO industry, scale up challenges abound and companies that have managed to build scale are far and few. Patheon is one such exception that has thrived on quality reputations and breadth of manufacturing expertise spanning small molecule as well as biologics. Thermo Fisher’s decision to enter this segment through this strategic acquisition is testimony to the opportune positioning of the CMO industry, particularly an end-to-end player. Another notable consolidation activity in the pharma contract service space this month is the merger of INC Research with inVentiv Health to create a CRO powerhouse with indomitable scale.We perceive a continuing active M&A landscape in the segment – for consolidation and for acquisition of smaller CDMOs to expand capability for early engagement with clients.
Exploding interest in Artificial Intelligence (AI) applications in Med-Tech & Healthcare Delivery
AffordabilityTalking about AI applications in healthcare, GE Healthcare’s recent announcement of a 10 year collaboration with Partners Healthcare, the corporate parent of a number of hospitals (including MGH and two Harvard hospitals), really gets the show on the road. The partnership is targeted to use deep learning technologies to build solutions that can simplify cumbersome administrative as well as routine tasks of physicians in order to enable them to improve quality time spent with patients. Assisted diagnostic tools that could bring humongous time savings in emergency and critical care settings, in turn improving healthcare outcomes is another focus area of the partnership. Taking cognizance of the fact that the “human element” is an indispensable aspect of healthcare delivery, this partnership is targeted at intelligently using AI applications to merely assist physicians in improving the overall quality of care. Diagnostics and healthcare delivery have always been hyped as the low hanging fruits when it comes to super computing and artificial intelligence applications. Although we are far from experiencing commercial impact, there is no denial that we are witnessing the beginning of the AI wave ready to transform healthcare as we know it. Given the exploding interest, it is time now for med tech and delivery entities to participate in this global transformation or risk being left behind.
Industry in transition - Indian Pharma Deepens Focus beyond Small Molecule Generics
Private Vaccines Market in India Indian pharma industry deepens the strategic focus on graduating from being purely focused on small molecule substitutable generics. In the quest to move up the value chain in the global arena, most leading players are pursuing opportunities across complex generics, specialty pharmaceuticals, biosimilars and even novel drugs. Two recent developments in this direction this month are advancement to the clinic of Glenmark’s NBE and Jubilant Pharma’s acquisition of Triad Isotopes. Glenmark’s bispecific antibody candidate GBR 1342 for multiple myeloma has become the second immune-oncology drug from the company’s proprietary BEAT® platform to have moved into clinical phase, with GBR 1302 for HER2+ cancers being the first that moved to clinical trials in January this year. This is a significant milestone in the company’s innovation-led growth trajectory, one that is supported by successful partnerships with global peers in the past. Jubilant on the other hand, has made great strides in strengthening its foothold in the niche nuclear medicine category by acquisition of US based Triad Isotopes (For more on the deal, click here). Besides helping Jubilant solidify its presence in the imaging agent and patient-specific nuclear medicine market, this deal has also helped the company in forward integration, with Triad being one of the largest radio pharmacy networks in the US today. These developments reflect commendable success in finding smart competitive niches and advancing into the complex domain of sustaining innovation led pipelines. We remain excited about this journey of transition and prospects for the next decade of pharma companies from established generics strongholds such as India.
Continuing Interests & Thriving M&A Landscape in the world of Specialty Pharma
Home-Health Fresenius Kabi has been keen on seeking inorganic growth and April has been a big month for the company with double acquisitions.At a deal value of $ 4.3 billion Fresenius Kabi’s announcement to acquire Akorn, Inc. is a recent addition to the thriving M&A deal landscape in generic pharma industry. Akorn is one of the few mid-sized specialty pharma firms that boastsa broad portfolio of over 180 drugs spanning branded and specialty pharma as well as complex generics with expertise in ophthalmic, topical, nasal, respiratory and injectable and is a synergistic fit for portfolio expansion for Fresenius, which has traditionally specialized in injectables. While this deal reinstates its continuing focus on generics, the company has also staged a simultaneous entry into biosimilars with acquisition of Merck KGaA’s biosimilars pipeline targeting oncology and inflammatory diseases at a deal value of 170 million euros upfront along with milestone payments of up to 500 million euros plus royalties on future product sales. Fresenius’ moves stand testament to the fact that companies remain aggressive in seeking new avenues to graduate in the crowded regulated market generics play through organic as well as inorganic expansion. The political undercurrent surrounding downward pricing threat only adds fuel to the fire as markets consolidate further and companies seek higher value growth opportunities to sustain their future.
Synergistic marketing partnerships in India - MNCs continue to Lean on Domestic Pharma
Home-Health Marketing collaborations remain a crucial stimulant for expanding market access for regulated market drugs in high volume markets such as India.It is a well-proven strategy of MNC participation in Indian market, with Novartis’ Galvus as the most successful example, being sold in India under 8 different brands through different domestic marketing partners. The recent marketing partnership announcement of Lilly’s erectile dysfunction drug Cialis with Lupin in India is yet another example of mutual synergistic collaboration that brings together the technical strength of a MNC and the domestic field force strength of the Indian partner. With Lilly’s Huminsulin range of products and rapid acting insulin analogs already being marketed by Lupin in India, it is evident that companies are making product-specific decisions on marketing collaborations, where there is a strategic fit and commercial market sense for both the collaborating partners. With India being one of the high volume global markets, caring for Indian patients continues to be a key priority for value maximization of multinational drugs. Considering the large end user base and difficulty in understanding nuances of geographical sub pockets, we expect the trend of synergistic marketing collaborations with Indian pharma to continue with interest from small, mid-sized as well as the largest global companies.

SATHGURU IN THE NEWS

Pharma Bio World
Innovation In Indian Pharma – Empowering Stronger Global Presence But Fraught With Challenges For Serving Indian Market

Biovoice News
Vaccine industry has earned India a special place in the global arena

Express Pharma
India is at the cusp of a new era in vaccines

EVENTS

BIO 2017 (San Diego, CA – June 2017)
Look forward to meeting you at the beach or in the convention center (booth 4700). Sathguru’s CEO Vijay is moderating a panel on biologics in crop improvement.

Stop by to say hello to us!

MANDATES —ongoing assignments and partnering opportunities

  1. Buy side mandate – US generic opportunities
  2. Strategic investments – Leading Israeli CDMO with strong expertise in topical products
  3. Series A VC fund raising – Artificial Intelligence based digital health venture
  4. Business Plan – Medtech Translational Center

RECENT PUBLICATIONS

  1. Embracing Innovation, Driving Growth Across Healthcare Continuum – “Making in India”
  2. The Make in India Imperative – Position Paper on Regulatory and Policy Changes required for Sustained Competitiveness of the Indian Vaccine Industry
  3. Indian Orthopedic Devices Market A $2.4 Bn Opportunity
  4. Biosimilars – How can we realize the $ 240 Bn Opportunity

Contact us to know more…

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