Healthcare Newsletter – January 2017

Sanofi Jumps on the Global Biosimilars Bandwagon
Sanofi is one of the few big pharma companies that has not ventured into the biosimilar segment beyond insulin and has remained put as an innovator biologic firm. The company’s recent announcement of a partnership with Chinese firm JHL Biotech unmistakably marks its entry into the global biosimilars market. While the $21 M deal has bought Sanofi the commercialization rights to an early stage Rituximab biosimilar asset of JHL, it has also facilitated access to other pipeline assets of JHL for Chinese and potential international markets. As part of the alliance, Sanofi will also make an investment of $ 80 million in JHL. This partnership is yet another example that stands to prove that the competitive landscape in the biosimilars world continues to heat-up and companies find merit in staying vigilant in bagging valuable assets to enter this segment. In our white paper released towards end of 2016 we had quantified that the biosimilar market could grow to $240 billion by 2030. With continuing transaction activity for portfolio expansion, we remain bullish about the mid-term potential of the segment but emphasize the need for increased commercial collaborations. (Download our white paper here)
Peptide Therapeutics Landscape Witnesses Further Consolidation
PolyPeptide’s recent acquisition of Lonza’s therapeutic peptides business in Belgium marks further consolidation in the already concentrated peptide segment. (For more on the deal, click here.) Manufacturing of peptide based therapeutics has been a relatively less contested space in the global pharma industry, with a few dominant players controlling majority of the stakes. Although drug synthesis technologies in peptides stray closer to small molecule development, manufacturing complexity remains high and technically sound talent pool remains scarce. Considering such high barriers to entry, even big pharma companies have traditionally turned to the niche players for manufacturing support for their peptide drugs, thus blurring the lines between CMOs and development companies in this specific segment. PolyPeptide and Lonza have both been globally dominant players, reaping the benefits of their niche specialization in peptide manufacturing. As this highly synergistic deal brings together PolyPeptide’s impressive portfolio of late stage peptide products and Lonza’s manufacturing facility along with 280 skilled employees, it undeniably creates a peptide powerhouse in the well-consolidated market segment. While most pharma companies either race behind biologics with a broad pipeline of products, or continue to conquer the known devil in small molecules, the true potential of therapeutic peptides remains to be explored by few indomitable stalwarts.
Molecular Diagnostics Continue to Lure Industry Investments
Siemens Healthineers has committed to invest $ 300 million in its laboratory diagnostics manufacturing facility in the US over the next four years. Diagnostics is irrefutably a cornerstone for healthcare success,as timely diagnosis could make or break therapeutic management of diseases.With advancements in technologies, the quest for more sensitive, effective and faster diagnostic assays has become the principal focus of the industry, driving investments into molecular diagnostics. The segment is evolving as the go-to market within in-vitro diagnostics and is today one of the fastest growing sub-segments. While molecular diagnostics has already proven its worth in infectious diseases, it holds huge untapped potential in chronic diseases and oncology. Moreover, increasing middle-class affordability, healthcare advancements and strategic partnerships among diagnostics companies have also made sophisticated molecular diagnostic technologies accessible to emerging markets. Even advanced techniques such as liquid biopsies are becoming an everyday reality. As the healthcare industry continues to stride towards personalized medicine, molecular diagnostics is likely to play a bigger role and fostering R&D in this space is a sure bet for competitors. Siemen’s recent expansion effort reflects this potential and we anticipate this trend to continue.
Amid Sluggish Capital Markets, Global Pharma Industry Thrives to keep Investments Alive
Global capital markets have lately been sluggish and volatile at best. While this has trickled down to staggering business investments in many sectors, the pharma industry has managed to keep the momentum alive in companies across developed and emerging markets. Many recent M&A deals stand testament to this, as pharma companies continue to seek inorganic growth. Bayer, for one, is seen to be testing new waters in stem cell therapy through a $ 225 million joint venture with healthcare investment firm Versant ventures, over a Japanese scientific invention. This is notable in light of the fact that widespread commercialization efforts in stem cell therapeutics have been elusive so far. Indian pharma and service companies’ outbound investment interests in developed markets also continue despite sluggish economic climate, with Sun Pharma emerging as a front runner in the last couple of months. Post acquisition of 85% stake in the Russian firm Biosintez for $24 million in November 2016, the company has also recently acquired global marketing rights for Novartis’s cancer drug Odomzo for $175 million. Cipla shares Sun Pharma’s appetite to expand cross-border investments, with its Netherlands-based subsidiary taking a 75% stake in the Iran-based Issat Company with a €16.8 million investment. We are glad to begin 2017 on this active M&A note and look forward to this robust deal landscape continuing through the year.

Sathguru Foot Print

Indian Vaccine Industry— Changes Needed for Sustained Competitiveness

Excerpts from position paper developed for CII:

Market Growth:

  • The Indian vaccine industry grew to approximately $ 1 billion in 2015 with a robust 5 year CAGR of 25%.
  • Commendable success in global supply of technologically complex vaccines at affordable prices.
  • About 60% of GAVI’s overall vaccine procurement was from Indian companies in 2014.

Context for Policy Reform:

  • Long standing requirements for multiple licenses and other regulatory redundancies cause significant delay in approval
  • Case in point is PCV vaccine, where India enjoys a strong pipeline, and near term product adoption in UIP is announced
  • Government spend on immunization needs to be increased at least 3 fold to meet near term goals

The Road to Success:

  • Policy Related Changes: Enhanced fiscal and funding support, removal of vaccines from NLEM, increase in immunization spend
  • Regulatory Changes: Eliminate redundancy in licensing processes, accelerate clinical pathway

Download the complete whitepaper here…

Sathguru in the News

What is the way forward for the Indian vaccines industry? – Business Standard

Breaking barriers to create formidable global impact – ehealth

J.P. Morgan Annual Healthcare Conference
Sathguru will be in San Francisco for JPM Annual Healthcare Conference (Jan 09-12, 2017). Stop by to say hello to us!

Contact us to know more…

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