Biotech drugs, made from living cells, are more complicated to make—and to copy—than traditional pills and therefore have proved highly resistant to low-cost competition, even after patents ran out. But after years of turning to these costly drugs to boost sales, big drug companies like Pfizer are now borrowing from the playbooks of generic makers and developing copycat versions of each other’s biotech drugs.
The lure is a global market that could soar to $20 billion in sales in five years, up from just a few billion dollars today, as health plans and governments seek to rein in spiraling health-care costs. These biotech-drug knockoffs, called biosimilars, can cost 20% to 30% less than the higher-price originals.
The Hospira deal underscores that the time has finally come for biosimilars, which have already gone on sale in some countries and could come to the U.S. as early as this year. Hospira is selling the drugs in Europe and Australia, and has asked health regulators for permission to sell two in the U.S. Acquiring Hospira would turn Pfizer, which has been trying to build up its biosimilars business, into a top player along with Novartis AG .
“The puzzle pieces come together in a very nice way,” Pfizer Chief Executive Ian Read said in an interview.
Pfizer is also interested in plugging Hospira’s portfolio of generic intravenous drugs and drug-infusion pumps, sold mostly in the U.S., into its world-wide commercial infrastructure, according to Pfizer executive John Young, who will run the combined businesses.
Hospira has had manufacturing issues in recent years, but Mr. Young said that due diligence left Pfizer feeling “comfortable that the issues have been or are being properly addressed.”
Under the terms of the deal, Hospira shareholders will receive $90 a share in cash, a 39% premium to Wednesday’s close. Pfizer said it expects the deal to close during the second half of this year and immediately add to earnings. Pfizer said it also expects to realize $800 million in cost savings within three years.
Pfizer stock rose 2.9% to $32.99 in 4 p.m. trading, while Hospira shares jumped 35% to $87.64.
And Pfizer executives indicated the Hospira acquisition wouldn’t stop Pfizer from doing more deals, even larger ones.
“We have lots of remaining capacity” to do more transactions, Pfizer Chief Financial Officer Frank D’Amelio said.
Pfizer was once the world’s leading pharmaceutical company by revenue, selling blockbuster pills like the cholesterol fighter Lipitor at premium prices. But Lipitor and other such drugs have lost U.S. patent protection in recent years, allowing low-price generic versions to go on sale and quickly dominate.
Just this year, Pfizer expects to lose $3.5 billion in sales due to generic competition.
To adjust, Pfizer and its rivals have been revamping their portfolios to sell a greater number of biotech drugs, which have traditionally been more insulated from low-cost competition.
For many years there weren’t any clear legal and regulatory paths for rival companies to sell knockoffs of biotech drugs, sometimes called biologics, without doing prohibitively costly testing akin to developing a new drug altogether.
In 2009, Pfizer paid $68 billion for Wyeth to acquire its biotech-drugs portfolio.
But that dynamic has started to shift. Biosimilar drugs are on sale in several countries overseas today, and they are coming soon to the U.S., causing a scramble among drug companies that had been counting on biotech drugs. In the U.S., the Affordable Care Act created a simplified pathway for companies to make their own versions of biotech drugs and prove to health regulators that their biosimilar medicines would work as well as the original drugs.
Last month, a panel of experts recommended the U.S. Food and Drug Administration green-light what would be the first therapy approved under the new pathway. The drug, developed by Novartis, would be a biosimilar version of Amgen Inc. ’s Neupogen treatment for chemotherapy patients, which generated $1.2 billion in world-wide sales last year. Analysts say the biosimilar Neupogen could be approved this year.
Biotech drugs with more than $100 billion in sales are expected to lose patent protection in the next five or 10 years, according to Pfizer. Industry officials expect there will be strong demand for lower-price versions of the drugs amid global pressures over drug costs.
In Norway, one biosimilar version of rheumatoid-arthritis treatment Remicade costs 72% less than the brand, according to Sanford C. Bernstein & Co.
With health-care systems looking to control costs, “we are a very hard proposition to stop,” Hospira Chief Executive Michael Ball said in an interview last month. “In the U.S., payers are coming to us to talk about biosimilars.”
Pfizer has been trying to build its own business in biosimilars, developing knockoffs of top-selling biotech drugs like AbbVie Inc. ’s Humira rheumatoid-arthritis therapy and Roche Holding AG ’s Avastin cancer therapy.
Yet Hospira, of Lake Forest, Ill., and Switzerland’s Novartis have led the way in biosimilars. Hospira has been selling biosimilars for seven years, and has three biosimilars on sale in Europe currently, Mr. Ball said. He said Hospira has asked the FDA to approve biosimilars of Remicade and anemia treatment Epogen.
Johnson & Johnson , which sells Remicade in the U.S. and certain other markets, reported the drug generated $6.9 billion in sales for the company last year. Epogen, from Amgen Inc., had $2 billion in world-wide sales last year.
Hospira, which is scheduled to report its 2014 results next week, had $4.4 billion in revenue last year, according to Pfizer. Meanwhile, Pfizer last month reported a 4% decline in 2014 revenue to $49.6 billion and a 58% drop in net income to $9.14 billion.
GlaxoSmithKline plc and Pfizer Inc to form new world-leading Consumer Healthcare Joint Venture
Transaction provides a unique opportunity to accelerate GSK’s strategy and create substantial value for shareholders
Lays foundation for separation of GSK to create two new UK-based global companies focused on Pharmaceuticals/Vaccines and Consumer Healthcare
GSK will have a majority controlling equity interest of 68% and Pfizer will have an equity interest of 32% in the Joint Venture.
The proposed all-equity transaction represents a compelling opportunity to build on the recent buyout of Novartis’ stake in GSK Consumer Healthcare, to create a new world-leading consumer healthcare business and to deliver further significant shareholder value. The proposed transaction also supports GSK’s key priority of strengthening its pharmaceuticals business over the next few years by increasing cashflows and providing an effective pathway through the separation of GSK Consumer Healthcare to build further support for investment in its R&D pipeline.
GlaxoSmithKline (GSK) から抗がん剤製品群を買収するとともに、大衆薬事業はGSKの事業と統合し、GSK主体のJVとする。
New Consumer Healthcare Joint Venture
The new Joint Venture will be well-positioned to deliver stronger sales, cash flow and earnings growth driven by category leading Power Brands, science-based innovation and substantial cost synergies. The combination will bring together two highly complementary portfolios of trusted consumer health brands, including GSK’s Sensodyne, Voltaren and Panadol and Pfizer’s Advil, Centrum and Caltrate. The Joint Venture will be a category leader in Pain Relief, Respiratory, Vitamin and Mineral Supplements, Digestive Health, Skin Health and Therapeutic Oral Health. The Joint Venture will be the global leader in OTC products with a market share of 7.3% ahead of its nearest competitor at 4.1% and have number 1 or 2 market share positions in all key geographies, including the US and China.
The proposed transaction is expected to realise substantial cost synergies, with the Joint Venture expected to generate total annual cost savings of £0.5 billion by 2022 for expected total cash costs of £0.9 billion and non-cash charges of £0.3 billion. Planned divestments targeting around £1 billion of net proceeds are expected to cover the cash costs of the integration. Up to 25% of the cost savings are intended to be reinvested in the business to support innovation and other growth opportunities. Overall the Joint Venture will target an Adjusted operating margin percentage in the ‘mid-to-high 20’s’ by 2022.
expects the proposed transaction to be
accretive to Total earnings in the
second full year following closing,
reflecting the impact and timing for the
costs of integration; and to be
accretive to Adjusted earnings and free
cashflow in the first full year after
The proposed transaction is transformational to the scale of GSK’s Consumer Healthcare business. Within 3 years of the closing of the transaction, GSK intends to separate the Joint Venture via a demerger of its equity interest and a listing of GSK Consumer Healthcare on the UK equity market. Over this period, GSK will substantially complete the integration and expects to make continued progress in strengthening its Pharmaceuticals business and R&D pipeline.
The intended separation of the Group will allow the two resulting companies to be established with appropriate capital structures for their future investment needs and capital allocation priorities. The new consumer healthcare company with its more durable cash flows will be able to support higher leverage levels than the GSK Group today, creating the opportunity on separation to reduce the leverage in the new Pharmaceuticals/Vaccines company.
GSK remains committed to its current dividend policy and confirms it continues to expect to pay 80 pence per share in dividends for 2018. Recognising the significance of this proposed transaction and the importance of dividends to shareholders, the company is today confirming that it expects to pay dividends of 80 pence per share for 2019.
Going forward, the proposed transaction enhances prospects for the Consumer Healthcare business and supports the development of GSK’s Pharmaceuticals business. With expected improvements in both businesses, GSK expects to be well positioned to deliver returns to shareholders alongside continued investment in its strategic priorities.
Emma Walmsley, Chief Executive Officer, GSK, said:
“Eighteen months ago, I set out clear priorities and a capital allocation framework for GSK to improve our long-term competitive performance and to strengthen our ability to bring new breakthrough medicines and better healthcare products to people around the world. We have improved our operating performance and have set out a new approach to R&D. We have also started to reshape the Group’s portfolio through prioritisation of R&D programmes, acquisitions such as that proposed with the oncology biopharmaceutical company, TESARO, the minority buy-out of the consumer healthcare business and a series of non-core product divestments.
transaction we have announced today is a
unique opportunity to accelerate this
work. Through the combination of GSK and
Pfizer’s consumer healthcare businesses
we will create substantial further value
for shareholders. At the same time,
incremental cashflows and visibility of
the intended separation will help
support GSK’s future capital planning
and further investment in our
“With our future intention to separate, the transaction also presents a clear pathway forward for GSK to create a new global Pharmaceuticals/Vaccines company, with an R&D approach focused on science related to the immune system, use of genetics and advanced technologies, and a new world-leading Consumer Healthcare company.
“Ultimately, our goal is to create two exceptional, UK-based global companies, with appropriate capital structures, that are each well positioned to deliver improving returns to shareholders and significant benefits to patients and consumers.”
Approvals and closing
The proposed transaction is subject to approval by GSK shareholders and conditional upon the receipt of certain anti-trust authority approvals. Subject to these approvals, the transaction is expected to close in the second half of 2019. The Board intends to recommend that shareholders vote in favour of the proposed transaction.
Pfizer and GlaxoSmithKline Announce Joint Venture to Create a Premier Global Consumer Healthcare Company
Establishes a new focused global consumer healthcare business with the independence and sustainability to deliver significant value Equity split of 32% Pfizer and 68% GlaxoSmithKline
“We are pleased to announce this new joint venture for Pfizer Consumer Healthcare, delivering on our commitment to complete the strategic review for this business in 2018,” stated Ian Read, Chairman and current Chief Executive Officer, Pfizer. “Pfizer and GSK have an excellent track record of creating successful collaborations, and we look forward to working together again to unlock the potential of our combined consumer healthcare businesses.”
Under the terms of the transaction, Pfizer will receive a 32% equity stake in the joint venture, entitling Pfizer to its pro rata share of the joint venture’s earnings and dividends, which will be paid on a quarterly basis. Pfizer will have the right to appoint three out of the nine members of the joint venture’s board. The transaction is expected to deliver $650 million in peak cost synergies and to be slightly accretive for Pfizer in each of the first three years after the close of the transaction, which is anticipated during the second half of 2019, subject to receipt of GSK shareholder approval and regulatory approvals, and satisfaction of other customary closing conditions.
As Pfizer will own less than 50% of the joint venture, Pfizer anticipates deconsolidating Pfizer Consumer Healthcare from its financial statements following the closing of the transaction. In the near- to medium-term, this deconsolidation is not expected to have a material impact on Pfizer’s top-line growth. In addition, given the Consumer Healthcare business records lower margins than Pfizer’s other businesses, the deconsolidation is expected to have a slight positive impact on Pfizer’s operating margins over the next several years.
Following the integration of the combined business, GSK intends to separate the joint venture as an independent company via a demerger of its equity interest to its shareholders and a listing of the Consumer Healthcare business on the UK equity market. GSK will have the sole right to decide whether and when to initiate a separation and listing for a period of five years from closing of the proposed transaction. GSK may also sell all or part of its stake in the joint venture in a contemporaneous IPO.
Should a separation and listing occur during the first five years after closing, Pfizer has the option to participate through the distribution of its equity interest in the joint venture to its shareholders or the sale of its equity interest in a contemporaneous IPO. After the fifth anniversary of the closing of the proposed transaction, both GSK and Pfizer will have the right to decide whether and when to initiate a separation and public listing of the joint venture.
“The combination of these leading businesses with distinct regional and category strengths will be more sustainable and broader in scope than either company individually,” said Albert Bourla, Chief Operating Officer and incoming Chief Executive Officer, Pfizer. “We believe that this joint venture is a great opportunity to ensure the future success of Pfizer Consumer Healthcare while unlocking meaningful after-tax value for Pfizer shareholders.”
The joint venture will be a category leader in pain relief, respiratory, vitamin and mineral supplements, digestive health, skin health and therapeutic oral health and will be the largest global consumer healthcare business. In addition, the joint venture is expected to be the first or second largest consumer healthcare player in key geographies, including the United States, Europe, China, India and Australasia. The joint venture will operate globally under the GSK Consumer Healthcare name.
“The transaction is a testament to the success of our Consumer Healthcare business, including its excellent reputation, talented colleagues, high-quality products and market reach,” said Chris Slager, President, Pfizer Consumer Healthcare. “The dedication and hard work of the Pfizer Consumer Healthcare team is impressive and inspiring. I am proud of our colleagues around the world who are passionate about the success of this business and the important role it plays in empowering consumers to take health and wellness into their own hands.”
Emma Walmsley, GSK CEO, will be Chair of the new joint venture. Brian McNamara, currently CEO GSK Consumer Healthcare, will be CEO of the new joint venture and Tobias Hestler, currently CFO GSK Consumer Healthcare, will be CFO.
Until separation, the joint venture will be consolidated in GSK’s financial statements.
For the year ended December 31, 2017, the Pfizer Consumer Healthcare business recorded revenues of approximately $3.5 billion and the GSK Consumer Healthcare business recorded revenues of approximately $9.2 billion.
GSK has agreed to pay a break fee of $900 million if (i) the GSK Board of Directors changes, withdraws or qualifies its recommendation of the transaction to its shareholders for approval; (ii) GSK’s shareholders vote on the proposed transaction and do not approve it; or (iii) GSK’s shareholders do not approve the proposed transaction by September 30, 2019 (subject to extension in certain circumstances).
Centerview Partners LLC, Guggenheim Securities, LLC and Morgan Stanley & Co. LLC served as Pfizer’s financial advisors, Wachtell, Lipton, Rosen & Katz, and Clifford Chance LLP served as its legal advisors, and Skadden, Arps, Slate, Meagher & Flom LLP served as its tax advisor.
Pfizer to Acquire
—Proposed acquisition strengthens Pfizer’s innovative biopharmaceutical business and is expected to accelerate its growth trajectory particularly in the long term —Opportunity to strengthen category leadership in Oncology with the addition of a breakthrough combination of BRAF/MEK inhibitors under investigation for a potential first-in-class therapy for patients with BRAF-mutant metastatic colorectal cancer —Expands Pfizer’s pipeline with multiple high-potential targeted investigational cancer therapies and adds a large portfolio of royalty-generating out-licensed medicines —Plans to maintain highly productive research unit in Boulder to complement Pfizer’s research hubs —Transaction valued at $48 per Array share in cash, for a total enterprise value of approximately $11.4 billion
Array BioPharma Inc.は、コロラド州ボルダーに本社を置き、癌治療に用いられる低分子薬を中心に新薬の発見、開発、商品化を事業とする企業です。
同社は1998年に設立され、癌の治療薬や多発性骨髄腫の治療薬、拡張型心筋症のための薬、C型肝炎のための薬品、胃がん・乳がんの治療薬などを製品候補として、Biogen Idec MA Inc.など複数の企業との共同契約のもとで開発を進めています。
Array BioPharma Inc.は2018年6月27日、米国食品医薬品局（FDA）がFDAの承認した検査法により検出されたBRAFV600EもしくはBRAFV600K遺伝子変異陽性の切除不能または転移性の悪性黒色腫患者の治療薬として、BRAFTOVIカプセルとMEKTOVI® 錠の併用療法を承認したことを発表した。
2017年5月に小野薬品工業はArray社と、BRAF阻害剤のエンコラフェニブおよびMEK阻害剤のビニメチニブに関するライセンス契約を締結し、小野薬品が日本および韓国で両剤を開発 および 商業化する権利をArray社から取得しました。
Pfizer Inc. and Array BioPharma Inc. today announced that they have entered into a definitive merger agreement under which Pfizer will acquire Array, a commercial stage biopharmaceutical company focused on the discovery, development and commercialization of targeted small molecule medicines to treat cancer and other diseases of high unmet need. Pfizer has agreed to acquire Array for $48 per share in cash, for a total enterprise value of approximately $11.4 billion. The Boards of Directors of both companies have approved the merger.
Array’s portfolio includes the approved combined use of BRAFTOVI® (encorafenib) and MEKTOVI® (binimetinib) for the treatment of BRAFV600E or BRAFV600K mutant unresectable or metastatic melanoma. The combination therapy has significant potential for long-term growth via expansion into additional areas of unmet need and is currently being investigated in over 30 clinical trials across several solid tumor indications, including the Phase 3 BEACON trial in BRAF-mutant metastatic colorectal cancer (mCRC).
In the U.S., colorectal cancer 大腸癌 is the third most common type of cancer in men and women. An estimated 140,250 patients were diagnosed with cancer of the colon or rectum in 2018, and approximately 50,000 are estimated to die of their disease each year.1BRAF mutations are estimated to occur in up to 15% of colorectal cancer cases and represent a poor prognosis for these patients.
“Today’s announcement reinforces our commitment to deploy our capital to bring breakthroughs that change patients’ lives while creating shareholder value,” said Albert Bourla, chief executive officer of Pfizer. “The proposed acquisition of Array strengthens our innovative biopharmaceutical business, is expected to enhance its long-term growth trajectory, and sets the stage to create a potentially industry-leading franchise for colorectal cancer alongside Pfizer’s existing expertise in breast and prostate cancers.”
In addition to the combination therapy for BRAF-mutant metastatic melanoma, Array brings a broad pipeline of targeted cancer medicines in development, as well as a portfolio of out-licensed potentially best-in-class and/or first-in-class medicines, which are expected to generate significant royalties over time.
“We are incredibly proud that Pfizer has recognized the value Array has brought to patients and our remarkable legacy discovering and advancing molecules with great potential to impact and extend the lives of patients in critical need,” said Ron Squarer, Array chief executive officer. “Pfizer shares our commitment to patients and a passion for advancing science to develop even more options for individuals with unmet needs. We’re excited our team will have access to world-class resources and a broader research platform to continue this critical work.”
In May 2019, Array announced results from the interim analysis of the Phase 3 BEACON mCRC trial: The second-or-third-line treatment with the BRAFTOVI triplet combination (BRAFTOVI + MEKTOVI + cetuximab) showed statistically significant improvement in overall response rate and overall survival compared to the control group, reducing the risk of death by 48%. The triplet combination could be the first chemotherapy-free, targeted regimen for patients with BRAF-mutant mCRC. Array intends to submit these data for regulatory review in the United States in the second half of 2019.
“We are very excited by Array’s impressive track record of successfully discovering and developing innovative small-molecules and targeted cancer therapies,” said Mikael Dolsten, Pfizer chief scientific officer and president, Worldwide Research, Development and Medical. “With Array’s exceptional scientific talent and innovative pipeline, combined with Pfizer’s leading research and development capabilities, we reinforce our commitment to advancing the most promising science, regardless of whether it is found inside or outside of our labs.”
Upon the close of the transaction, Array’s employees will join Pfizer and continue to be located in Cambridge, Massachusetts and Morrisville, North Carolina, as well as Boulder, Colorado, which becomes part of Pfizer’s Oncology Research & Development network in addition to La Jolla, California and Pearl River, New York.
Pfizer expects to finance the majority of the transaction with debt and the balance with existing cash. The transaction is expected to be dilutive to Pfizer’s Adjusted Diluted EPS by $0.04 -$0.05 in 2019, $0.04 -$0.05 in 2020, neutral in 2021, and accretive beginning in 2022, with additional accretion and growth anticipated thereafter. Pfizer will provide any appropriate updates to its current 2019 guidance in conjunction with its third quarter 2019 earnings release.
Under the terms of the merger agreement, a subsidiary of Pfizer will commence a cash tender offer to purchase all outstanding shares of Array common stock for $48 per share in cash for a total enterprise value of approximately $11.4 billion. The closing of the tender offer is subject to customary closing conditions, including regulatory approvals and the tender of a majority of the outstanding shares of Array common stock (on a fully-diluted basis). The merger agreement contemplates that Pfizer will acquire any shares of Array that are not tendered into the offer through a second-step merger, which will be completed promptly following the closing of the tender offer. Pfizer expects to complete the acquisition in the second half of 2019.
Pfizer’s financial advisors for the transaction were Guggenheim Securities, LLC, and Morgan Stanley & Co. LLC, with Wachtell, Lipton, Rosen & Katz acting as its legal advisor. Centerview Partners served as Array’s exclusive financial advisor, while Skadden, Arps, Slate, Meagher & Flom LLP served as its legal advisor.