Category: Pharma, Biotech & Healthcare

01/16/14

Permalink 12:12:57 pm, by dacare, 153 words, 160 views   English (US)
Categories: News of China, Pharma, Biotech & Healthcare

Sanofi to expand into small cities

French drug maker Sanofi will expand into small cities to meet the growing market demand for health products, the company's top management said on Thursday.

According to Fabrice Baschiera, general manager of commercial operations of Sanofi Greater China, demand for high-quality health care products and services is growing.

"So, we decided to go out from those big cities to counties to reach more patients, bring our know-how with physicians through training and the latest training materials — especially in the cardiovascular and diabetes areas, the areas where Sanofi has already built up a strong foundation and knowledge, where we can make a real difference and have the most impact," Baschiera said.

The company, together with the Medical Services Standard Specialized Committee of the Ministry of Health, National Institute of Hospital Administration and Chinese Medical Doctor Association, launched the Basic Medical Standard Enhancement Project to offer more medical services to customers in towns and counties.

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01/09/14

Permalink 10:21:00 am, by dacare, 319 words, 138 views   English (US)
Categories: News of China, Pharma, Biotech & Healthcare

Johnson & Johnson trademark revoked in China

China's top industry and commerce watchdog recently ruled that the trademark "OneTouch" for a line of blood glucose meters and test strips produced by LifeScan, a Johnson & Johnson company, violates Chinese trademark laws, and should be revoked.

According to Chinese laws, if Johnson & Johnson doesn't file a lawsuit against the ruling in 30 days, or if a verdict isn't reached within 60 days after the ruling was made, the Trademark Appeal Board of China's State Administration for Industry and Commerce has the right to remove all of the company's OneTouch products from the market.

Public security authorities can also confiscate the company's illegal income from the product line in the past years, said Huang Yunzhong, an attorney from Beijing Peiwen Law Firm.

Huang is also the legal counsel of Guilin Zhonghui Biotechnology Co in the Guangxi Zhuang autonomous region, which has been under criminal investigation since 2007 for allegedly producing counterfeits of Johnson & Johnson's OneTouch blood glucose test strips used by patients with diabetes.

In 2005, Johnson & Johnson recalled its OneTouch glucose meters, because instead of providing a warning, the meter turned itself off when it read a dangerous blood glucose level of 1024 mg/dL or above.

But later in 2006, Johnson & Johnson announced that it found a large amount of counterfeit blood glucose test strips from Zhonghui in China, which caused previous machine failures in its blood glucose meters.

Huang Yunzhong, the attorney, filed the dispute on the "OneTouch" trademark to the Trademark Appeal Board in late 2011, and the board reached the decision to revoke the trademark on Dec 27, 2013.

The recent ruling said "one touch" falls into a category of medical subject headings, so "OneTouch" cannot be trademarked.

Huang believes the ruling would bring about a favorable investigation result for Zhonghui on the accusations the company was making counterfeits.

Johnson & Johnson told China Daily it would comment on the ruling when the company had prepared a response.

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12/19/13

Permalink 01:26:15 pm, by dacare, 521 words, 172 views   English (US)
Categories: News of China, Pharma, Biotech & Healthcare

GSK revamps sales reps' compensation

British pharmaceutical giant GlaxoSmithKline announced on Tuesday it will on longer reward its Chinese sales representatives based on their sales volume, a vast change after the company became embroiled in a series of bribing scandals.

The new system applies to all of the GSK sales employees, including sales representatives and sales managers, who interact with prescribing healthcare professionals, according to GSK's Tuesday announcement.

Under the new system, all customer service employees will be evaluated on technical knowledge, quality of service and adherence to the company values of transparency, integrity, respect and patient focus.

GSK is the first pharmaceutical company to publicly implement such changes in China. The company said the new system allows it to put patients' needs above everything else it does.

The Chinese government initiated an anti-corruption campaign for the medical industry in July after conducting a bribery investigation into GSK.

According to China's public security authorities, the company allegedly used travel agencies to funnel at least 3 billion yuan ($489 million) in bribes since 2007.

The scandal widened across an industry in which other multinational pharmaceutical companies also faced scrutiny in China over claims they bribed medical staff to prescribe their products.

GSK denies that the new move is directly related to the probe by Chinese authorities, saying the changes are part of its efforts to evolve their business model, build trust in the markets and improve transparency.

Experts said GSK and its sales team face a difficult transition.

"It will take some time for GSK to find out how to improve the effectiveness of its incentive system and how to encourage its salespeople to pay attention to their service quality for more income," said Bruce Liu, partner and co-head of the Pharma & Healthcare practice at Roland Berger Strategy Consultants.

Liu said GSK's former payroll was based on objectives, which translates to sales volume, but it now is focused on process management.

"It is helpful to improve employees' academic level in order to provide professional information to doctors," he added.

"Our medical representatives are the gateway to our customers, and it is important that we inspire, coach and ultimately reward people working within the organization to focus on behaviors that reflect our values," said Herve Gisserot, senior vice-president and general manager of GSK Pharmaceuticals and Vaccines China.

But Liu cautioned that GSK's changes "will not get instant results."

In the third quarter that ended Sept 30, the company reported a 61 percent year-on-year slide in its China pharmaceuticals and vaccines business.

But the crisis, Liu said, could be a blessing in disguise.

Since the government is encouraging private investment in the medical sector and prioritizing support of nonprofit hospitals run by private investors, and as experts are calling for the separation of medical services and drug sales in hospitals, Liu said GSK's prompt action will help the company grab market share ahead of its peers.

GSK also announced it will stop paying individual healthcare professionals to attend medical conferences and instead will fund education for them through independent grants.

The transition to the new sales compensation model will start in January in China as well as in other markets around the world.

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10/29/13

Permalink 11:12:08 am, by dacare, 208 words, 223 views   English (US)
Categories: News of China, Pharma, Biotech & Healthcare

Discontent grows among doctors

Nearly 80 percent of the 3,700 doctors surveyed by the Chinese Medical Doctor Association said they don't want their children to work in medicine. Many of the doctors surveyed cited the growing tension between patients and doctors as well as the escalating violence in hospitals across the country in recent years.

In 2009, 62.5 percent of the 3,200 doctors the associated surveyed expressed the same opinion, according to the Chinese Medical Doctor Association.

"We conducted similar surveys around the country in 2002, 2004, 2009 and 2011, and we found that the proportion of doctors who want to see their children become doctors keeps dropping," said Deng Liqiang, an official from the association.

An overwhelming majority of doctors also said that their salary didn't match how much work they put into their jobs, and that tense doctor-patient relationships and enormous amounts of pressure at work are creating a negative attitude toward their jobs.

"The survey results showed that doctors are not positive," Deng said.

A survey conducted by one of China's most popular medical websites, Dingxiangyuan, or dxy.cn, showed that many doctors are not in good health, with more than a quarter of those surveyed are at high risk for cardiovascular diseases. The incidence of hypertension among male doctors older than 35 is two times the normal rate.

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10/15/13

Permalink 02:22:56 pm, by dacare, 367 words, 210 views   English (US)
Categories: News of China, Pharma, Biotech & Healthcare

116 medics involved in Dumex milk bribe scandal

SOME 116 medical staff from 85 institutes in north China’s Tianjin Municipality were involved in a bribery scandal with French infant formula producer Dumex, the city government said yesterday.

From 2011, staff collected personal details of newborn babies for the company, gave presentations, distributed publicity materials and offered free introductory cans of Dumex.

In return, they received kickbacks from Dumex, part of French food group Danone, an investigation found.

Staff involved every month received sums ranging from hundreds to tens of thousands of yuan.

The cash has been recovered, the government announced on its official Weibo.com micorblog.

Thirteen people have either been sacked, had operation licences revoked or been transferred to other positions.

And another six people, who had supervisory duties, received administrative punishments, the statement said.

Tianjin government did not give details on the remaining 97 staff involved in the scandal.

It said three names published in earlier media reports — Li Yue, Wang Zi and Lu Xuezhi — were Dumex employees, rather than hospital workers.

Dumex China launched an internal investigation after media reports in September.

Over the weekend, it said the investigation has now been “substantially completed.”

Dumex blamed the scandal on shortcomings in a company-sponsored mother-and-child health education program.

These led to “practices that contradicted the purpose of the program, which violated companywide policies,” said Dumex.
In some cases, the program was not appropriately managed, said the company.

Dumex said the program has been suspended, new management would be appointed, and training carried out.

Last month, a China Central Television program claimed doctors and nurses in Tianjin were feeding babies with Dumex in return for cash payments.

Babies developed a taste for Dumex and rejected their mothers’ milk, it was claimed.

It also gave Dumex an advantage in the fiercely competition formula milk market, said the report.

Last week CCTV claimed that the bribery scandal extended to other cities, including Beijing.

In 2011, the former Ministry of Health ruled that producers were not allowed to promote formula to babies up to six months old, unless mothers suffered from serious conditions.

In 2008, the Supreme People’s Court and Supreme People’s Procuratorate said that medical staff using their positions to make money would be considered to be taking bribes.

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10/11/13

Permalink 02:01:41 pm, by dacare, 1014 words, 391 views   English (US)
Categories: News of China, Pharma, Biotech & Healthcare

Merck’s Job Cuts Highlight A Big Problem Facing Big Pharma Companies

Merck (NYSE:MRK) has announced that it will cut its workforce by 20% over the next two years, which could result in the loss of close to 16,000 jobs. This will leave the company with less than 65,000 employees which is in stark contrast to its peak strength of close to 100,000 employees following its acquisition of Schering-Plough in 2009. [1] With this restructuring, Merck intends to save $2.5 billion annually which can boost its free cash flows by almost 20%. However, the impact will be mitigated by the expected restructuring costs of roughly $2.5 billion to $3 billion. [1]

The company’s move highlights the broader problems that Merck and other big pharmaceutical firms are facing today. The R&D (research and development) productivity has declined over the years, and the strategy of developing drugs for major diseases is not working. The landscape of the global pharmaceutical industry is shifting towards more niche, innovative and genetically targeted medicines. In addition, Merck is suffering from the loss of patent exclusivity for some of its major drugs and may look for acquisition of some promising medicines to offset the failure of some of its research projects.

What Is The Problem That Merck Is Facing?

Like other major pharmaceutical companies, Merck is also battling the impact of patent expiry of its several major drugs including Singulair, Propecia, Clarinex, Maxalt, Cozaar and Hyzaar. Out of these, asthma drug Singulair has had the biggest impact and has continually weighed on Merck’s growth for the past few quarters. Worldwide sales of Singulair, a once-a-day oral medicine for chronic treatment of asthma and relief of symptoms of allergic rhinitis, stood at $5.5 billion for 2011. However, this figure declined to $3.85 billion in 2012 following its patent expiry in August same year. Merck expects that within two years following the patent expiration it will lose substantially all U.S. sales of Singulair, with most of those declines coming in the first year.

In addition, Merck’s cardiovascular division has also been hurt by the patent cliff as its drugs Cozaar/Hyzaar, which garnered over $2 billion in revenue in 2010, lost patent exclusivity in large markets including the U.S. and Europe in late 2010. As a result, sales fell by roughly 35% to $1.3 billion in 2012. Additionally, Propecia, Clarinex and Maxalt together accounted for roughly $1.5 billion in revenues in 2012. Due to patent expiries, we expect their combined sales to go down to about $1-1.1 billion in 2013.

While the big drugs are losing their sales, there is little chance for new blockbusters replacing them. The R&D productivity has significantly declined over the last decade. Although the industry’s R&D spend has increased, the number of new drugs approved by the FDA has come down. In fact, Merck is planning to terminate certain drugs in late stage development and intends to focus on acquiring experimental drugs.

What Is Merck Likely To Focus On?

There has to be a shift from developing blockbusters treating major diseases to focusing on niche therapeutic areas where although the patient population is low, pricing is quite high due to high specificity and efficacy. Major therapeutic areas are getting flooded with generics and there haven’t been any major advancements to thwart the competition. Merck has mentioned that it plans to continue investing in vaccines and diabetes, where it already has successful products.

Diabetes

Merck’s type 2 diabetes treatment drugs Januvia and Janumet saw strong volume growth in international markets and retained their market leadership with 70% share in the second quarter. [2] Excluding the impact of currency movement, Januvia saw its sales jump by 7% while Janumet’s revenues surged 17%. [3] In addition, the company is working with Pfizer to develop and commercialize its investigational SGLT2 inhibitor, Ertugliflozin, for the treatment of type 2 diabetes. With obesity on the rise, diabetes is affecting more people globally. In the U.S. alone, roughly 26 million people suffer from the condition. [4] China’s problem is even worse, as a report suggests that 11.6% of Chinese adults have diabetes and around 40% of adults between the age of 18 and 29 are on the verge of developing it. [5] That puts China’s diabetes patient count at 114 million individuals, and this figure is likely to go higher. According to IMS health, China’s diabetes market is expected to grow 20% annually and reach $3.2 billion by 2016. [6]

We currently account Januvia’s revenues under Alimentary & Metabolism drugs division, which constitutes roughly 15% to our price estimate for Merck. Januvia’s importance can be gauged from the fact that the exclusion of the drug’s sales from Merck’s revenue forecast leads to downside of about 5-10% to our price estimate. That’s a lot of value for a single drug in a diversified company like Merck.

Acquisition Strategy

It appears that Merck will trim down its R&D expenses, and instead focus on acquiring drugs externally. This way, the company will assume the role of pharmaceutical private equity/venture capitalist firm to a certain degree. In addition, we believe that it can pursue orphan drugs, and novel therapies including higher focus on gene therapy, stem cell research etc.

Cancer Treatment

Cancer treatment is a growing market for the pharmaceutical industry. The opportunity comes from the fact that global incidence of Cancer is likely to increase from about 12.7 million in 2008 to 21.3 million in 2030. [7] In addition, the number of deaths are likely to show a similar growth trajectory as depicted in the chart below. Cancer is a not a single disease, it has in fact more than 200 types and thousands of subtypes affecting more than 60 organs. That gives an opportunity for Merck to develop novel therapies and capture niche markets.

Our price estimate for Merck stands at $51.60, implying a premium of about 5-10% to the market price.

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Notes:
Merck to Cut Staff by 20% as Big Pharma Trims R&D, The Wall Street Journal, Oct 22013 [?] [?]
Merck’s Q2 2013 Earnings Transcript [?]
ref:1 [?]
National Diabetes Fact Sheet, 2011, CDC [?]
China ‘Catastrophe’ Hits 114 Million as Diabetes Spreads, Bloomberg, Sept 4 2013 [?]
China Diabetes Triples Creating $3.2 Billion Drug Market, Bloomberg, Nov 5 2012 [?]
J&J’s Investor Presentation [?]

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