Business
Vioxx (rofecoxib). The firm refused to found to prevent fractures, as well as according to a recent analysis by Credit
comment on its share price but one analyst increasing bone density, in postmenopausal Suisse, far exceeding the S&P average.
said that after a phenomenal year in 2007, its women with osteoporosis. Big pharma companies have halted
stock had “drifted a bit” in 2008. Data from the Phase III trial pushed share buy-backs to conserve cash for M&A,
Lilly joined Merck at the foot of our Amgen’s share price up to the $63 mark and while many smaller biotechs are struggling to
pharma stocks after sliding throughout the
onto a YTD high of $65.89 when additional raise cash. With share prices low for
year to reach YTD lows in October.
data revealed that the drug halved biotechs, CEOs may be looking to grab
Following a $57.18 high in January the stock
osteoporosis patients’ risk of new vertebral platform technologies and products at a
gradually fell towards the $50 mark amid
fractures. On the back of the data, analysts deflated price.
concerns around its patent exposure and
raised their expectations and speculated that However, Mr Glennie makes a distinction
regulatory setbacks for the anti-clotting
big pharma might make an offer for the between US and European pharma. Many US
agent prasugrel.
marketing rights to the drug. firms are cash-rich, unlike their European
Yet, the greatest decline came after Lilly
Genentech’s share price crept up counterparts, meaning they could buy their
agreed to pay $6.5 billion for ImClone
to $98.81 in mid-August after rejecting way out of trouble and move towards
Systems, which many viewed as too costly a
Roche’s offer. Over the next quarter or so, speciality care/biologicals. Conversely,
sum for the biotech company. Christian
Genentech’s share price began to dwindle European companies have more revenue
Glennie, a senior editorial analyst at EP
as concerns that Roche, which was still diversity and they face smaller patent
Vantage, described the deal as “a good bit of
pursuing the company, would be unable to expirations than US competitors meaning we
business” for ImClone.
finance a better offer in the current financial
can expect US firms to be more aggressive
Analysts were sceptical about the deal,
climate. Roche said financing the deal
in M&A.
with Credit Suisse, for instance, stating that
would not be a problem and although
the price is “largely dependent upon
analysts agree, Genentech’s share price is
cost-cutting
meaningful success” of ImClone’s pipeline. Its
now at the upper end of $82 – lower than
Ms Palmer Foster also believes that more
analysts also cast doubts on ImClone’s
Roche’s bid – on fears that the deal may
mergers, particularly between pharma and
oncology programmes, believing that
not go through.
biotech, will occur. Driving pharma/biotech
although they are in very competitive areas
Biogen Idec underwent a difficult year,
tie-ups will be “a fear and dislike of mega-
“differentiation and success are very
becoming the greatest faller of our biotech
mergers, the need to buy-in innovation and
stocks. The firm’s 24% decline to $42.55 a
the temptation of battered biotech
uncertain”.
share was largely catalysed by Tysabri
valuations”. She also predicts more cost-
The group believes the acquisition could
(natalizumab) and three separate
cutting in sales, marketing, R&D and
take up to five years to justify, some time
occurrences of progressive multifocal manufacturing in big pharma, and portfolio
after Lilly’s anticancer Gemzar (gemcitabine
leukoencephalopathy (PML). In July two cases rationalisation driven by the need to focus
HCl; 2010) and the antipsychotic Zyprexa
were diagnosed in Europe by the company’s therapeutic expertise.
(olanzapine; 2011) lose patent protection.
partner Elan Pharmaceuticals. Ms Palmer Foster concludes by drawing
Of the pharmaceutical companies
attention to the new US President and his
accruing share price declines of 6-8%
influence on the key US market. “What will
(Novartis, Roche, Johnson & Johnson and
Lilly joined Merck at the foot of
be the suggestions for healthcare reform?
GlaxoSmithKline), Mr Glennie suggested that
our pharma stocks after sliding
What changes will there be at the FDA from
their falls were largely attributable to stock
sell-offs by investors in September and
throughout the year to reach
a political point of view? What impact will
the financial crisis have on federal budgets?”
October following a string of parlous
YTD lows in October These questions will be answered in due
developments surrounding the financial
course, but there will be a period of
markets and economy.
uncertainty as the country’s new leader
biotech’s better returns
The news caused Biogen Idec’s share price settles in.
to fall from $69.76 to $50.01. A further PML In conclusion, the remainder of this year
The five US biotech stocks tracked in
case in the US drove the share price down and 2009 will be interesting – that’s one of
Scrip’s Stock Tracker produced a much more
further before settling around the $40-42 the few things of which we can be certain.
mixed picture over the year, with gains,
mark in October. The drug was withdrawn in Over that time the Scrip Stock Tracker will
declines and almost flat performance.
2005 following the possible emergence of continue to monitor the impact of the
Genentech finished the period with the
the brain disease, before being reintroduced capital markets and the financial system on
highest share price of $82.94, up by 23%
in 2006. the biopharmaceutical sector, and our 2009
following Roche’s $43.7 billion offer for the
The cases of PML capped a disappointing review will show how our predictions
44% of Genentech it does not already own.
year for Biogen Idec, which looked to be in panned out.
However, with investor disquiet over
recovery after Carl Icahn sought to replace a
Roche’s ability to fund the acquisition
quarter of Biogen’s board to help trigger its
dragging Genentech’s price south, Amgen
sale. The activist shareholder had expressed
finished the period with the best performing
an interest to acquire the company in
stock of all our biopharmaceutical shares, up
October 2007.
by 27.4%. Amgen’s shares traded at around
$47 during the first quarter, before dipping M&A
to average out at $42 until July. One aspect of the forecast for 2009 is
In July, the firm’s osteoporosis drug consolidation. Pharma typically doesn’t have
Christopher Spillane is
Scrip’s US reporter.
denosumab showed efficacy in several pivotal much debt on its books, is cash-rich and pays
Phase III trials in men with osteoporosis and out dividends. Indeed, healthcare product
the stock price gained momentum towards companies as a whole are second only to IT
the end of the month when the drug was firms in terms of balance sheet liquidity,
www.scripnews.com/supplements Scrip 100
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