13th Annual Feature: Most Admired Companies
The most admired pharma, biotech/biopharma, and specialty company recipients of 2013 – as voted on by the Med Ad News audience – are each former winners whom have reclaimed their respective crowns. After capturing the pharmaceutical category four straight years, Novartis has been usurped by Johnson & Johnson. J&J was the last company to win this award before Novartis, back in 2008. The health-care giant has been dealing with the impact of various OTC product and medical device recalls in recent years. A new corporate brand campaign launched during 2013 and strong revenue growth across its pharma and device/diagnostics businesses has helped J&J weather the product-recall storm. Falling to runner-up in the 2013 pharmaceutical voting was Novartis, followed by third-place Roche, dual-category eligible Amgen at No. 4, and fifth-place Abbott/AbbVie.
Amgen returns as the champion of the biotech category after holding the title belt during 2010 and 2011, and finishing third in 2012. The world’s largest independent biotechnology company is reaping the benefits of a variety of billion-dollar brands not yet exposed to biosimilar competition. Amgen also recently agreed to acquire Onyx Pharmaceuticals in one of the largest biotech-biotech company deals of all-time, a move that will bolster its long-term growth prospects. Last year’s top vote getter in this category, Biogen Idec, dropped down the third place in the 2013 polls. Roche, a strong player in the biotech and pharma fields, was selected No. 2 in this year’s biotech voting. Novo Nordisk finished in fourth place and Gilead Sciences rounded out the top five companies in the Most Admired Biotech/Biopharma setting. Novo and Gilead represent some of the fastest-growing entities in the health-care space, and a collection of future blockbuster drugs emerging from their pipelines have them poised to continue their strong revenue production into the next decade.
Gaining top honors in the specialty pharma category for 2013 is Allergan, which was also the leading vote receiver from 2008-2011 and came in second place in 2012. Last year’s champ in this category, Shire, came in at No. 3 in this year’s voting. Teva Pharmaceutical Industries moved up from the third spot for the 2012 polls to second place in the 2013 results. Valeant Pharmaceuticals International and Mylan finished No. 4 and No. 5 in the 2013 elections.
The following pages detail the three victors of the Most Admired Company categories. Also, more information about J&J, Amgen and Allergan as well as many other top vote getters in this year’s elections will be provided in the October 2013 issue of Med Ad News, which analyzes the world’s top 50 pharmaceutical/biotechnology/biopharma/specialty pharma companies.
MOST ADMIRED PHARMA COMPANY:
JOHNSON & JOHNSON
Johnson & Johnson is one of the world’s leading health-care entities. With headquarters in New Brunswick, N.J., J&J operates as a holding company for more than 275 operating companies in 60-plus countries. Incorporated during 1887, J&J has about 128,000 employees engaged in the R&D, manufacture, and sale of a diverse array of products in the health-care arena. The company consists of three business segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics.
The Consumer business covers a wide range of products used in the baby care, skin care, oral care, wound care and women’s health-care areas, as well as nutritional and OTC pharma products, and wellness and prevention platforms. The Pharmaceutical business includes products in areas such as anti-infective, antipsychotic, contraceptive, gastrointestinal, hematology, immunology, infectious diseases, neurology, oncology, pain management, thrombosis and vaccines. J&J’s Medical Devices and Diagnostics segment includes a diverse range of products used to treat cardiovascular disease; orthopedic and neurological products; blood glucose monitoring and insulin delivery products; general surgery, biosurgical, and energy products; professional diagnostic products; infection prevention products; and disposable contact lenses.
Amongst the J&J family members are the world’s sixth-largest consumer health company; the largest and most diverse medical devices and diagnostics player; the fifth-largest biologics entity; and the eighth-largest pharma company.
Johnson & Johnson is led by Alex Gorsky, the seventh CEO in the company’s 126-year history. J&J manages within a strategic framework geared toward generating sustainable growth. To accomplish this, management operates the business consistent with particular strategic principles that have proven successful over time. To this end, J&J participates in growth areas in human health care and is dedicated to attaining leadership positions in these growth areas via the development of high-quality, innovative products and services. New products launched during the past five years represented 25 percent of the company’s 2012 sales. For 2012, $7.7 billion – 11.4 percent of sales – was invested in R&D. This investment reflects management’s dedication to the significance of continuing development of new and differentiated products and services to sustain long-term growth.
Johnson & Johnson views its principle of decentralized management as an asset and fundamental to the success of a broadly based business. The company also fosters an entrepreneurial spirit, uniting the extensive resources of a large organization with the ability to anticipate and react quickly to local market changes and challenges, its leadership says. J&J is committed to developing worldwide business leaders who can attain growth objectives. According to executives, J&J businesses are managed for the long term in order to sustain leadership positions and achieve growth that provides an enduring source of value to the company’s shareholders.
Financial and business performance
Johnson & Johnson was the leading health-care revenue generator during 2012 at $67.22 billion, more than $8 billion ahead of No. 2 Pfizer. J&J has produced annual revenue increases in each of the past three calendar terms, with global sales rising 3.4 percent for 2012, 5.6 percent during 2011, and 0.5 percent in 2010. Sales by U.S. companies totaled $29.8 billion during 2012, up 3.2 percent over 2011. Sales accounted for by international companies reached $37.4 billion in 2012, up 3.5 percent. The acquisition of Synthes, net of the related divestiture, increased total global sales growth and operational growth by 3.1 percent.
Consumer segment sales for 2012 totaled $14.4 billion, down 2.9 percent versus 2011, including 0.5 percent operational growth offset by a negative currency impact of 3.4 percent. The leading Consumer business segment for J&J in 2012 was OTC Pharmaceuticals and Nutritionals with sales of $4.4 billion, decreasing 1.1 percent.
J&J’s Pharmaceutical segment produced 2012 sales of $25.4 billion, rising 4.0 percent versus 2011, with operational growth of 6.8 percent and a negative currency impact of 2.8 percent. According to IMS, J&J
had the fastest-growing Top 10 pharmaceutical business in the United States, Europe and Japan during 2012.
The company’s best-selling prescription medicine in 2012 was Remicade (infliximab), a treatment for a variety of immune-mediated inflammatory diseases. The biologic therapy accounted for 2012 sales of $6.14 billion for J&J, representing growth of 11.8 percent versus the drug’s 2011 performance for the company.
The Medical Devices and Diagnostics segment generated sales of $27.4 billion in 2012, up 6.4 percent over 2011, with operational growth of 8.7 percent and a negative currency impact of 2.3 percent. The Synthes acquisition, net of the related divestiture, increased total sales and operational growth for the Medical Devices and Diagnostics business by 7.9 percent. Leading this segment’s 2012 sales was the Orthopedics franchise at $7.8 billion, up 34.3 percent.
For the first half of 2013, J&J worldwide sales reached $35.38 billion, increasing 8.5 percent compared to the corresponding 2012 period. During January-June 2013, U.S. sales rose 9.5 percent to $15.97 billion and international sales grew 7.6 percent to $19.41 billion. Consumer segment sales in first-half 2013 improved 1.6 percent to $7.33 billion. Global Pharmaceutical sales increased 11 percent over first-half 2012 to $13.79 billion. In the Med Devices & Diagnostics area, global sales during the first six months of 2013 improved 9.9 percent to $14.26 billion.
Remicade remained Johnson & Johnson’s best-selling prescription product during the first half of 2013, with global sales improving 7.5 percent year over year to $3.27 billion.
“Our strong second-quarter results reflect the progress we’ve made against our near-term priorities of delivering on our financial commitments, restoring a reliable supply of over-the-counter products to consumers, continuing the successful integration of Synthes and building on the momentum in our pharmaceutical business,” Mr. Gorsky noted. “Our talented colleagues at Johnson & Johnson continue to bring meaningful innovations to patients and consumers around the world and have positioned us well to deliver sustainable growth.”
Acquisitions, collaborations, and alliances
The Synthes transaction for a purchase price of $20.2 billion in cash and stock represents the largest one ever for Johnson & Johnson. The net acquisition cost of the deal was $17.5 billion based on cash on hand at closing of $2.7 billion. Through this transaction – completed during June 2012 – the combination of Synthes and J&J’s DePuy Companies constitutes the largest business within the Medical Devices and Diagnostics segment of J&J. DePuy provides one of the most diverse orthopedics portfolios in the industry. Synthes is an innovator in trauma, spine, cranio-maxillofacial and power tools.
During 2013, J&J acquired Aragon Pharmaceuticals. The privately held, pharma discovery and development company concentrated on drugs to treat hormonally driven cancers. The transaction included Aragon’s androgen receptor antagonist program and lead product candidate ARN-509. The second-generation androgen receptor signaling inhibitor is undergoing Phase II development for castration resistant prostate cancer. The deal, valued potentially at up to $1 billion, was closed in August 2013.
J&J’s Cordis completed the acquisition of Flexible Stenting Solutions in March 2013. FSS is a top developer of innovative flexible peripheral arterial, venous and biliary stents. The company’s FlexStent Self Expanding Stent System provides Cordis with the opportunity to evolve its S.M.A.R.T. Stent platform to address unmet needs for peripheral artery disease. The S.M.A.R.T. Stent is the only one FDA-approved for iliac, superficial femoral artery and proximal popliteal artery vascular indications.
Janssen Biotech and Johnson & Johnson Innovation announced in June 2013 the establishment of a research alliance with the Icahn School of Medicine at Mount Sinai. The purpose of the alliance is to advance the scientific understanding of inflammatory bowel disease and the discovery of next-generation therapeutic solutions. Scientists from the Janssen Immunology Therapeutic Area and researchers from Mount Sinai are working together to investigate disease triggers, identify new opportunities for therapeutic interventions and establish diagnostics to facilitate precision medicine and predictive biomarkers. This first-of-its-kind industry and academic partnership unites Janssen R&D capabilities with an early-stage life-science investment via the Johnson & Johnson Innovation Center in Boston and Mount Sinai’s expertise in computational biology, and clinical and translational research in IBD.
Janssen Research & Development – a division of Janssen Pharmaceutica – and Johnson & Johnson Innovation announced in May 2013 the introduction of a collaborative initiative with scientists from three prominent Belgian academic institutions and research centers. The project is anticipated to drive discoveries to improve the prevention, diagnosis and treatment of neurodegenerative diseases. Janssen Research & Development and Johnson & Johnson Innovation are dedicating up to 5 million Euros for this project for a five-year period. The initiative intends to attract top researchers in the Benelux scientific community to submit proposals for cutting-edge research in neurodegenerative disorders. This effort advances the Janssen and Johnson & Johnson Healthy Minds initiative, which strives to accelerate progress in the battle versus neurologic and brain disorders as well as to build on the companies’ long-standing dedication to neuroscience and mental health.
R&D and innovation
J&J is dedicated to investing in R&D with the aim of delivering high quality and innovative products. Global costs of R&D activities for 2012 rose 1.6 percent versus the prior calendar term, reaching $7.67 billion.
The Pharmaceutical business accounted for 2012 R&D of $5.36 billion, Medical Devices and Diagnostics represented $1.68 billion, and the Consumer segment expenditure was $622 million.
As of May 2013, the Johnson & Johnson Pharmaceuticals segment was well-positioned to continue driving growth with more than 10 potential new product submissions and 25-plus significant brand line extensions by 2017. J&J managers plan for new products to represent nearly half of the overall sales in the Pharmaceuticals segment by 2017. J&J intends to continue its dedication to addressing the most serious worldwide unmet medical needs to help transform the lives of patients. The research and development strategy builds on strong internal research and external innovation. The late-stage pipeline is lead by potential breakthrough therapies that will help transform patient care and sustain future growth.
Aided by a unique model of innovation, J&J’s Pharmaceuticals segment has built an industry-leading pipeline that produced 11 new drug launches since 2009 through May 2013, more than doubling its productivity during the past four years. These new products, along with core growth brands, spurred 12 consecutive quarters of operational sales growth in the segment and contributed significantly to J&J’s recent earnings growth.
According to Joaquin Duato, worldwide chairman of the Pharmaceuticals Group, “We’ve spent the past five years transforming our business, and the growth we’re seeing today is the direct impact of that effort. The innovative new therapies in our pipeline will drive our next wave of growth. With strong momentum across our global Pharmaceuticals segment, we are executing well against our commercial strategy to gain market share and ensure greater access to our medicines. We’re also strengthening our presence in critical geographies and have nearly doubled our footprint in emerging markets during the last five years.”
J&J’s approach to innovation has led to a revitalized product portfolio for the Janssen Pharmaceutical Companies. Near-term and long-term compounds are being developed in the fields of immunology, neuroscience, infectious diseases and vaccines, cardiovascular and metabolism, and oncology.
Late-stage products Janssen intends to submit for marketing clearance by 2017 are directed at addressing serious unmet needs. Examples include simeprevir for hepatitis C, which is awaiting approval in United States, Europe and Japan; ibrutinib and daratumumab for treating hematologic malignancies, which both have received a record number of Breakthrough Therapy Designations by U.S. regulators according to J&J; sirukumab and guselkumab for significant immune mediated diseases; a three-month formulation of Invega Sustenna/Xeplion, with a potential to change the treatment paradigm for schizophrenia; and novel vaccines for treating influenza, rabies and polio.
The pharma pipeline includes a host of potential first-in-class medicines. For instance, ibrutinib is awaiting FDA approval for two B-cell malignancies. The drug is intended for treating previously treated patients with chronic lymphocytic leukemia/small lymphocytic lymphoma, and previously treated patients with mantle cell lymphoma. If cleared for approval, ibrutinib would be the first in a class of oral BTK inhibitors and is one of the first medicines to be submitted for approval via FDA’s Breakthrough Therapy Designation pathway. Ibrutinib would be jointly marketed in the United States by Janssen Biotech and Pharmacyclics.
With substantial growth in the Asia-Pacific pipeline, Janssen intends to continue accelerating its development-stage pipeline in Japan and China. Three new molecular entities and three brand-line extensions are in registration in Japan as of May 2013, and Janssen expects to submit two additional NMEs and six brand-line extensions by 2017. In China, four new molecular entities and four line extensions are in registration, and Janssen plans to submit nine NMEs and six brand-line extensions by 2017.
With a concentration on precision medicine, the company has additionally invested best-in-class research capabilities in genomics, biotechnology, biomarkers, companion diagnostics and vaccine platforms, and in accessing early-stage breakthrough innovation from the leading innovation hotspots globally. New products introduced since 2009 constituted 17 percent of total pharma sales in 2012, up from 9 percent for 2011. Fueled by new indications, label extensions and additional country launches of these products, as well as the potential new products expected to emerge from its pipeline, products launched since 2009 are anticipated to account for nearly half of the total sales in the segment by 2017.
These products include Invega Sustenna/Xeplion (paliperidone palmitate), a once-monthly, long-acting, injectable atypical antipsychotic for the acute and maintenance treatment of schizophrenia in adults; Simponi (golimumab), a biologic approved to treat adults with moderate to severe rheumatoid arthritis, psoriatic arthritis and ankylosing spondylitis; Stelara (ustekinumab), a biologic approved for treating moderate to severe plaque psoriasis; Zytiga (abiraterone acetate), an oral, once-daily medication for use in combination with prednisone for treating metastatic, castration-resistant prostate cancer; the oral anticoagulant Xarelto (rivaroxaban); Incivo (telaprevir), a direct acting antiviral protease inhibitor for treating genotype-1 chronic hepatitis C virus; Invokana (canagliflozin), Janssen’s first pharma product for treating adults with type 2 diabetes, launched in March 2013; and Sirturo (bedaquiline) for the treatment of pulmonary multi-drug resistant tuberculosis, the first new mechanism of action against tuberculosis in more than 40 years.
On the new device front, Ethicon Endo-Surgery during 2013 introduced the Harmonic Ace+ Shears with Adaptive Tissue Technology. This next-generation product in the best-in-class Harmonic portfolio of ultrasonic surgical devices can handle multiple surgical jobs such as dissection, sealing, transection and otomy creation. With Adaptive Tissue Technology, Harmonic Ace+ Shears responds intelligently to different tissue conditions by regulating energy delivery and providing surgeons with enhanced audible feedback. This allows the Harmonic Ace+ Shears to exhibit 23 percent less thermal spread while delivering 21 percent shorter transection times versus Harmonic Ace without Adaptive Tissue Technology. With a refined blade design, the tapered, coated blade is designed for multi-functionality with precise grasping and dissection.
J&J’s long history includes a strong track record in the areas of citizenship and sustainability. Management says the company’s Healthy Future 2015 Goals are tracking well toward their targeted impacts, including advancing global health; safeguarding the planet; encouraging sustainability among J&J’s suppliers and throughout its supply chain; fostering the most engaged, health-conscious and safe employees; advancing community wellness; measuring the impact of philanthropy; and fostering transparency and collaboration.
Johnson & Johnson is in the midst of a five-year comprehensive pledge to the United Nations’ Millennium Development Goals. J&J is one of the largest corporate donors, having provided $966 million in cash and products to 600 programs in 50 countries during 2012. The company’s diverse partners are aligned with J&J’s goal of making life-changing, long-term differences in human health.
J&J has teamed up with 12 other companies to combat neglected tropical diseases in developing countries, having enabled generic entities to make and distribute copies of its HIV medicine Prezista (darunavir) in sub-Saharan Africa. As mentioned earlier, accelerated marketing clearance was granted by FDA for Sirturo.
Janssen is the first pharma company to fund a Point Scholarship, the largest scholarship-granting organization in the United States for lesbian, gay, bisexual and transgender (LGBT) students of merit. The scholarship is for LGBT students whose area of study is concentrated on HIV/AIDS, or who have chosen to attend business school. The scholarship is awarded for a four-year period to graduating high school seniors and college students. During July 2013, Janssen announced the recipient of the second scholarship the company is supporting via the Point Foundation.
David Julius, Ph.D., was recognized by J&J in June as the winner of the 2013 Dr. Paul Janssen Award for Biomedical Research. Dr. Julius is chair of the Department of Physiology at the University of California, San Francisco. He was selected for his discovery of the molecular mechanism that controls thermosensation (sensory perception of temperature) and elucidation of the role this mechanism plays in the sensation of acute and inflammatory pain. By providing a mechanistic view of how stimuli are detected in the body, Dr. Julius’ discovery significantly advanced the study of pain and may result in new pain therapies.
MOST ADMIRED BIOTECH/
BIOPHARMA COMPANY: AMGEN
Established during 1980, the worldwide biotechnology pioneer Amgen discovers, develops, manufactures and delivers innovative human therapeutics. Based in Thousand Oaks, Calif., the company’s medicines help millions of patients to combat cancer, kidney disease, rheumatoid arthritis, bone disease, and other serious illnesses. Amgen ranks as the world’s second-largest biotechnology entity after Roche.
Amgen’s best-selling product is Enbrel (etanercept), an inhibitor of tumor necrosis factor, a substance that plays a role in inflammatory diseases. Another multibillion-dollar franchise for the company is Neulasta (pegfilgrastim), a pegylated protein based on the Filgrastim molecule, and Neupogen (Filgrastim), a recombinant-methionyl human granulocyte colony-stimulating factor; those two drugs stimulate the production of neutrophils, a type of white blood cell that helps the body fight infection. The blockbuster brands Aranesp (darbepoetin alfa) and Epogen (epoetin alfa) are erythropoiesis-stimulating agents that stimulate the production of red blood cells. Xgeva and Prolia (denosumab) consist of the same main ingredient but are approved for different indications, patient populations, doses, and frequencies of administration.
Denosumab is a human monoclonal antibody that specifically targets RANKL, an essential regulator of osteoclasts (the cells that break down bone). Those seven products represented 89 percent, 90 percent and 92 percent of Amgen’s global sales during 2012, 2011 and 2010.
The company’s other marketed medicines include Sensipar/Mimpara (cinacalcet), a small molecule calcimimetic that lowers serum calcium levels; Vectibix (panitumumab), a monoclonal antibody that binds specifically to the epidermal growth factor receptor; and Nplate (romiplostim), a thrombopoietin receptor agonist that mimics endogenous TPO, which is the primary driver of platelet production.
Financial and business performance
2012 marked a record year for Amgen in terms of revenue, totaling $17.27 billion, which was a $1.68 billion improvement over the 2011 figure. The 11 percent increase was aided by 9 percent product sales growth driven by strong performance across the portfolio. Generating billion dollar sales in 2012 were Enbrel ($4.24 billion), Neulasta ($4.09 billion), Aranesp ($2.04 billion), Epogen ($1.94 billion), and Neupogen ($1.26 billion). Amgen’s adjusted EPS rose 22 percent to $6.51 due to 15 percent adjusted operating income growth and lower shares outstanding.
Amgen anticipates 2013 will be a stronger year for the company on the revenue front, as demonstrated during the first six months. First-half 2013 global revenue totaled $8.92 billion compared to the January-June 2012 amount of $8.53 billion. Amgen’s second-quarter 2013 revenue reached $4.68 billion versus the April-June 2012 total of $4.48 billion. According to company management, 9 percent product sales growth in 2Q 2013 was driven by Enbrel ($1.16 billion, up 9 percent versus 2Q 2012), Neulasta ($1.12 billion, +10 percent), Xgeva ($249 million, +39 percent), and Prolia ($188 million, +57 percent).
“We saw solid product trends during the second quarter and are carrying good momentum into the second half,” said Robert A. Bradway, Amgen’s chairman and CEO. “We continue to make excellent progress with our pipeline of innovative molecules and look forward to multiple data readouts in 2014, including pivotal Phase 3 data for our cholesterol-lowering agent, AMG 145, in the first quarter.”
In the pipeline
Amgen spent $3.38 billion on research and development in 2012 compared to $3.17 billion for 2011. The total for first-half 2013 amounted to $1.85 billion versus $1.56 billion during January-June 2012. R&D expenses rose 17 percent to $944 million for second-quarter 2013, mainly in support of Amgen’s later-stage clinical programs, including AMG 145.
In November 2012, Amgen presented data from four Phase II trials evaluating AMG 145 as monotherapy, in combination with statin therapy, in heterozygous familial hypercholesterolemia, and in statin-intolerant subjects. In each of those trials, treatment with AMG 145 resulted in statistically significant reductions in low-density lipoprotein cholesterol versus the control arms at 12 weeks. The Phase II program enrolled 2,000-plus patients across seven studies to evaluate the effects of AMG 145 across multiple patient populations who may benefit from additional cholesterol-lowering treatment options. Based on the results, Amgen proceeded with Phase III enrollment in those populations.
Developed by Amgen scientists, the human monoclonal antibody AMG 145 inhibits Proprotein Convertase Subtilisin/Kexin Type 9. PCSK9 is a protein that reduces the liver’s ability to remove LDL-C, or “bad” cholesterol, from the blood. As a result, bad cholesterol increases. AMG 145 binds to PCSK9 circulating in the blood and prevents it from binding to LDL receptors in the liver. Without PCSK9 bound to them, LDL receptors can take up and remove bad cholesterol from the blood, recycle and remain available for binding additional LDL-C.
Other Amgen new drug compounds that advanced to Phase III development during 2012 were brodalumab, romosozumab and rilotumumab. Brodalumab (product code AMG 827) is one of five inflammation monoclonal antibodies being co-developed in a collaboration with AstraZeneca. During October 2012, Amgen announced the beginning of Phase III studies in moderate-to-severe psoriasis. The studies include three Phase III trials with ustekinumab and/or placebo controls. Amgen completed a Phase II study for brodalumab in psoriatic arthritis in 2012. Brodalumab is additionally being evaluated for treating asthma.
As a highly selective human monoclonal antibody, brodalumab binds to and blocks signaling through the IL-17 receptor. The IL-17 pathway plays a significant role in inducing and promoting inflammatory disease processes. Brodalumab may be the only investigational treatment in development that blocks the IL-17 receptor, thereby blocking several of the IL-17 ligands at once from sending signals to the body.
By halting IL-17 ligands from binding with the receptor, brodalumab prevents the body from receiving signals that may result in inflammation and other conditions.
The humanized monoclonal antibody romosozumab (product code AMG 785) inhibits the action of sclerostin. Amgen in April 2012 began two Phase III studies for treating postmenopausal osteoporosis in women.
The registrational study is a placebo-controlled trial evaluating incidence of new vertebral fractures at 12 and 24 months in 6,000 patients. The active-controlled trial versus alendronate is evaluating the incidence of clinical fracture and new vertebral fracture at 12 and 24 months in 4,000 patients.
The new drug candidate romosozumab is being developed in collaboration with UCB. Amgen holds the rights to commercialize romosozumab for all indications in the United States, Canada, Mexico and Japan.
Rilotumumab (product code AMG 785) is a human monoclonal antibody that inhibits the action of hepatocyte growth factor/scatter factor. Rilotumumab is being studied as a cancer treatment. Amgen launched a Phase III trial for treating gastric cancer during November 2012.
Acquisitions and collaborations
Amgen entered 2013 with various opportunities to continue growing its business. Management believes that the currently approved indications for Xgeva and Prolia represent significant commercial opportunities. Longer-term growth may additionally be attained by the successful development of the company’s later-stage pipeline, by expansion into emerging markets and Japan, and via strategic business development opportunities. Those opportunities include Amgen’s acquisitions of Micromet and Mustafa Nevzat Pharmaceuticals during 2012.
Micromet was acquired by Amgen during March 2012 for about $1.15 billion. The publicly held biotech company has concentrated on the discovery, development and commercialization of innovative antibody-based therapies for treating cancer. Now a wholly owned subsidiary, Micromet has provided an opportunity for Amgen to further expand its oncology pipeline. Micromet’s bi-specific T-cell engager technology platform has produced various drug candidates that are being developed as cancer treatments.
Amgen acquired substantially all outstanding stock of Mustafa Nevzat in June 2012 for $677 million in cash. The privately held company has been a top supplier of pharmaceuticals to the hospital sector and a major supplier of injectable medicines in Turkey. The acquisition has provided Amgen with an expanded presence in Turkey and the surrounding region.
Amgen has had a collaboration deal with AstraZeneca since March 2012 to jointly develop and commercialize certain monoclonal antibodies. The new drug candidates stem from Amgen’s clinical inflammation portfolio and include brodalumab, AMG 139, AMG 157, AMG 181 and AMG 557. The pact covers global development and commercialization except for certain Asian countries for brodalumab and Japan for AMG 557, which are licensed to other third parties.
Amgen revealed in August 2013 its acquisition of Onyx, cited as the fifth-largest biotech-biotech company deal in history. Amgen is expected to acquire all outstanding shares of Onyx for $10.4 billion, or $9.7 billion net of estimated Onyx cash. Onyx is engaged in the development and commercialization of innovative cancer therapies.
Onyx’s significant and growing multiple myeloma franchise includes Kyprolis (carfilzomib) for Injection, FDA-approved during 2012 and projected by some industry analysts to have multi-billion annual sales potential. Onyx has three partnered oncology assets: Nexavar (sorafenib) in partnership with Bayer HealthCare Pharmaceuticals, which is on the market for unresectable hepatocellular carcinoma and advanced renal cell carcinoma and generated more than $1 billion in 2012 sales; the Bayer compound Stivarga (regorafenib) tablet, which is FDA-approved for metastatic colorectal cancer; and the Pfizer drug candidate palbociclib in Phase III for advanced breast cancer. Onyx also has multiple oncology compounds in various stages of clinical development.
Through this deal, Amgen is anticipating the benefits from the worldwide rights to Onyx’s innovative oncology portfolio and pipeline. Amgen plans to leverage its oncology capabilities and experience to support Onyx’s clinical-development programs and maximize Kyprolis’ global potential. The acquisition additionally adds to Amgen’s robust late-stage pipeline, which includes nine innovative products for which registration-enabling data are expected by 2016; four of these are regarded as innovative, first-in class oncology products.
Amgen annually commits significant financial support and product donations to assist in making a difference in people’s lives. Company staff members dedicate thousands of hours volunteering their time and talent to their communities. Amgen’s corporate giving initiatives are quite diverse: research grants and fellowships; medical education grants; donations of cash, product and equipment; community involvement via corporate sponsorships; and cash donations and volunteerism by staff members. The Amgen Foundation provides grants and matches staff donations to eligible non-profits.
The Amgen Foundation is an integral component of Amgen’s dedication to dramatically improve people’s lives. The foundation has donated more than $200 million to nonprofit organizations across the United States, Puerto Rico and Europe supporting its areas of concentration. The foundation seeks to advance science education, advance quality of care and access for patients, and support resources that create sound communities where Amgen staff members live and work. Nearly $20 million was invested during 2012 to 170-plus organizations that reflect Amgen’s core values and complement the company’s dedication to impacting lives in inspiring and innovative ways.
Amgen donates to qualified charitable organizations for the support of science, technology, medicine, healthcare or education; public education of disease states, medical conditions, science, or technology; and genuine philanthropic and charitable causes consistent with the company’s scientific and medical interests. Donation types include endowed professorships, fellowships, fundraising events, patient advocacy programs, public education programs, and scholarships.
The company makes charitable donations and sponsorships concentrated on humanitarian, social, education and community programs to qualified organizations outside the U.S. healthcare community. Donations and sponsorships include support for fundraising events.
Amgen provides its medicines at no cost to uninsured American patients with no or restricted drug coverage who could otherwise not afford treatment via two foundations. These foundations have supported hundreds of thousands of patients throughout the years. The nonprofit Safety Net Foundation supported by Amgen provides company products at no cost to qualifying people with no or limited drug coverage. The Safety Net Foundation covers Aranesp, Epogen, Neulasta, Neupogen, Nplate, Prolia, Sensipar, Vectibix, and Xgeva. The nonprofit ENcourage Foundation supported by Amgen and Pfizer provides Enbrel at no cost to qualifying people with no or limited drug coverage.
MOST ADMIRED SPECIALTY PHARMA
The multi-specialty health-care company Allergan was established in 1950 with a dedication to uncover the best of science as well as develop and deliver innovative and meaningful treatments to help people reach their life’s potential. Allergan has 11,200 employees and a presence in 100-plus countries, a rich and ever-evolving portfolio of pharmaceuticals, biologics, medical devices and OTC consumer products, and state-of-the-art resources in R&D, manufacturing and safety. Allergan employs more than 50 percent of its work force in research and development or sales to ensure the company’s focus on innovation and its customers.
Allergan started as an eye-care company and remains a global leader in that field. In time, the company’s focus has transformed to include neurosciences, medical aesthetics, medical dermatology, breast aesthetics, obesity intervention, and urologics. The flagship franchises – eye care, neurosciences, medical dermatology and urologics – fall under Allergan Pharmaceuticals.
The corporation added breast aesthetics and dermal fillers to its business arsenal via the acquisition of Inamed during 2006, thus creating a world-leading medical aesthetics franchise. Through Inamed, Allergan additionally acquired a leading product portfolio in obesity intervention that offers minimally invasive devices to help patients obtain sustained weight loss and reduce health risks associated with obesity. Each of these products are represented via the Allergan Medical corporate division.
“With specialty product lines focused on high-growth markets, Allergan represents a new multi-specialty health care model for the future, where diversification and focus live together to offer physicians and patients best-in-class treatments and a robust pipeline for continuous innovation,” according to the company. “Bolstered by an integrated R&D organization and global infrastructure, characteristics of some of the industry’s largest pharmaceutical companies, Allergan also maintains a lean and efficient operation with solid growth prospects, like many smaller and more specialized organizations in the health-care field. Allergan is large enough to command sufficient resources to address significant patient needs yet small enough for nimble execution. As we look to the future, we will continue to follow our R&D technologies into additional specialty areas and build a leadership presence of relevance to the doctors and patients we serve.”
Allergan develops, manufactures and markets a wide array of prescription and OTC products designed to treat eye diseases and disorders. These include dry eye, glaucoma, inflammation, infection, allergy and retinal disease. Restasis (cyclosporine ophthalmic emulsion) 0.05 percent is the company’s best-selling eye-care product and the largest prescription ophthalmic pharmaceutical by sales value in the U.S. Restasis is the first prescription eye drop to help increase tear production in instances where tear production may be reduced by inflammation because of chronic dry eye. Chronic dry eye is a painful and irritating condition involving abnormalities and deficiencies in the tear film due to various causes. The incidence of chronic dry eye rises with age, after menopause in women and in people with systemic diseases. Allergan introduced Restasis in the United States during 2003 and the drug is sold in 40 countries.
Allergan’s best-selling product is the multi-functional Botox, which is available in about 88 countries. The blockbuster brand treats 26 different conditions including spasticities, dystonias, chronic migraine and the urological conditions of neurogenic detrusor overactivity and idiopathic overactive bladder. Botox (onabotulinumtoxinA) was first given the green light by U.S. regulators in 1989 for treating two eye muscle disorders: strabismus and blepharospasm. Botox was the first botulinum toxin type A product approved anywhere globally.
The company’s diversified business model includes products for which patients may be eligible for reimbursement and cash pay products that consumers pay for directly out-of-pocket. For fiscal-year 2012, an estimated 62 percent of Allergan’s product net sales were derived from reimbursable products and 38 percent stemmed from cash pay products.
Allergan announced a new president on June 24, 2013: Douglas S. Ingram. Mr. Ingram heads the company’s global commercial operations, with responsibility for Allergan’s broad portfolio of pharmaceutical, consumer and medical device products. For the previous three years, he was executive VP and president of Europe, Africa and Middle East. Mr. Ingram has been with Allergan since 1996.
Financial and business performance
Allergan’s total revenue amounted to $5.81 billion for 2012, $5.42 billion during 2011, and $4.92 billion in 2010. For Allergan during 2012, the eye-care pharma business led the way in terms of the company’s product lines with sales of $2.69 billion ($2.52 billion for 2011). Botox was the No. 2 product line for Allergan in 2012 at $1.77 billion ($1.59 billion in 2011), accounting for 31 percent of Allergan’s consolidated product net sales. Therapeutic uses accounted for 52 percent of Botox total sales and aesthetic uses represented the other 48 percent.
Allergan reported first-half 2013 total revenue of $3.06 billion, compared to $2.8 billion during the first six months of the previous calendar term. The company reported $1.58 billion in total product net sales for second-quarter 2013, up 10.6 percent versus April-June 2012.
“In the second quarter, double digit sales and earnings growth is in line with our long term growth aspirations,” stated David E.I. Pyott, Allergan chairman and CEO. “We are also pleased with further R&D progress with the FDA Advisory Committee’s unanimous recommendation for Juvederm Voluma XC and with the filing of Ozurdex for diabetic macular edema in both the United States and Europe.”
Based on the first-half results, Amgen expected full-year 2013 total product net sales of between $6.05 billion and $6.2 billion, excluding the obesity intervention business. For full-year 2013, total specialty pharmaceuticals net sales are projected between $5.23 billion and $5.34 billion, and medical devices net sales are predicted to fall between $820 million and $860 million. Botox net sales for 2013 are estimated between $1.94 billion and $2 billion; Restasis net sales are predicted to range from $870 million to $900 million; Lumigan franchise net sales are estimated between $620 million and $640 million; Alphagan franchise net sales are expected to be $450 million to $480 million; and Latisse net sales are estimated at $110 million. Breast aesthetics product net sales for full-year 2013 are expected to fall between $380 million and $400 million, and facial aesthetics product net sales are projected between $440 million and $460 million.
Product and pipeline updates
Allergan is regarded as a pioneer in specialty pharmaceutical, biologic and medical device research and development. The company’s R&D
efforts are concentrated on products and technologies related to the many specialty areas in which Allergan operates as well as new specialty areas. Allergan’s R&D budget for 2012 totaled $989.6 million, representing 17.3 percent of its product net sales. The company supplements its R&D with a dedication to identify and obtain new technologies via in-licensing, research collaborations, joint ventures and acquisitions.
Allergan announced in May 2013 an FDA advisory committee’s unanimous vote that the benefits of Juvederm Voluma XC outweigh the risks. The injectable hyaluronic acid dermal filler is for cheek augmentation to correct age-related volume deficit in the mid-face. If approved (potentially by late 2013), it would be the first dermal filler in the U.S. with that indication.
Allergan submitted a supplemental new drug application in second-quarter 2013 for U.S. clearance of Ozurdex (dexamethasone intravitreal implant) 0.7 mg to treat diabetic macular edema. Also during this period, the company filed a Type II variation to the Marketing Authorisation Application with the EMA for approval of Ozurdex 700 micrograms intravitreal implant in applicator to treat adult patients with diabetic macular edema.
FDA regulators issued a complete response letter to its new drug application for Levadex (dihydroergotamine) inhalation aerosol for the acute treatment of migraine in adults, as announced by Allergan on April 16, 2013. The company intends to file an amended application by year-end 2013 and anticipates marketing clearance during second-quarter 2014.
Botox was approved by FDA during January 2013 for a new indication. U.S. health authorities cleared Botox for treating overactive bladder with symptoms of urge urinary incontinence, urgency and frequency in adults who have had an inadequate response to or are intolerant of an anticholinergic medication. An estimated 14.7 million adults experience overactive bladder symptoms with urinary incontinence.
Natrelle 410 Highly Cohesive Anatomically Shaped Silicone-Filled Breast Implants for use in breast reconstruction, augmentation and revision surgery were FDA-approved in February 2013. The implants are designed to mimic the slope of the breast to deliver a subtle, non-augmented look while remaining soft to the touch. U.S. approval was based in part on Allergan’s 10-year prospective, multi-center pivotal study including nearly 1,000 women who have undergone breast reconstruction, augmentation or revision surgery.
M&A and deals
Allergan has been active on the acquisition and deal front during 2012 and 2013. In fourth-quarter 2012, the company acquired SkinMedica for $348.3 million. The acquisition consists of various aesthetic skin-care products but did not include the SkinMedica Colorescience aesthetic make-up business.
The SkinMedica family consists of physician-dispensed, non-prescription aesthetic skin care products such as Lytera, TNS (Tissue Nutrient Solution) and Vaniqa. Lytera is an over-the-counter, non-hydroquinone skin-brightening product that minimizes the appearance of skin discoloration and dark spots. The TNS anti-aging OTC product line includes NouriCel, a patented biotech-derived enriched nutrient solution, and also consists of cleansing, toning, moisturizing, sun protection, acne, visible redness, lightening products and peels. Vaniqa (eflornithine HCl) is a topical prescription cream used to reduce the growth of facial hair in women, and was FDA-cleared during 2000.
MAP Pharmaceuticals was acquired by Allergan for $25 per share. The deal, first announced Jan. 22, 2013, was completed on March 1. MAP is a biopharma company developing and commercializing new neurology therapies.
Allergan entered into a collaboration with MAP in January 2011 to jointly promote Levadex to neurologists and pain specialists in United States and Canada upon regulatory approval in those countries. MAP initially filed a New Drug Application for Levadex with U.S. health authorities in May 2011. MAP refiled the NDA in October 2012 with additional data and provided responses to FDA comments. During the following month, MAP announced that its NDA refiling was accepted for FDA review as a complete Class 2 response, with a Prescription Drug User Fee Act goal date of April 15, 2013.
Allergan announced in first-quarter 2013 the completion of the company’s previously disclosed review of strategic options for maximizing the value of its obesity intervention business. Allergan is formally dedicated to pursue a sale of that business unit. Management intended to execute a signed deal to sell the obesity intervention business in first-half 2013, but no announcement had been made as of August 2013.
The obesity intervention business include the Lap-Band and Orbera Systems. Lap-Band is designed to provide minimally invasive long-term treatment of severe obesity and is used as an alternative to more invasive procedures including gastric bypass or sleeve gastrectomy. U.S. regulators cleared for marketing Lap-Band during 2001 to treat severe obesity in adults who have failed more conservative weight reduction choices. Lap-Band is the first FDA-approved device for bariatric surgery in patients with a BMI of 30-35 with one or more obesity related comorbidities. The Orbera Intragastric Balloon System is a non-surgical option for treating overweight and obese adults in 60-plus countries, but it is not available in the United States.
“Evidenced by our recent acquisitions of SkinMedica and MAP Pharmaceuticals and our decision to declare our obesity intervention assets as a discontinued business, we are dynamically managing our portfolio to drive long-term sales growth,” Mr. Pyott stated.
The Allergan Foundation was established in 1998 as a U.S.-based, private charitable foundation with a mission to make a positive and lasting impact on the community. According to Allergan, the foundation lends philanthropic support and involvement to organizations working hard to make the lives of individuals healthier and happier and to make their communities better places to live.
The Allergan Foundation has made grants totaling more than $33 million. Support is concentrated in four philanthropic areas: the arts, civic programs, education, and health and human services. As part of the foundation’s dedication to health and human services, it supports selected initiatives known as “Focus Grants.” Those grants improve patient diagnosis, treatment, care and quality of life, and promote access to quality health care. Each organization receiving support from the foundation is committed to addressing unmet community needs.
Allergan funds educational activities via an extensive unrestricted educational grant program. By doing this, Allergan fosters increased understanding of scientific, clinical, and health-care issues. The company also seeks to provide an efficient and effective grant review process to help facilitate grant requests for quality independent education.
Posted: October 2013