Blog #4 - Current Events

Parth Patel
Business 1.0
April 1st 2013

Blog #4: Accounting

·         What are some current events in your industry? What is the impact of these events on the industry?

There are always many events happening in the pharmaceutical industry.  New drugs are always being researched, getting grants, and entering the public. Old drugs are being tested over and over to make sure they are staying true to rules and regulations, and some drugs are going back to trials to fix  problems and issues.

Here are a few current events:

Halt Medical has secured FDA clearance for its Acessa system, which uses radiofrequency ablation to help treat uterine fibroids in women. The device, which already has been cleared in Canada and Europe, is designed to provide a less invasive and cheaper alternative to conventional fibroid surgery. 

More related to our specific firms, Pfizer, Portola, and Bristol-Myers Squibb have signed a clinical collaboration agreement to study the drug, Eliquis.  The collaboration will happen during the clinical study, which begun in January. Major bleeding events occur infrequently in patients taking Factor Xa inhibitors and standard measures are taken to control these events. Development of an agent specifically designed to reverse the activity of Factor Xa inhibitors may provide an antidote for patients who, in rare instances, have an uncontrolled major bleeding event or require emergency surgery.

These are just a few of the events happening in our particular industry.  There hundreds of articles, journals, etc. being published about new things occurring in the Pharma world.  All these events impact our industry in both a good and bad way.  Sometimes, it is good that old drugs are going back into the lab to fix bugs, and there is always need for new drugs to come out.  Cures for any sickness is always beneficial.

References:

http://www.worldpharmanews.com/bms/2259-portola-bristol-myers-squibb-and-pfizer-sign-clinical-collaboration-agreement-to-study-eliquisr-and-portolas-universal-factor-xa-inhibitor-antidote-prt4445

http://www.worldpharmanews.com/development/2263-scientists-test-5000-combinations-of-100-existing-cancer-drugs-to-find-more-effective-treatments

Revenue, Profit, And Loss of Novo Nordisk in 2012

"In 1923, the first patients were treated with insulin from the company that is now Novo Nordisk" (CEO Lars Rebien Sørensen). For 90 years, a little less than a Century, Novo Nordisk has been the lead provider of Insulin. And, though governments keep insisting on price reductions, Novo was able to obtain a noticeable increase of 12% in revenue in 2012. This increase was mainly due to the great demand for their key products: Victoza, Novolog, and Levemir. Novo Nordisk's main market for 2012 was North America. Why? This is mainly because obesity is the main cause for type 2 diabetes, which is treated with either Novolog and Levemir (19% of all sales took place in North America alone). Moreover, Novo was able to get approval for many new medications that were sold all over the world. Examples of this consist of: Tresiba® and Ryzodeg®. Even though these drugs are currently only sold in Japan, the approval and selling of these new products accounted to 15% os all sales in 2012. And, lastly, international operations increased by 16%.

So, how is it that a company, in the pharmaceutical industry, had such a positive outcome in a time when governments are insisting on price reductions which would, in theory, affect negatively on company revenue? According to the 2012 Annual Report, Novo Nordisk stepped back and tried to take a different approach to diabetic medication. Last year, in the European Diabetes Leadership Forum, Novo Nordisk met with other 700 participants to discuss and agree on priorities and ambitions in order to better include their medication into healthcare programs and meet federal price requirements. This, in turn, not only helped them stay in line with laws, but also allowed them to achieve noticeable growth. 

However, not everything was smiles and rainbows for the company in 2012. They received a regulatory warning by the FDA in march of 2012. They answered to the letter by December of the same year. Moreover, the drug vactreptacog alfa was discontinued in August due to safety concern. In response to this, Novo faced a 6% drop from expected sales in the las quarter of 2012. So, how does Novo plan on recovering from this fall? They plan to further expand sales of modern insulin drugs (like Tresiba® and Ryzodeg®) in the United States, Canada, and Europe. 

After analyzing the Financial Statement fro 2012 I learned that there was a 2.81% increase in assets, a 6.91 decrease in liabilities, and dividends increased by 9.91%. These numbers represent a healthy growth in the company. 

What do these numbers mean when compared to other companies in the Industry? Let's take Abbott Laboratories as a comparison. Abbott had a 6% increase in Net Income in 2012 and 3 billion increase in Operating Cash Flows. Numbers may not be as impressive for Abott, but one must still take into consideration that they integrateed AbbVie, a research and investigation, independent and competitive company into the Pharmaceutical and Healthcare industry. This is estimated to provide future growth and revenue in the next few years. Even more so than Novo Nordisk. This is mainly due to the fact that trends signal that companies that are investing in research now will have the healthiest growth. After looking at Novo's Financial Statement and Annual Report, they show no sign of drifting away from their one and only product: Insulin. This is mainly the reason why analysts agree that Novo is having healthy growth now, but since they show no sign of investing in biotechnology research, the growth will stagger in a couple of years. 

References:
http://webmedia.novonordisk.com/nncom/images/annual_report/2012/Novo-Nordisk-AR-2012-en.pdf
Abbot Annual Report 2012
Novo Nordisk Financial Statements by Yahoo Finance

competitive landscape

CARLA LLANEZA

What is the competitive landscape of this industry in the USA?  Where does your company fit into this landscape?

For the pharmaceutical industry, the amount of competition that takes place is large and continues to grow today. Specifically, there seems to be a large investment in the generic brand drug than there is the brand named drug. This movement towards investing in the generic market is because the prices are so low that other investors can use that as a way to buy from them. However, does this new competitive edge and the landscape by which it seems to lay out go against the basics of business etiquette? That’s a question worth asking as the landscape continues to grow and expand over time.

            Another segment of the landscape in the pharmaceutical group would be the barriers to entry. There are very high barriers in a company, which demands innovation and undoubted trust. This industry has been around for years on end, the idea to compete in such an industry is one that includes the main idea which would be competing in price. The generic brands are increasingly popular amongst customers because of the cost efficiency of the product (IBIS World). The generic brand continues to be a “cheaper” option which always is a factor in the competitive landscape of companies. In specific, the CVS brand will usually be a few dollars cheaper than the “Tylenol” brand at the supermarket. This is strategic because customers know and understand the main ingredient in the “Tylenol” which happens to be Ibuprofen. This definitely foreshadows an even greater and larger boom for the generic brand companies. Unfortunately, the brand name companies being at the quality level they are will take a larger stab. The idea that the generics are taking off because of price is a way in showing how the economy in the United States is doing. There is less revenue therefore customers would rather spend it on cheaper drugs than the more expensive brand named drugs. Therefore why is it that the competition has continued to stay alive if there is a clearer and cheaper option?

            There is no denying that the generic company does not have as many advertisements as the brand name products. However, now there are also strategies by which brand name products are creating to veer customers away from purchasing their products. (IBIS Wrold). The United States continues to be a powerhouse in the market and will continue to grow so long as the competition between the generic and brand name pharmaceutical companies remains alive.

http://clients1.ibisworld.com.proxyau.wrlc.org/reports/us/industry/competitivelandscape.aspx?entid=488

Blog 3: Current Events

One very important event that happened late last month was the possible discovery of a drug that could prevent metastatic cancers.  The drug would work by making the body train special immune system cells that would guard against cancer relapse.  This could have a very large potential impact on the industry as a whole or whichever company ends up getting the patent for this drug.  Cancer is one of the prevalent diseases in the US today and if one company discovered a cure or a better way of treating it the market could be worth tens of billions of dollars.

Another important event that is ongoing is the recall of all lots of Omontys Injections.  The lots are used to treat anemia in adult dialysis patients, however it has been found that there have been over 19 cases of anaphylaxis from patients taking the drugs and three of the cases have resulted in the death of the patient.  Due to this the FDA has had no choice but to issue a recall for the drug to prevent any more cases like this occurring.  This will have a major effect on Affymax, Inc. as it is means that all the research into these drugs was a waste of money.

A collaboration that just comes to light today is the strategic alliance between Merck and Nordic Bioscience on the drug sprifermin, which is used to treat osteoarthritis in the knee. Nordic Bioscience will provide Merck with clinical development services on a “on a shared-risk basis in exchange for a payment structure that includes service fees and potential milestone and royalty payments on the program.”  Currently it looks like the drug is going be successful but by combining with Nordic Bioscience it offers Merck a greater amount of expertise and resources.  Like the development of all new drugs it could be a billion dollar drug line.

http://www.worldpharmanews.com/

Consumer Trends That Affect the Industry

Current Trends That Affecte The Pharmaceutical Industry

More than one third of the adult population in the Us is considered to be obese (Centers for Disease Control and Prevention). Because of this, according to the Los Angeles Times, the FDA has approved the first weight-loss drugs since 1999. Qsymia, a weight-loss drug is growing in popularity since 2012. The drug is supposed to help people lose 6.7% of their body fat during the course of a year. Tagging along to the obesity trend, companies such as Novo Nordisk (lead insuline provider) have taken advantage of the situation and have created multiple insuline drugs to treat type 2 diabetes. Moreover, high blood pressure drugs such as Norvasc are being used to treat one of the most common side effects caused by obesity. So, how exactly does this trend affect the business side of the pharmaceutical industry? According to News Medical, higher obesity rates could cause nationwide increases in health care costs by 2030. This is having a huge impact on different companies as they create different drugs to treat obesity side effects. 

On a different note, pharmaceutical companies have also been creating many different antidepressant drugs. According to the FDA, the most common antidepressant drugs in 2012 were Prozac and Symbyax. In the past 20 years, Americans have become the most popular user of antidepressants around the world. Moreover, this has made "them one of the most costly and the third most commonly prescribed class of medications in the U. S". Examples of these medications include Prozac and Symbalta. However, recent studies have shown that there has been a significan increase in over-the-counter antidepressant drugs. More and more companies are taking advantage of the growing need for these medications. 

These are just a couple of current trends that are affecting the Pharmaceutical Industry. The demand for weight-loss drugs is increasing, as well as diabetes. And a higher need for over-the-counter antidepressant medication is occurring. In order to fit the public's need, pharmaceutical industries have to keep up with current trends. 

http://www.news-medical.net/news/20120920/Report-Obesity-rates-will-continue-to-grow-causing-increases-in-health-care-costs-disease-incidence.aspx

http://www.accessdata.fda.gov/scripts/cder/drugsatfda/index.cfm?fuseaction=Reports.MonthlyApprovalsAll

http://articles.latimes.com/2012/jun/27/science/la-sci-obesity-drug-20120628

Blog #3 - Differentiation

Parth Patel
Business 1.0
March 17th 2013

Blog #3: Marketing

·        How do companies in this industry differentiate themselves from one another?

Differentiation, in the most literal sense, means what makes someone or something different.  Johnson & Johnson managed to brand themselves as a family-oriented company.  Their products range from lotion to band-aids to soaps to orthopedics.  Companies, in the pharmaceutical industry, that can set them apart from the rest by making themselves a household name have already won in the industry, as its very difficult to differentiate in this industry.

Differentiation in any industry and business is key to survival.  Various companies, like Safeway and Giant, offer the same products, but whether or not they market and brand themselves is how they differentiate and create success for themselves.  Companies like Johnson & Johnson and Pfizer Co. have established themselves as strong contenders in the pharmaceutical industry.  When I say Johnson & Johnson , a bottle of shampoo has probably popped up in your head, along with a giggling baby. Similarly, Pfizer is actually a leading research-based company that has pioneered many innovative treatments like biopharmaceuticals that are like robot science. Pfizer specifically differentiates itself from other companies with its specialized product; biotechnology, a new and upcoming form of healthcare.

Different pharmaceutical companies focus their time and funds to different methods of marketing for their products.  Take Johnson & Johnson for example, they create products that consumers can find in a grocery store, skincare products, wound care, and dental care are among their product mix.  On the other hand, AstraZeneca is streamlined towards physical and health therapy products and treatments that are not necessarily “pick-up-and-go”, but long-term therapeutic use.

Companies that are strictly business-to-business, like biotechnology, rely on the success and reliability of their products.  Biotechnology firms will not receive business if physicians or healthcare specialists do not recommend or use their products.  The diverse mix of products and services offered by these pharmaceutical companies is what differentiates them from each other.

 Reference:

http://clients1.ibisworld.com/reports/us/industry/majorcompanies.aspx?entid=487