Preston Clive
3
All posts from Preston Clive
Preston Clive in Preston Clive - THE IRRITATED AMERICAN, Wielding The Digital Hatchet,

Once Upon A Time There Was This Drug Company . . . .

THE IRRITATED AMERICAN

"I'm a little nervous--my some British lab is blowing up my iPhone." (IMAGE: chemanager.com)

Despite my belief that intellectual property should be protected and protected well, I think that the whole market for biosimilars, which I reported about yesterday vis a vis the Pfizer merger with Hospira, who is a maker of a subclass of drugs called biosimilars, is badly needed here in this country to offset the outrageous prices for brand name biotech ("standard" manufacture drugs) pharmaceuticals.

Biosimilars, for those unfamiliar with the term, is a form of "generic" drug which can be used as a substitute for extremely costly brand- name, patent-protected drugs that are difficult-to-impossible to afford for the uninsured and those with limited coverage. Biosimilars are feasible entries into the market via their route to manufacture: rather than simply knocking off the drug they wish to copy, the company takes the target pharmaceutical apart in the lab, and by studying its constituent parts and ultimate mechanics of action, arrive, via the use of human or animal cells/precursors, at a drug which produces if not the exact similar mechanism on the body then one similar enough whereby the new drug can be prescribed not only within the same medical scenario but as a substitute for the exact drug to which it was specifically engineered to mimic. Thusly, the original high-price drug is rendered unnecessary.

The deal made a good deal of sense for Pfizer, as Pfizer is the holder of many those just mentioned high cost drugs with copy protection--copy protection that is weakening, and weakening specifically because of the emerging market of biosimilars engineered by segment powerhouse Hospira. Thus it's a case of a general buying out an enemy and folding that threat into his ranks.

What is lesser known is the story regarding how this biosimilar market has emerged and become legally feasible for drug makers. The growth of the biosimilar market has been triggered in large part by the Affordable Care Act--Obamacare--and the mission of the act to bring cheaper versions of hi ticket biotech flagship drugs here to the USA. 

Hospira, the drug company acquired by Pfizer, had a thriving, growing biosimilar drug business in Europe, who has had a regulatory environment which has been welcoming to the biosimilar market for years now. The European Medicines Agency/EMEA had cleared a regulatory path for these drugs years ago, but here in this country the US Food & Drug Administration had nothing which made their entry legally possible, The Hatch Waxman act of the 1980's (the last major US legislation for generics) did not provide clearance for these specifically engineered generics to flagship "name" biotech pharmaceuticals. 

Until Obamacare. Now, generics of expensive biotechs, made via the use of human or animal cells to arrive at the copy, have had the door opened for commerce here in the States. Next month, the first biosimilar drug is set to hit the US market, and the growth will--to all observing eyeballs--be absolutely guaranteed to be explosive. During a recent Morgan Stanley conference, Hospira estimated that the emerging market is going to hit $40 Billion--$30 Billion of that staggering number is anticipated to come from the USA.

So when you wipe your brow and grab a table to steady yourself when growing woozy after reading about the amount of money Pfizer is paying for Hospira, remember that all of that future upside is now poised to siphon itself directly into Pfizer coffers. $17 Billion dollars in purchase price doesn't sound so staggering any longer. 

The human cells in the brains that make the financial decisions at Pfizer seem to be working well. Be a good source for some future biosimilar engineered to bring strategic sense to a disordered mind, no?

Preston Clive

2/6/2015***