Pharmaceutical company Shire uses strategy of harvesting drugs from rivals

By Rachel Cooper Published: 10:39PM GMT twenty-one Feb 2010

More curative majors are gnawing up earnest drug from biotech companies that they afterwards labour in-house rather than building from blemish Photo: Danny Lawson/PA Wire

The Basingstoke-based curative company, that specialises in treatments for singular diseases and symptomatic illnesses, has spearheaded a "search and development" plan where, rather than building drug from scratch, the association snaps up earnest drug from alternative companies that they afterwards labour in-house.

This indication of niche investigate and trawling alternative companies for intensity drug competence have initial annoyed hilarity; but it is a plan about that Shire"s curative peers are apropos increasingly critical as they cruise how to seaside up their pipelines in the face of a call of top-earning drug entrance off patent. Shire itself has not long ago experienced what those in pharma circles call the "patent cliff".

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Last April, the association came underneath hazard when a general aspirant to the courtesy necessity hyperactivity commotion (ADHD) drug, Adderall XR, entered the market.

Mr Russell pronounced that brazen of the drug confronting general competition, "people were really concerned Adderall XR had been pulling expansion for majority years".

"It would have been really easy to feed on grass down the hatches and constrain the business," he added. But instead the association done dual acquisitions value a total $4bn (�2.6bn).

One of those acquisitions was biotech association New River Pharma, paid for for $2.6bn in Feb 2007, that finished up on condition that Shire with Vyvanse, a new drug to yield ADHD, that has helped mangle Shire"s tumble over the viewable cliff-edge.

Last week, it was suggested that during the last quarter, revenues from Vyvanse rose 41pc to $145m, assisting equivalent descending revenues from Adderall XR, that right afar usually creates up around 10pc of the company"s product sales compared with 40pc of sales in 2008.

Promoting a "search and development" plan as Mr Russell calls it, as well as focusing the attentions on treatments for singular diseases, has helped Shire set up a portfolio of eight key drugs, that will, he says, yield a "tremendous platform" for going forward.

Some analysts were, however, some-more wary about Shire"s fourth-quarter figures.

Jack Scannell, researcher at Bernstein, pronounced the formula had been flattered by the approach Medicaid rebates in the US on Adderall XR had been calculated, adding that the total were not "quite as stellar" as they initial looked. But overall, he was certain about the results, adding that they were on top of consensus.

But Morgan Stanley, that described Shire"s fourth-quarter formula as "very strong", has been pulling the "Pharma 2.0" indication of purchasing initial drug from not as big rivals as a equates to of alleviation the risks of building drugs.

Pharmaceutical companies are increasingly embracing this move towards slicing behind their own early-stage investigate activities and focusing on niche markets.

GlaxoSmithKline (GSK) has already endured a series of drug entrance off patent, losing $4.5bn in revenues to general foe over the last 3 years, but has total $5bn of new sales opposite the organisation.

That is down to changes in the investigate and growth plan as well as alternate the courtesy to rising markets and bringing in revenues from the consumer products, such as Sensodyne toothpaste.

But Britain"s greatest drug association has denounced plans to serve renovate the investigate and growth work. It is set to frame afar high-risk, high-cost areas of investigate such as basin to increasingly concentration similar to Shire on singular diseases.

"We are creation certain that we are spending income where we have the majority appropriate possibility of returns," pronounced Andrew Witty, GSK arch executive, at the time.

At Shire, Mr Russell pronounced that operative in singular diseases authorised them to concentration on a specific organisation of patients and rise clever relations with clinicians.

Savvas Neophytou, an researcher at Panmure Gordon, pronounced Shire was in a "very great position" since of selecting to work in this field, adding that it was engaging to see GlaxoSmithKline "making a incursion in to this market".

AstraZeneca, that is set to lose exclusivity on multiform drugs, together with Arimidex, a breast cancer drug with sales of $1.9bn in 2009, is receiving stairs to scour biotech companies for early-stage drug rather than building medicines from scratch. Just last week, it paid $100m to Rigel Pharmaceuticals for the rights to the next-generation rheumatoid arthritis drug. Rigel has already carried out the Phase I and Phase II early and mid-stage trials, but AstraZeneca will pattern the last Phase III trial.

Gary Waanders, an researcher at Nomura Code, pronounced that outsourcing the progressing stages of investigate done sense, withdrawal the big pharmas free to concentration their efforts on removing drug to market: "Pharma companies are in all really great at this bit of growth since of their endless clinical networks and logistic resources and additionally their monetary resources."

But where does the change to externalising early-stage investigate leave the biotech companies perplexing to lane down those earnest containing alkali compounds?

Mr Waanders warned that the proliferation of biotech companies gave big pharmas lots to select from when seeking for in-licensing deals, withdrawal curative companies "holding majority of the cards in chartering negotiations".

Andrew Heath, who sits on the house of the BioIndustry Association, warned that chartering deals could risk biotech companies apropos one-trick ponies.

"The risk is that you turn dominated by a big partner and it becomes tough to do deals with alternative companies," he said.

However, he total that the advantages do transcend the risks, adding that await from a vital curative association was the usually approach majority cash-strapped biotech companies would have the event to take their drug to the marketplace.

Paul Cuddon, an researcher at KBC Peel Hunt, pronounced that in-licensing played to the strengths of both big pharma and biotech.

"Big pharma is great at late- theatre development, since biotech is great at find and discerning decisions on either a drug is great or not. The multiple of the dual is an glorious vital fit," pronounced Mr Cuddon.

He pronounced that fit creates financial, as well as vital sense.

"The cost of building a drug is right afar estimated to be at $1bn - and the drug companies don"t indispensably get anything out of their investment," he said. "So the drug companies are observant "why don"t we do a understanding with a biotech association where we compensate out $1bn but we get an authorized drug at the finish of it?"."

And as drug makers move to accelerate their pipelines, that"s a subject to that for majority companies the answer is seeking increasingly obvious.