Healthcare, Digital Marketing and Market Access Strategy - John G. Baresky
The Super Bowl is a global event; marketers and advertisers invest millions in audience research and testing plus media ad spending to air the best television commercials money can buy
- Quality story line with clear and meaningful messaging
- Strong brand and company identification elements
- A unique campaign strategy that aligned network television, website and social media venues to effectively engage audiences worldwide
A first for Thyroid Eye Disease
Horizon's recently FDA approved Tepezza is indicated for the treatment of Thyroid Eye Disease (TED). TED is a healthcare condition associated with the inflammation of the eyes, eye muscles, eyelids, tear glands and fatty tissues behind the eye.
Tepezza (teprotumumab-trbw) can be described as a biologic or biotherapy agent as it is a fully human monoclonal antibody (mAb) and a targeted inhibitor of the insulin-like growth factor 1 receptor (IGF-1R).
Medical issues associated with TED
TED is also known as Graves’ Orbitopathy or Ophthalmopathy and is an autoimmune condition. TED’s symptoms include outward bulging of the eye which may cause a series of problems such as double vision, eye pain, light sensitivity or issues with closing the eye. Tepezza may help some patients prevent more serious challenges with their eyes as a result of TED including the potential need for surgical procedures. Tepezza is an injectable product administered via infusion; once every 3 weeks for a total of 8 infusions.
FDA Director of The Division of Transplant and Ophthalmology Weighs In On Tepezza:
Wiley Chambers, M.D., deputy director of the Division of Transplant and Ophthalmology Products in the FDA’s Center for Drug Evaluation and Research shares these comments about Tepezza:
“Currently, there are very limited treatment options for this potentially debilitating disease. This treatment has the potential to alter the course of the disease, potentially sparing patients from needing multiple invasive surgeries by providing an alternative, non surgical treatment option. Additionally, thyroid eye disease is a rare disease that impacts a small percentage of the population, and for a variety of reasons, treatments for rare diseases are often unavailable. This approval represents important progress in the approval of effective treatments for rare diseases, such as thyroid eye disease.”
FDA requires Horizon to conduct a post-approval study for Tepezza
As part of the FDA's approval of Tepezza, Horizon will continue monitoring Tepezza’s performance in a post marketing study. The study will assess the product's safety profile in a larger patient population.
About Horizon Therapeutics
Horizon Therapeutics (the recently renamed Horizon Pharma) is based in Dublin, Ireland with a U.S. headquarters located in the Chicago suburb of Lake Forest, Illinois. Founded in 2005, Horizon's annual revenues are about $1.25 billion.
Organ donation saves lives
National Donor Day is dedicated to organ donors plus the patients and medical professionals needing their help. Advancements in medicine have made incredible progress in organ transplant success but this record of achievement cannot continue without more donors. While more transplant procedures are being conducted each year, many never happen because there were not enough donors.
Organ transplants are more common but still challenging
Since each patient and donor is different, no two transplants are the same. With each transplant, medical professionals, clinical researchers and other transplant science stakeholders learn more. For each transplant, medical professionals conduct an intense and time sensitive assessment of the organ recipient and the organ donor to determine the best match that will help increase the chances of success and survival.
Organ transplant patients require considerable care after the procedures are completed
Following the transplant procedure, transplant patients are still at risk for complications as a result of the transplant including organ rejection. Even with highly effective immunosuppressive drugs and other therapies plus the care and support of healthcare professionals, organ rejection can occur years after a transplant is performed. In some cases the person is added to the transplant waiting list again. Based on new patients and transplant patients needing a replacement for their transplanted organ, there is an ongoing demand for more organ donors.
Ten facts about organ donation and organ
Over 120,000 persons in the United States are in need of an organ transplant; for many of them their very life depends on it
Almost 40,000 organ transplants were conducted in 2019
One organ donor can save the lives of or tremendously improve the quality of life for 8 people or even more
In the United States more than 700,000 organ transplants have been conducted since 1988
These are the most common organ transplants:
- Blood Vessels
- Heart Valves
- Skin Tendons
Survival rates vary depending upon the patient and post-transplant recovery challenges including organ rejection
A new person is added to the organ transplant list in the United States every ten minutes
In the United States it is estimated 20 persons die each day that were waiting for transplants
Organ donation is free and there are no costs to register as an organ donor
Sign up to be an organ donor or share this information with someone else so they can be an organ donor, too
You can help over 120,000 persons currently waiting for an organ transplant!
Visit this resource to learn how to sign up; if you are already registered, please share it with those who would like to join yourself and others as life saving organ donors:
OrganDonor.Gov - U.S. Government Information on Organ Donation and Transplantation
Spread the word: Friday February 14th is National Donor Day!
Published on 1/22/2020; updated 2/23/2020
Amazon hires Dr. Vin Gupta
Amazon continues to fortify itself with healthcare talent and technology assets. It has ramped up its online pharmacy unit Amazon Pharmacy / PillPack, acquired healthcare software and technology startup Health Navigator plus launched Amazon Comprehend Medical and Amazon Transcribe Medical. Amazon is also involved in a collaboration with the Pittsburgh Health Data Alliance.
Its latest addition is the reported hiring of Dr. Vin Gupta for its Amazon Care unit. Amazon Care (formed in 2019) is dedicated to serving the headquarters staff of Amazon and provides an array of healthcare services to employees and their dependents. Its programs include conventional patient and clinician care visits, telemedicine access plus other medical support and pharmacy services.
Dr. Gupta has a distinguished clinical, commercial and government background
Vin's experience spans these and other organizations in full time and advisory roles:
- Institute of Health Metrics and Evaluation
- Council on Foreign Relations
- U.S. Air Force
- U.S. State Department
- NBC News
- World Bank Group
- Brigham & Women’s Hospital
He has extensive academic credentials including:
- MPA; Public Administration, Harvard University
- USAF United States Air Command and Staff College
- MSc; International Relations and Affairs, University of Cambridge
- MD; Columbia University College of Physicians and Surgeons
- BA; Chemistry, Princeton University
Initially published 1/06/20, updated 2/23/20
The 2019-2020 Flu season is well underway across the United States
The Centers for Disease Control ( CDC ) plus other government healthcare agencies and medical professionals are closely monitoring what is shaping up to be a formidable Flu season.
Who is most at risk for Flu?
Individuals spanning infant to elderly are susceptible to the Flu virus. Expectant mothers, seniors and persons with chronic conditions such as asthma, an airway abnormality or other respiratory issues, diabetes, hypertension, heart disease, neurological or neurodevelopmental disease, kidney, liver or blood disease could be more vulnerable to Flu and severe Flu symptoms.
Who are some of the leading healthcare companies developing and marketing vaccine products to help protect against the Flu?
The largest Flu vaccine manufacturers include:
- AstraZeneca ( NYSE: AZN )
- GlaxoSmithKline ( NYSE: GSK )
- Sanofi ( NASDAQ: SNY )
- Seqirus / CSL ( ASX: CSL )
Most Flu vaccine formulations are administered via a single injection although an inhaled nasal mist Flu vaccine is available ( FluMist Quadrivalent manufactured by AstraZeneca ). Healthcare professionals determine and prescribe which Flu immunization option, injection or inhaled formulation, is most appropriate for each patient.
What products are available to treat the Flu for those diagnosed with it?
Depending on the consumer or patient there is an array of over-the-counter medications available which treat Flu symptoms that do not require a prescription.
There are several companies manufacturing Flu antiviral drugs which can be administered to patients with confirmed Flu diagnosis that require a prescription including:
- Rapivab ( peramivir; injection ) - manufactured by CSL
- Relenza ( zanamivir; dry powder for inhalation ) - manufactured by GSK
- Tamiflu ( oseltamivir phosphate; oral ) - manufactured by Roche but also available as as a generic
- Xofluza (baloxavir marboxil; oral) - manufactured by Genentech / Roche ( OTCMKTS: RHHBY )
How is the Flu season unfolding so far?
- The predominant Flu virus strain varies by region
- Age groups are another variable in profiling specific Flu virus strains
- Nationwide, influenza B/Victoria virus has been the most frequently reported Flu strain thus far; the second most frequently occurring is A(H1N1)
- Influenza B/Victoria viruses are most commonly reported in children age 0-4 years ( 46% of reported viruses) and persons age 5-24 years ( 57% of reported viruses)
- A(H1N1) pdm09 viruses are most commonly identified in persons age 25-64 years (41% of reported viruses)
- For adults 65 years of age and older almost equal proportions of influenza A(H1N1) pdm09 ( 38% ) and A(H3N2) viruses ( 37% ) have been reported
- Current hospitalization rate has been 6.6 cases per 100,000 ( similar to previous Flu season trends at this calendar interval but on the increase )
- Overall the CDC estimates there have been 4.6 million Flu cases so far this year resulting in about 39,000 hospitalizations and over 2,100 fatalities
What are some ways I can protect myself and others from the Flu?
- It is not too late to get the Flu shot ( or FluMist if appropriate ); there are ample supplies presently available
- Take precautions to avoid contracting and spreading Flu virus:
- Avoid persons who are sick
- Avoid directly touching eyes, nose, mouth; cover nose and mouth with a tissue when coughing or sneezing; properly dispose of the tissue quickly
- Wash hands with soap and water frequently and clean / disinfect surfaces where hand contact is frequent ( desks, counters, table tops, cell phones, keyboards, tablets, door handles, remote controls, appliance handles, etc. )
- If diagnosed with the Flu and prescribed Flu antivirus medication, patients should be certain to complete the entire course of therapy and limit close contact with others
Tokyo-based Astellas buys second California biotech company in less than a month
Astellas Pharma ( OTCMKTS: ALPMY ) is acquiring Xyphos Biosciences in a deal worth up to $665 million. Astellas is seeking to build out its immuno-oncology business capabilities. This is the second acquisition Astellas has made in a month. Historically the company has made few buyouts since it was formed in 2005 from the merger of Yamanouchi Pharmaceutical and Fujisawa Pharmaceutical.
Xyphos is centered on advanced oncology treatment science
Astellas covets Xyphos’ proprietary molecules which can be delivered to natural immune cells or to engineered Chimeric Antigen Receptor (CAR) cells to generate immunotherapies for oncology treatment. The deal provides Astellas with additional clinical talent plus proprietary processes and technology focused in novel cancer treatment research and development. Xyphos’ first CAR cell product investigational agent is in preclinical development and scheduled to be tested in a first-in-human clinical study in 2021.
Astellas announced a multi-billion dollar deal earlier this month
Earlier in December, 2019 Astellas bought Audentes Therapeutics for $3 billion. Audentes is a biotech firm focused on gene therapy. Xyphos and Audentes are each based in South San Francisco.
Astellas is a worldwide pharmaceutical leader
Based in Tokyo, Japan with a U.S. headquarters in Northbrook, Illinois, Astellas is Japan’s second largest pharmaceutical company ( Takeda is ranked number one). Astellas has over 17,000 employees and generally speaking is aligned with 5 disease categories:
- Gene Therapy
Xyphos is an ideal element that fits well with Astellas’ corporate strategy. With annual sales of approximately $12 billion and a market capitalization estimated at $33 billion, Astellas has made assertive moves in 2019 to accelerate its clinical and financial future success from the start in 2020.
John G. Baresky
Gene therapy continues to draw multi-billion dollar investments from biotech and pharmaceutical companies worldwide
Roche ( OTCMKTS: RHHBY ) is committing over $1 billion dollars up front to Sarepta Therapeutics ( NASDAQ: SRPT ) in a licensing deal with substantially more to follow depending upon the progress of SRP-9001, an investigational gene therapy targeting Duchenne muscular dystrophy.
Roche and Sarepta develop a product development and licensing deal
Based on its $1.15 billion deal with Sarepta, Roche will have global rights to launch and market SRP-9001 except for the United States:
- Sarepta received $750 million in cash from Roche
- Roche purchased about $400 million of Sarepta stock at $158. 59 per share
For now Sarepta, based in Cambridge, Massachusetts, has decided to retain the U.S. market sector for its own commercial ventures. Sarepta will continue to manage clinical development and production manufacturing of SRP-9001; Roche has agreed to cover half of the global clinical development costs. If the drug meets unspecified regulatory and sales milestones, Sarepta could receive up to $1.7 billion more in funds from Roche, as well as royalties on any net sales, if SRP-9001 achieves certain regulatory approval requirements as well as sales revenue targets.
The patient care science of SRP-9001
SRP-9001 has the potential to be a breakthrough therapy in a challenging patient care sector. SRP-9001 is presently in Phase II clinical development. The agent is designed to deliver the micro-dystrophin-encoding gene directly to the muscle tissue for the targeted production of the micro-dystrophin protein.
Sarepta's strategy to fund clinical trials for SRP-9001
With Roche’s investment, Sarepta can continue to invest in the development of the product and conduct clinical trials. They are selecting patients for the two-part Phase II SRP-9001-102; a 40-patient study focused on safety and efficacy of SRP-9001 in a 48-week randomized, double-blinded, placebo-controlled timeframe plus a 96-week, double-blinded extension period. This clinical study program has an anticipated wrap up targeting the 4th quarter of 2022.
Based on positive results, Sarepta and Roche will pursue marketing opportunities worldwide
If the product is approved, Sarepta will have funds to orchestrate commercialization initiatives to launch the product in the United States. Roche, headquartered in Basel, Switzerland, has the global expertise and commercial resources that will enable it to move forward in other markets around the world. Roche, which just completed a $4.3 billion acquisition of gene therapy company Spark Therapeutics, will be a lucrative partner for Sarepta to market other gene therapy pipeline products with in the future or perhaps be wholly-acquired by Roche.
Partnerships and licensing agreements are popular options for large and mid-sized biotech and pharmaceutical companies to explore gene therapy commercial opportunities while avoiding risk
Gene therapy and other highly-focused clinical research or product development firms do not always have the financial resources or business structure to orchestrate a complete commercial lifecycle of their work. Established, publicly-held drug companies frequently collaborate with gene therapy and other smaller, highly advanced biotherapeutic concerns. As pipeline candidates move through the clinical trials process, it is easier to gauge the likelihood of their chances for approval by regulators. They provide financial support to these activities and when it appears their success is almost imminent, larger investments and commitments are made to assure trial completion, approval and subsequent clinical / commercial launch traction.
The high cost and high risk involved with gene therapy research is a barrier to entry; less firms and highly focused therapies reduce competition in the sector
As an advanced area of life sciences with potential to cure diseases by replacing missing or mutated versions of a gene found in a patient’s cells with healthy copies gene therapy is not a sector many companies can participate in based on time, clinical and financial commitments. Depending on the patient and the genetic-based issue involved, gene therapy in has been proven to significantly reduce or eliminate complex, life threatening conditions. Success in the gene therapy sector also enriches the clinical insights and manufacturing attributes of their organizations which can be applied in other product development ventures outside of the gene therapy realm.
LinkedIn: John G. Baresky
Twitter: Healthcare & Content Marketing Guy
Published on 12/19/19, updated 2/23/20
Danaher achieves critical European regulatory approval milestone in acquisition of GE biopharma business unit
Danaher ( NYSE: DHW.WD ) is closing out 2019 at full speed with its attention squarely centered on 2020. The European Union has approved their acquisition of GE Biopharma which completes a pivotal stage of their quest to buy one of GE's most prestigious and profitable corporate divisions. To satisfy the European Commission and other government regulatory requirements, Danaher will sell off these operating groups:
- MolDev FortéBio molecular characterization business located in Fremont, California and Shanghai, China
- Pall Biotech chromatography hardware unit operating from Portsmouth, United Kingdom and Westborough, Massachusetts
- Pall Biotech chromatography resins company operating out of Cergy, France
- Pall Biotech Single-Use Tangential Flow Filtration ("SUT TFF") systems located in Portsmouth, United Kingdom and Westborough, Massachusetts plus its stainless-steel Hollow-Fibre TFF (“SS HF TFF”) systems operations in Shanghai, China
- Pall Biotech SoloHill microcarriers and particle validation standards unit based in Farmington Hills, Michigan
With addition of GE biopharma assets, Danaher's business will engage multiple bioprocessing industry sectors
As a combined organization, Danaher and the acquired assets of GE Biopharma Business will be a worldwide leader in products and services aligned with bioprocessing including consumable single-use technology products such as bioreactors, mixers or connectors plus cell culture media and sera, microcarriers, bioprocessing filtration, molecular characterization, microscopy, high-content screening and laboratory filtration. Its enormous portfolio will enable it to embrace the needs of multiple customer stakeholders.
These include academic institutions and commercial research organizations plus an array of companies involved with research, development, manufacturing, and commercialization of products prepared from or used by biological systems such as biopharmaceutical developers and manufacturers, cosmetics, food, fuel, livestock feed and other biochemical product and service providers.
Danaher corporate profile
Headquartered in Washington, D.C., the Danaher organization is generally defined through three business groups:
- Environmental & applied solutions
- Life sciences
With the addition of the GE biopharma assets, Danaher’s abilities in each of the 3 will be significantly multiplied and likely reach into new business sectors as well. Excluding the addition of the GE biopharma assets and their revenue potential, Danaher already generates just under $20 billion in annual sales.
Danaher will be disrupting the competitive balance in their business sectors
These top 10 Danaher rivals plus other firms will be sizing up the new competitive threats Danaher is formulating:
- Agilent Technologies ( NYSE: A )
- Bruker Corporation ( NASDAQ: BRKR )
- Harvard Bioscience ( NASDAQ: HBIO )
- Illumina ( NASDAQ: ILMN )
- Lonza Group ( OTCMKTS: LZAGF )
- PerkinElmer ( NYSE: PKI )
- Roche ( OTCMKTS: RHHBY )
- Thermo Fisher Scientific ( NYSE: TMO )
- VWR / Avantor ( privately held )
- Waters Corporation ( NYSE: WAT )
Danaher completes its divestiture of Envista including stock ownership and voting rights
Danaher completes its divestiture of Envista including stock ownership and voting rights
Another strategic corporate development milestone at Danaher is the completion of its dental product assets into a fully independent spinoff known as Envista Holding Corporation which was launched in 2018. Danaher recently accepted an aggregate of 22,921,984 shares of Danaher common stock in exchange for all of its 127,868,000 shares of Envista common stock. Danaher is now completely separated from Envista as it no longer possesses any voting rights or economic interest in the newly formed company.
Danaher spinoff formed a global professional dental product leader
Overlooked in the broader sense of the investor and dental healthcare communities, through spinning off its dental assets to form Envista ( NYSE: NVST ) Danaher launched a professional dental products giant comprised of:
- 3 primary business units: KaVo Kerr, Nobel Biocare, Ormco
- Over 12,000 employees
- More than 30 dental brands and product franchises
- $2.8 billion in annual sales generated from over 150 nations
Danaher's organizational and revenue goal plans for 2020
Moving forward, Danaher will be busy with the arrangements to integrate its new assets and aligning their revenue producing capabilities according to their annual business plan. At the same time, they will be shopping the 4 Pall business units and MolDev FortéBio to interested parties. 2020 will unveil a significantly larger and somewhat redefined Danaher that customers, competitors and investors will be paying much more attention to in the future.
Commercial synergy, market access and profit in strategic partnerships
Walgreens Boots Alliance (NASDAQ: WBA ) ranks at number 17 on the Fortune 500 list of largest firms. Reportedly they are exploring options to take the company private which may also be a strong signal to other industry leaders that it is open to takeover offers. Regardless of what their ultimate goals are, they remain a global force in retail, pharmacy, wholesaler and other sectors. The company’s CEO, Stefano Pessina, has communicated Walgreens is actively pursuing more partnerships as a business strategy that enable it to generate revenue by asserting its corporate, financial, clinical and operations resources to build market access and revenue while disrupting competitors --without having to deploy excessive funding for complete acquisitions that contribute further to debt loads.
Walgreens Boots Alliance ( WBA ) financial profile based on the formation of its present corporate structure
For many, Walgreens is a widely recognized retail drugstore chain that competes against consumer and pharmacy players such as CVS Health, Target, Walmart, grocery store pharmacies and online juggernaut Amazon's consumer and pharmacy businesses. In 2014, Walgreens completed an acquisition exercise valued at $4.9 billion cash plus 144.3 million common shares valued at $10.7 billion to acquire UK and Swiss-based Alliance Boots ( Walgreens had earlier committed $4 billion cash and 83.4 million common shares to get the deal underway ). Based in Deerfield, Illinois, ( a Chicago suburb ), the new organization, which deems itself as a holding company, immediately transformed into a global, multi-sector competitor.
Primary elements of Walgreens Boots Alliance financial position
- Market capitalization of $50 billion
- Annual sales: $136.86 billion ( 2019 figures which represented a 5.8% increase over 2018 )
- Earnings: $3.982 billion
- Debt: $15 billion
- Ownership stake of 16% held by CEO Stefano Pessina
- Business operations in more than 25 nations
- Over 415,000 employees
- More than 18,500 stores located in 11 countries
- Over 390 distribution centers servicing pharmacies ( including pharmacies not owned by WBA ), physician offices and healthcare provider organizations
- Ownership stake of 26% in AmerisourceBergen, a global leader in healthcare wholesaler operations ranked at number 12 on the Fortune 500 list; annual sales of $153 billion
Based on its success and expertise dating back to 1901, Walgreens is acknowledged as an industry leader in consumer, pharmacy, wholesale and other business sectors. While it has various collaborations in place with a number of entities, it has 4 partnerships with established industry leaders equal to its own scope and scale. They demonstrate how attractive Walgreens is as an ally and business opportunity. Their relationships with Walgreens underscores Walgreens' ability to innovate and operate outside of conventional business model structures to share knowledge and resources which benefits both partners while increasing sales.
U.S. grocery store giant Kroger Co.
Walgreens has been collaborating with grocery store giant Kroger ( NYSE: KR ) in several marketing initiatives and late in 2019 announced the formation of their own GPO, Retail Procurement Alliance. By combining their orders, Kroger and Walgreens seek to lower costs and boost operational efficiencies. The two companies are already selectively marketing each other’s private label brand products in test market stores across the nation.
Cincinnati, Ohio based Kroger operates over 2,800 stores under 17 different names in 35 states with annual sales exceeding $122 billion. By working together, Kroger and Walgreens are developing wider market access for each of their product portfolios while developing synergies to more effectively operate and compete against Amazon, Walmart, Target, CVS Health, Albertsons, Costco plus other grocery and pharmacy rivals.
The global leader in healthcare wholesale operations McKesson Corporation
Late in 2019, Walgreens entered into a collaboration with McKesson, the world’s largest wholesaler. The two companies formed a joint venture to combine each of their drug wholesale units ( Alliance Healthcare Deutschland and GEHE Pharma Handel ) in Germany. McKesson ( NYSE: MCK ) has a 30% stake int the venture and WBA owns the remaining 70%. The organization will optimize efficiencies and strengthen a competitive position in Germany. The joint venture ( yet to be named and still requiring approval by regulators) is exclusively deployed within Germany's borders and does not extend into other nations.
This arrangement is particularly interesting relative to Walgreens 26% ownership in AmerisourceBergen, one of McKesson’s primary competitors. McKesson, headquartered in San Francisco, ranks at number 7 on the Fortune 500 list by producing over $208 billion in yearly sales.
Technology champion and innovator Microsoft Corporation
Early in 2019 Walgreens Boots Alliance entered into a deal with Microsoft to enroll over 380,000 employees in Microsoft 365 cloud apps which encompass mobile, Office 365, security features and other applications. Walgreens will also transition the majority of its IT workload to Azure and Microsoft’s cloud platform. The two organizations are further working on solutions to optimize data workflow throughout WBA including administrative, pharmacy, operations and other areas through artificial intelligence ( AI ) and other technology. Microsoft has deep AI capabilities spanning, voice, advanced machine learning, data science, Internet Of Things ( IoT ) / Interoperability applications and robotics.
This arrangement benefits Walgreens as it gives them access to Microsoft’s technology resources and IT savvy while Microsoft gains a wider presence in the consumer / patient data management, retail, pharmacy, operations and other sectors ripe for advanced technology development. Through the partnership, both are staking a competitive position against a mutual consumer, healthcare and commercial technology rival, Amazon. Ranked at number 24 in the Fortune 500, Seattle based Microsoft churns out more than $110 billion in annual sales.
Blue Cross Blue Shield Pharmacy Benefit Manager Leader Prime Therapeutics
In 2017 Walgreens entered into a partnership arrangement with Prime Therapeutics, one of the largest pharmacy benefit management companies in the United States. The venture, called AllianceRx Walgreens Prime, is a ten year commitment for the 2 partners. Walgreens is the central ( but not exclusive ) retail pharmacy provider for Prime Therapeutics and the two jointly operate a specialty pharmacy plus mail order pharmacy services. AllianceRx Walgreens Prime benefits WBA with enhanced market access to the membership of 14 BCBS plans plus other customer groups.
Prime Therapeutics realizes the benefit of being aligned with a leader in retail, mail and specialty pharmacy services and operations. Prime Therapeutics, based in Eagan, Minnesota, was founded in 1998. It services more than 28 million members and patients. Their cooperative ownership structure is comprised of 14 Blue Cross Blue Shield plans across the United States.
Walgreens building its future through clinical, operations, and technical transformation plus strategic alliances
Through the company it keeps in strategic partnerships and willingness to reinvent itself; Walgreens fortifies its ability to profitably grow and compete. Maximizing its assets and attributes with equally adept and equipped partners, Walgreens cultivates and improves its organizational effectiveness. Moving forward, Walgreens has numerous options to satisfy the demands of consumers, patients, payers and shareholders while continuing to be a preferred strategic ally for existing and future partners.
LinkedIn: John G. Baresky
Twitter: Healthcare & Content Marketing Guy
Medical school applicants and medical school enrollees transforming based on gender, ethnicity, race
The Association of American Medical Colleges ( AAMC ) reports that based on its data, more females than males are enrolled as medical students throughout the nation. The margin is narrow but reflects an ongoing trend that has been building over the last several years. This is a breakthrough for women, the medical community, academia and the nation.
AAMC is a champion for better patient care and healthcare academics
Based in Washington, D.C., AAMC was founded in 1876. AAMC is a non-profit organization. Its members comprise all 154 accredited United States and 17 accredited Canadian medical schools encompassing almost 400 teaching hospitals and health systems, 51 Department of Veterans Affairs ( VA ) medical centers plus over 80 academic medical societies. The AAMC is a healthcare leader dedicated to improving medication education and patient care while driving breakthrough medical research and healthcare innovation.
A positive and growing trend that cleared a medical school enrollment milestone in 2017
Presently, 50.5% of all enrolled medical students are women. This number is built from crossing an earlier landmark threshold from 2017 when for the first time females outnumbered males as first-year medical students.
Kaiser Family Foundation Data
According to the Kaiser Family Foundation ( KFF ) there were 25,955 medical school graduates in 2018. This number includes allopathic medical school graduates and osteopathic medical school graduates. The top 10 states of combined allopathic and osteopathic graduates were:
- California: 1,477
- Florida: 1,316
- Illinois: 1,315
- Michigan: 1,143
- Missouri: 922
- New York: 2,402
- Ohio: 1,122
- Pennsylvania: 1,910
- Texas: 1,735
- Virginia: 858
Based in San Francisco and founded in 1948, the Kaiser Family Foundation is a commercially and clinically recognized and respected non-profit organization dedicated to the major healthcare issues of the United States and the role of the nation as an influential global healthcare policy leader.
As an industry, healthcare is becoming more diverse
The medical school academic sector is changing in many other ways. A greater number of minorities are applying and the percentage of them being accepted is on the rise as well.
Data from AAMC reveals a small and steady transformation in healthcare academics and the future healthcare workforce:
- Native American or Alaska Native applicants increased by 4.8% and their acceptance levels increased by 5.5%
- Hispanic or Latino applicants grew by 5.1% and those accepted grew 6.3%
- African American or black applicants rose by 0.6% and those accepted increased by 3.2%
- For African American or black males, their applicant count grew by .5% and those accepted increased by 3.7%
If current trends continue, the physician workforce of the future will be significantly changed
While women and minorities are presently outnumbered in the physician ranks, the current trends mark an important change from the past norms which is favorable for patients and clinicians moving forward. For persons early in their education and forming ideas about their career aspirations or for those people seeking a change in their existing careers, the prospects of gaining entry into the healthcare industry is greater than ever --including the opportunities for medical doctor roles as long as they can meet the academic rigor ( average GPA of undergraduates admitted to medical school is above 3.7 ) and take on the economic burden involved.
Medical school expense is a daunting challenge but interest in the healthcare profession and physician careers is robust
Based on data from the American Medical Student Association ( AMSA ), the annual cost of attending a public medical school ( complete with tuition, fees, and health insurance included ) is approximately $34,592 for in-state students and $58,668 for out-of-state students. This cost rises considerably for those attending private institutions. Private medical school tuition, fees and health insurance average over $50,000 annually for in-state or out-of-state enrollees. These figures are based on statistics from 2016-2017; for public and private universities these costs continue to increase. Founded in 1950, AMSA is a student governed non-profit organization with over 30,000 members that is based in Washington, D.C. which cultivates healthcare academic and student advocacy while providing a framework for educational and clinical communication and networking.
The sustained and growing interest in healthcare as a career and physician-centered roles is encouraging. 20 new medical schools have opened in the last ten years and class sizes have been expanded which has resulted in a 33% growth trend that dates back to 2002.
Americans are living longer; will there be enough physicians to care for us?
Amazingly, the expansion may not be sufficient to meet the healthcare needs of the nation. Thanks to rapidly evolving healthcare knowledge, better techniques and advanced healthcare products as well as a decline in tobacco use, U.S. citizens are living longer. To meet the needs of today and those of future generations, the number of physicians needs to increase as present data indicates a drastic shortfall by up to 122,000 doctors is approaching by the year 2032.
LinkedIn: John G. Baresky
Twitter: Healthcare & Content Marketing Guy
Synthorx: a fourth multi-billion dollar acquisition for Sanofi in less than 10 years
Sanofi is expanding its oncology therapeutics business through acquiring Synthorx for approximately $2.5 billion. Based in La Jolla, California, Synthorx has a primary focus in immuno-oncology. Synthorx's most current primary development project is THOR-707, a form of interleukin-2 (IL-2) which, if approved and launched, can be deployed to treat multiple solid tumor types as a monotherapy and potentially in combination with checkpoint inhibitors. The agent is intended to increase effector T-cells and natural killer cells that eliminate cancerous cells in patients.
Synthorx has value-added biotech research & development attributes for Sanofi to build on
An added asset for Sanofi in the deal is Synthorx’s Expanded Genetic Alphabet platform. It can be integrated with Sanofi’s existing initiatives in nanobody research and development. This will support Sanofi’s ventures in advanced patient care and healthcare product sectors such as:
- Protein Fusions
$2.5 billion deal a mega win for Synthorx investors
Synthorx had gone public in 2018. These three initial backers will realize an enormous windfall from their investments in it:
- Avalon Ventures
- RA Capital
Sanofi expanding its ability to compete in advanced pharmaceutical product sectors while stacking on debt
Sanofi, which has been reported to be shopping its consumer healthcare products unit as a spinoff or joint venture that could be worth up to $30 billion, has made three sizable acquisitions since 2011 that, combined with the Synthorx deal, will push up its $28 billion debt load:
- Synthorx: bought for $2.5 billion in 2019
- Bioverativ: acquired for $11.5 billion in 2018 ( a spinoff from Biogen)
- Ablynx purchased for $2.4 billion in 2018
- Genzyme bought for $20 billion in 2011
Based in Paris, France, Sanofi ( NASDAQ: SNY ) is a global contender ranked within the top 10 of pharmaceutical manufacturers. It generates over $42 billion in annual sales and has over 100,000 employees.
Sanofi transforming its corporate organization and clinical focus
The Synthorx deal is part of a newly emerging change in strategy at Sanofi. They are not only seeking to further monetize their consumer healthcare products unit through a spinoff, partnership or outright sale but also to channel more focus into global healthcare opportunities based on clinically complex medicines. Their senior leadership team has communicated they are going to be significantly reducing their clinical and financial investments in the cardiovascular / hypertension and diabetes / endocrinology patient care sectors in favor of more challenging life science commercial opportunities.
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Could 3M be seeking to boost revenue or pay down long term debt?
3M ( NYSE: MMM ) is reportedly exploring it options to sell or spinoff its drug delivery systems unit. Based in Maplewood, Minnesota ( a suburb of St. Paul ), 3M ( formerly known as the Minnesota Mining and Manufacturing Company ) is a global conglomerate with long established business enterprises in consumer goods, healthcare, industrial products and worker safety.
3M has a robust presence in the healthcare sector
While 3M generates about $33 billion in sales annually, the drug delivery portfolio of products is a smaller part of a substantially large healthcare products unit. It is estimated drug delivery product revenue accounts for less than 2% of 3M’s total annual sales. Medical device manufacturers, brand and generic pharmaceutical manufacturers as well private equity investors can be considered as likely buyers if 3M does move forward with the sale of the business unit.
Possible plans for proceeds from sale of the drug delivery business unit
If 3M were to spinoff or sell the drug delivery unit, it could be marketed for around $1 billion. 3M may have plans to drop the proceeds of the drug delivery unit into the bottom line of its annual revenue totals or could apply it to pay down some of its long term debt which is approximately $19.4 billion.
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Astellas Expands Therapeutic Portfolio With Gene Therapy Deal
Astellas ( OTCMKTS: ALPMY ) has announced it is acquiring Audentes Therapeutics ( NASDAQ: BOLD ) for $3 billion and plunge itself into the gene therapy market. Based in San Francisco, California, Audentes is a clinical stage research company centering on the development of AAV-based genetic medicines for people with significant and rare neuromuscular diseases.
Astellas is a global pharmaceutical leader
Astellas, based in Tokyo, Japan with a U.S. headquarters in Northbrook, Illinois, is Japan’s second largest pharmaceutical company ( Takeda is ranked at number 1). The current product portfolio of Astellas is defined by 4 categories and the addition of Audentes will establish a 5th with the specialty of genetic therapy:
- Gene Therapy
Astellas employs approximately 17,500 worldwide; Audentes has less than 1,000 staff members.
Audentes has developed a robust pipeline of advanced gene therapies
Audentes' adeno associated virus ( AAV ) gene therapy technology platform and proprietary production process expertise is applied in programs spanning 3 modalities:
- Gene Replacement
- Vectorized Exon Skipping
- Vectorized RNA Knockdown
Audentes has committed significant resources to develop potential approval candidates although risk remains high in terms of chances of approval by the Food and Drug Administration ( FDA ) in the United States and the government regulatory agencies of other nations:
- AT132 X-linked Myotubular Myopathy MTM1 ( Gene Replacement )
- AT845 Pompe GAA ( Gene Replacement )
- AT702 Duchenne Muscular Dystrophy Exons 2, 1-5 ( Vectorized Exon Skipping )
- AT751 Duchenne Muscular Dystrophy Exon 51 ( Vectorized Exon Skipping )
- AT753 Duchenne Muscular Dystrophy Exon 53 ( Vectorized Exon Skipping )
- AT466 Myotonic Dystrophy DMPK ( Vectorized Exon Skipping / Vectorized RNA Knockdown )
Presently, the leading candidate for approval in the Auduentes portfolio is AT312 which could happen as early as mid-2020. Its clinical trial performance has generated good results in the treatment of X-linked myotubular myopathy (XLMTM) occurring primarily in male infants.
Astellas began exploring gene therapy marketplace in 2018
Astellas began exploring gene therapy marketplace in 2018
Astellas has already licensed a gene therapy candidate. In 2018 Astellas entered into a licensing agreement with Juventas Therapeutics for JVS-100. JVS-100 is a non-viral gene therapy expressed from stromal cell-derived factor -1 ( SDF-1 ) which is a naturally occurring signaling protein activating the endogenous tissue repair pathways. Founded in 2007 and based in Cleveland, Ohio, Juventas is a private, clinical stage biotechnology company developing novel non-viral gene therapies which activate natural processes. Their clinical indication specialties encompass dermal scar prevention, heart failure, peripheral artery disease and other areas of investigational research and development.
Why is gene therapy such a hot marketplace for biotech and pharmaceutical companies to invest in?
Gene therapy is an advanced area of life sciences with potential to cure diseases by replacing missing or mutated versions of a gene found in a patient’s cells with healthy copies. Depending on the patient and the genetic challenge involved, gene therapy in some instances can resolve significant illnesses with one dose. Because of the advanced clinical technologies involved with developing and manufacturing gene therapies, they are quite costly and the processes to develop them are complex and highly coveted by pharmaceutical manufacturers.
Large and mid-sized pharmaceutical companies are always seeking to build their clinical and commercial capabilities. Many product categories are crowded with competition including:
- Gastraoesophogeal Reflux Disease ( GERD )
- Oral Contraceptives
There are numerous brand and generic drugs in each of these categories. While the patient population prescribed these products is in the millions and the medications involved taken on a daily basis for months if not years, pharmaceutical companies devote large sums to develop these products and promote them. Then conversely, they frequently discount the products through market access strategy measures to contract for favorable positions on managed care organization ( MCO ), prescription benefit manager ( PBM ) and health system formularies or group purchasing organization ( GPO ) listings.
While gene therapy and other advanced medications are costly and risky to produce, the investment to promote them following approval is less. The payout is larger as there are less competitors due to their high research & development and production costs plus the narrow indications they are approved for and reduced number of patients they are prescribed to results in significantly higher prices at time of launch.
Astellas is highly selective in its acquisition strategy
It has been almost 10 years since Astellas last made such a sizable acquisition. In 2010, Astellas acquire OSI Pharmaceuticals for $3.8 billion. With annual sales of approximately $12 billion and a market capitalization estimated at $33 billion, Astellas is solidly established in global healthcare markets and has the clinical and financial resources to cultivate a successful gene therapy portfolio of products.
Astellas versus the competition in the gene therapy marketplace
By adding Audentes’ research & development attributes and manufacturing capabilities plus its connections with patient groups, academic institutions and the biotech research community, Astellas assertively positions itself in the expanding gene therapy marketplace.
Roche ( OTCMKTS: RHHBY ) Novartis ( NYSE: NVS ) and Pfizer ( NYSE: PFE ) are presently the blue chip pharmaceutical manufacturer leaders in gene therapy. Roche acquired gene therapy company Spark Therapeutics for $4.8 billion in 2019, Novartis bought up AveXis, another gene therapy leader for $8.7 billion. Among Pfizer's many investments, they acquired gene therapy producer Bamboo Therapeutics for $645 million in 2016.
Reportedly Pfizer and Novartis have been hard at work building out their gene therapy development and manufacturing capabilities. Pfizer has allocated about $600 million to gene therapy production and Novartis slightly less at $500 million.
Potential gene therapy giants or acquisition targets
Upcoming gene therapy companies, which could substantially grow on their own if their pipeline candidates are approved, may also be attractive buyout targets. Some of the leading gene therapy companies of this caliber include:
- MeiraGTx Holdings PLC (NASDAQ: MGTX )
- Regenxbio Inc. ( NASDAQ: RGNX )
- Sarepta Therapeutics Inc. ( NASDAQ: SRPT )
- Solid Biosciences Inc. ( NASDAQ: SLDB )
- uniQure NV ( NASDAQ: QURE )
- Voyager Therapeutics Inc. ( NASDAQ: VYGR )
While it appears there are numerous contenders in the gene therapy market, their products are highly niche-focused so they have less or no competition within each of the therapeutic areas they are exploring to develop new medicines. The high rate of clinical trial failure also results in an ongoing reduction of competing agents throughout the product development cycle.
Drug manufacturers seek to avoid large financial outlays and risk involved with gene therapy and other biotherapy product development
Many large and mid-sized companies owned by the investment community prefer to have smaller, highly-focused companies develop products like gene therapies first. As they progress through the approval process, the pharma companies either license or buy outright the product or the firm when approval by regulators seems imminent. In advance, these companies may partially fund the research necessary to develop the products. Audentes provides Astellas with a solid candidate to enter the gene therapy market with and hopefully generate other products in the future.
Astellas and Audentes deal approval and product approval timelines
Even before the Astellas and Audentes deal is approved by regulators, the approval of AT132 X-linked Myotubular Myopathy MTM1 ( Gene Replacement ) will be highly anticipated by investors, company staff members and the medical community. Depending when the deal is approved and AT132 is approved, a combined torrent of activity will follow. Astellas and Audentes could be working to integrate their organizational structures and launching a strategic product venture at the same time. As 2020 rapidly approaches, each company has much to accomplish and look forward to.
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Amazon Combines Digital Savvy With Voice And Transcribing Technology To Drive Innovation In Patient Care And Healthcare Data Management
Conversation Converted To Digital Text Technology
Amazon ( NASDAQ: AMZN ) is introducing a new healthcare application which will integrate with patient electronic health records ( EHR ).
Conversations between physicians and patients are recorded and converted into text content that populates the EHR at point-of-care. EHRs are also referred to as Electronic Medical Records ( EMR ).
Healthcare Clinical And Cost Advantages
The application, known as Amazon Transcribe Medical, will enable clinicians and patients to have more direct and meaningful dialogue that is retrievable for review at a later time. During face-to-face interactions, doctors and patients can converse without the doctor having to continually interrupt their dialogue to enter notes in the EHR or recall the details later either by memory or handwritten note which are not always easy to interpret.
Amazon Technology In Partnership With Cerner and Suki
Amazon developed the application by collaborating with Cerner, one of the world’s largest EHR companies and a startup company, Suki, that specializes in transcription technology. Currently, the Amazon Transcribe Medical program can only be used by those healthcare provider organizations and EHR platforms aligned with Amazon Web Service ( AWS or “Amazon Cloud”).
Amazon Transcribe Medical was designed to work with Amazon Comprehend Medical, an application that enables developers to work with unstructured medical text rhetoric aligned with patient symptoms and associated clinical details including drug therapy doses, diagnoses and other pivotal, finite detail essential for a well-fortified EHR patient file.
Patient Information HIPAA Compliance And Data Accuracy
The application meets HIPAA requirements which is absolutely pivotal in all things related to patient data, privacy and security. The advanced technology and testing involved with developing the program also demanded a high degree of accuracy in terms of medical terminology, punctuation and other details relevant to clinician and patient conversations.
Microsoft, Google, Other Competitors
Advanced voice transcription technology is being pursued by numerous other healthcare software and technology companies. While Microsoft and Google have collaborations underway with various partners in this regard, there are many other companies developing solutions which could compete with Amazon, Microsoft and Google. They could launch independently or be acquired by one any one of these three companies or others to accelerate development of a marketable commercial product to be used by hospitals, health systems, medical practice groups or other healthcare provider organizations.
Besides Google and Microsoft, these are some other competitors in the medical transcribing space threatened by Amazon Transcribe Medical:
Dolbey, Entrada and Nuance already interface with some EHRs but having a complete clinical and commercial solution that can be utilized by an entire hospital or health system is something on an entirely different scale. Amazon, Cerner and Suki, with Amazon Cloud as an integral resource, have the clinical, financial and technical bandwidth necessary to provide enterprise-wide medical transcription EHR programs that will have wide impact on broad based healthcare provider organizations.
Voice Recognition Technology ( VRT ) And Transcription Technology
In healthcare and an array of other industries, advances in voice recognition and transcription technology are widely welcome and highly anticipated. These solutions speed processes, streamline recording and retrieval of information and bypass the keyboard interface which slows down processes and contributes to errors. As we have seen with smartphones, digital assistants, various remote control apparatuses and other uses of digital technology, the ability to control technical interfaces and collect, store, share data via voice is becoming a new technology standard in healthcare, businesses and homes.
Demands Of Clinicians And Healthcare Provider Organizations
As Amazon Transcribe Medical’s launch plans unfold, doctors, nurses and other clinicians, as well as healthcare administrative staff, will be eager to learn more about it. Amazon will be busy not only educating the market about it but also incorporating additional attributes into it to fulfill customer requirements and stay ahead of competitors. Companies like Microsoft, Google and others will spur their efforts to develop their own solutions to blunt momentum Amazon may build from the start.
Patient Information Data Companies
Allscripts, Cerner, Epic, Meditech and other EHR / EMR companies will have demands put on them by their customers in order to be able to accommodate VRT and transcription technology applications from Amazon and other organizations or develop equally sophisticated or better solutions of their own.
Unique Opportunities English-Speaking And Non-English Speaking Nations And Communities
For all players in the voice medical transcription space, there will be a race to develop solutions that accommodate multiple languages including regional dialects. Healthcare is a universally global industry and a great way to drive user adoption and sales revenue is to be able to market solutions in primary and secondary markets as well as emerging markets and third world nations.
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Novartis' latest acquisition drives the company into the center of an enormous healthcare sector with deep competition
Novartis ( NYSE: NVS) has announced it is acquiring cardiovascular therapy-focused The Medicines Company ( NASDAQ: MDCO ) for $9.7 billion. Novartis, based in Basel, Switzerland covets The Medicine Company’s “Inclisiran” agent; a small interfering RNA (siRNA) PCSK9 drug compound being evaluated for its promising ability to lower low-density lipoprotein (LDL) cholesterol ( also known as LDL-C or “bad cholesterol” ). It is not on the market yet but appears to be well-positioned for approval by regulators and is expected to have a favorable administration schedule of just 2 doses annually.
The cholesterol pharmaceutical market is thick with brand and generic competition from an array of heavy hitters
With the exception of Livalo and Praluent, each of these products are available through generic pharmaceutical manufacturers; some have been prescribed for decades:
- Alirocumab ( Praluent - Sanofi / Regeneron - no generic )
- Atorvastatin ( Lipitor - Pfizer )
- Fluvastatin ( Lescol - Novartis )
- Lovastatin ( Mevacor - Merck )
- Pitavastatin ( Livalo - Kowa - no generic )
- Pravastatin ( Pravachol - Bristol Myers Squibb )
- Rosuvastatin calcium ( Crestor - AstraZeneca )
- Simvastatin ( Zocor - Merck )
Novartis is a worldwide healthcare leader
Novartis is a Fortune 500 company ranked at 201. It generates approximately $52 billion in annual sales and employs overs 125,000 workers. Its top ten products each generate over $1 billion annually in sales:
- Affinitor / Votubia ( palbociclib )
- Cosentyx ( secukinumab )
- Galvus ( vildagliptin )
- Gilenya ( fingolimod )
- Gleevec ( imatinib )
- Lucentis ( ranibizumab )
- Promacta / Revolade ( eltrombopag )
- Sandostatin ( ocretride acetate )
- Tafinlar w/ Meknist ( dabrafenib + trametinib )
- Tasigna ( nilotinib )
The Medicines Company is a clinical development company with a strategy centered on researching compounds that have fallen short of expectations and not able to meet approval standards by the Food and Drug Administration and other regulators in earlier commercial product development ventures. They revisit the data and assess options to refine certain product attributes as well as clinical trial designs and related approval trial processes to determine if a product can be reinvestigated, entered into clinical trials once again and perhaps be approved.
Novartis planning for the future
Coincidentally, Novartis ( formed from the merger of Ciba-Geigy and Sandoz ) with a market capitalization of approximately $207 billion and The Medicines Company were both founded in 1996. Novartis has two primary business units:
- Innovative Medicines ( which will house Inclisiran if it is approved )
- Sandoz ( Sandoz manufactures generic and biosimilar or biogeneric products)
Novartis has been assertively working on transforming their organization into a pure pharmaceutical / biotech company. Earlier in 2019, Novartis spun off their blue chip consumer product brand, prescription drug and contact lens eyecare unit, Alcon, into a fully independent company ( NYSE / SXC: ALC) with a market capitalization of $28 billion. In 2018 it sold off its 36.5% stake in a consumer health product joint venture to their partner, GSK, for $13 billion.
Novartis a global player in billion dollar acquisitions
Mergers and acquisitions are almost routine in the healthcare industry. Novartis is well versed in the exercise. Some of their largest deals include:
- In 2018 Novartis made two acquisitions; AveXis for $8.7 billion and Endocyte for $2.1 billion
- Genzyme was bought by Novartis for $21 billion in 2011
- In 2008, Novartis began acquiring Alcon from Nestle for almost $60 billion in two separate transactions.
- Chiron was purchased by Novartis in 2006 for $5.1 billion
- Novartis bought Hexal AG for $8.3 billion in 2005
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SANOFI IS A GLOBAL LEADER IN PRESCRIPTION DRUG AND CONSUMER HEALTHCARE PRODUCTS
Global pharmaceutical leader Sanofi S.A. ( NASDAQ: SNY ) is reportedly weighing options to make significant changes to its commercial organization and its consumer products business unit. Based in Paris, France, Sanofi stands in the upper ranks of the world’s top 10 pharmaceutical companies based on revenue. Employing over 100,000 workers, it generates over $42 billion in annual sales and is ranked at #288 in the Fortune 500. There is speculation in the investor, healthcare and consumer product business communities that Sanofi may form up its consumer products business unit as a separate spinoff or enjoin it through a partnership with another company.
SANOFI CONSUMER PRODUCTS DIVISION
Sanofi’s consumer products division is sizable; its annual sales are just over $5 billion. It has an established portfolio of familiar over-the-counter ( OTC ) and health and beauty ( HBA) brand products including:
- Gold Bond
- Selsun blue
Based on its $5 billion dollar annual sales and brand franchises' worth along with associated assets and liabilities, it is estimated Sanofi’s consumer business unit could be valued as high as just over $30 billion as a standalone company. Spinning the consumer products unit off or engaging in a partnership with another company could reduce costs and free up cash for Sanofi to invest in other parts of its organization.
SANOFI CORPORATE STRUCTURE
Worldwide Sanofi has 75 manufacturing sites based in 33 different countries. Their leading markets are the United States, Europe and Asia. They organize their commercial enterprise based on 5 divisions:
- General Medicines and Emerging Markets
- Specialty Care ( Sanofi Genzyme )
- Vaccines ( Sanofi Pasteur )
- Diabetes & Cardiovascular
SANOFI'S CLINICAL AND COMMERCIAL GLOBAL MARKET PRESENCE REMAINS FORMIDABLE WITHOUT CONSUMER BUSINESS UNIT
Whether Sanofi spins off or enters a partnership with its consumer products division, it will have plenty of options to reinvest income generated from it. Sanofi’s non-consumer, prescription drug and biotech businesses span brand and generic formulations for rare diseases, oncology, hematological disorders, neurology, immunology / vaccines, cardiovascular and endocrinology. Some of Sanofi’s top prescription drug products are:
- Lantus / insulin glargine ( diabetes care / endocrinology )
- Aubagio / terifluonide ( multiple sclerosis / neurology )
- Lovenox / enoxaparin sodium ( anticoagulant / cardiology )
- Plavix / clopidogrel ( coronary artery disease, peripheral artery disease / cardiology )
- Toujeo / insulin glargine ( diabetes care / endocrinology )
SANOFI'S MULTI-BILLION ACQUISITIONS AND SALES
Sanofi has been steadily reforming its business model to build up its brand pharmaceutical and advanced healthcare product operations. The plans for the potential sale or spinoff of the consumer health unit aligns with their ongoing strategy. These are deals Sanofi has orchestrated in the last ten years:
- Baxter acquires Sanofi's Biosurgery Seprafilm product franchise for $350 million cash in 2019
- 2018: Ablynx, a nano antibody biotech company, is acquired by Sanofi for $4.8 billion
- 2018: Bioverativ, a hemophilia drug developer, is bought by Sanofi for $11.6 billion.
- 2018: Sanofi sells its generic drug unit Zentiva to private equity concern Advent International for $2.2 billion
- 2011: Sanofi acquires biotech leader Genzyme for $20 billion
Sanofi may use the proceeds generated from the offloading of the consumer products unit to pay off debt, invest more in existing pipelines or conduct additional acquisitions. Sanofi's market capitalization is roughly $117 billion and its debt load is just under $28 billion; jettisoning some of this burden would brighten its balance sheet.
Sanofi has been actively involved with fortifying the consumer products business unit. In 2017 it offloaded its animal health unit to Boehringer Ingelheim in a swap deal for their consumer products division valued at $20 billion. A joint-venture with another company would enable them to continue to collect revenue from its consumer brands while putting more focus on biotech, prescription drug and other advanced therapies ( it is also conceivable Sanofi could choose to sell the consumer unit outright to another company). The advantages of a spinoff arrangement are Sanofi could partition the consumer unit away from their organization, benefit from the initial sale of shares and also choose to be a shareholder in the new organization.
Sanofi is believed to be meeting with investment bankers plus other advisors and consultants to determine which option is best for them. No companies have emerged thus far as potential candidates for Sanofi to partner with or have expressed interest in buying the consumer unit outright.
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A strategic succession of executive leadership at Abbott
After 21 years as CEO, legendary pharmaceutical, diagnostic and medical device merger & acquisition strategist and corporate leader Miles White is handing over the reins of Abbott to his planned successor, Robert Ford, Chief Operating Officer and President of Abbott, Inc.
Stanford University and McKinsey alum
Miles White, born in Minneapolis, Minnesota, launched his brilliantly dynamic career beginning with his graduation from Stanford University ( Bachelors in Mechanical Engineering, 1978 and MBA, 1980 ) then signing on at the New York based blue chip management consulting firm McKinsey.
Abbott Laboratories, Inc.
White joined Abbott Laboratories in 1984 and rapidly ascended through the ranks to the senior leadership position of CEO and chairman of the board by 1999.
Once at the helm of Abbott, Miles moved forward with a series of strategic deals which re-shaped the global pharmaceutical, medical device and diagnostic industries.
Abbott acquires Knoll Pharmaceutical from BASF
In 2000 Abbott bought Knoll Pharmaceutical from German chemical and industrial conglomerate BASF ( OTCMKTS: BASFY ) for $6.9 billion. This deal was instrumental in Abbott and eventually spinoff AbbVie’s growth as it included the now multi-billion dollar blockbuster drug Humira (adalimumab - a TNF blocker). Humira’s worldwide annual sales have been as high as $20 billion. White outmaneuvered front-runner Eli Lilly ( NYSE: LLY ), as well as Bristol-Myers Squibb ( NYSE: BMY ) and Sanofi-Synthelabo ( NASDAQ: SNY ) who were also considered front-runners seeking to acquire Knoll.
It is something to contemplate how the growth paths of these 3 companies would have evolved had they acquired Knoll or how Abbott would have progressed without Knoll. A further consideration would be how BASF would have succeeded had they not sold Knoll. Humira's commercial success was not guaranteed, undoubtedly Abbott's and White's pharmaceutical business savvy which was carried forth and enriched by AbbVie's strategic capabilities enabled Humira to hit the ground running following its launch with effective market access strategy, a succession of additional FDA approved indications and sales drive outpacing competitors.
Abbott spinoff Hospira acquired by Pfizer
Moving on from the Knoll deal, White formed up Abbott’s older hospital products unit into a separate commercial organization that became the Abbott spinoff company known as Hospira ( NYSE: HSP ) in 2004. When it was introduced as a public company, Hospira had 14 manufacturing plants and sales of approximately $2.5 billion. Hospira was acquired about 11 years later for $17 billion by Pfizer ( NYSE: PFE ) in 2015.
MediSense diagnostic and blood glucose monitoring deals sets the stage for Abbott's long term success in global diabetes care
A second significant corporate maneuver was launched by White in 2004 as Abbott acquired diagnostics and blood glucose monitoring company MediSense for $1.2 billion. Quickly glancing ahead, Abbott and White transformed the MediSense acquisition with its FreeStyle and related product franchises into becoming a global leader in blood glucose monitoring despite numerous low cost competitors entering the sector.
MediSense's primary competitors in the diabetes care space, formidable global healthcare companies to say the least, did not fare so well. Johnson & Johnson ( NYSE: JNJ ) exited the diabetes care business by selling off their LifeScan diabetes unit in 2018 through a private equity deal to Platinum Private Equity. Germany-based Bayer ( OTCMKTS: BAYRY ) sold their Contour diabetes care franchise to private equity firm KKR and Panasonic Health in 2015. Switzerland based Roche (OTCMKTS: RHHBY ) significantly downsized its Accu-Chek diabetes care business unit between 2014 and 2018.
Kos Pharmaceuticals acquisition and the unorthodox deal with Boston Scientific to buy Guidant assets
Following the Knoll and MediSense acquisitions plus the Hospira spinoff; Abbott was back in the acquisition saddle by acquiring Kos Pharmaceuticals for $3.7 billion in 2006. Based on this buy, Abbott fortified their cardiovascular health oral pharmaceutical portfolio with two cholesterol agents, Advicor and Niaspan, which aligned well with Abbott's triglyceride product TriCor.
White and Abbott executed a finesse asset deal in 2006 when Boston Scientific acquired Guidant, a producer of cardiac pacemakers, implantable cardioverter-defibrillators, stents and other cardiovascular medical technology. Abbott purchased the vascular intervention and endovascular businesses from Boston Scientific and agreed to share the rights of Guidant's drug-eluting stent programs with Boston Scientific. Abbott paid Boston Scientific $6.4 billion in an arrangement comprised of $4.1 billion for the Guidant assets, a loan of $900 million plus Abbott acquiring $1.4 billion of Boston Scientific common stock. While it was an unconventional arrangement it allowed for Boston Scientific and Guidant to close their deal and avoid antitrust issues with regulators while Abbott was able to secure specific elements of Guidant's product line that it coveted.
GE and Abbott Diagnostics deal unravels
In 2007 White encountered headwinds as a proposed $8.13 billion deal to sell two diagnostic units ( in-vitro diagnostics and point-of-care) to GE fell through. White had partitioned the diabetes and molecular diagnostics businesses away from the transaction as they had more clinical and commercial upside in their future for Abbott to benefit from. Since GE and Abbott mutually agreed to walk away from the deal, no breakup fees were involved.
Advanced Medical Optics
Undaunted by the shortcomings of the GE deal, Abbott acquired Advanced Medical Optics or $1.4 billion in 2009. The deal instantly made Abbott a leading player in optical healthcare as Advanced Medical Optics was one of the top companies in Lasik laser vision surgery technology and cataract surgery lenses.
Solvay and Piramal acquisitions
White continued to outdistance the GE deal setback quickly with Abbott acquiring the pharmaceuticals business of Belgium-based Solvay Group for $6.6 billion in 2010. This deal was followed up by another acquisition in 2010 as Abbott bought Piramal Healthcare’s Health Solutions unit for $2.2 billion. As a result Abbott effectively became the largest pharmaceutical drug manufacturer in India.
At this point in Miles White’s vigorous tenure at Abbott he had completed an array of multi-billion deals that expanded the depth and width of the company’s marketplace and competitive scope. Moving forward from 2010 it became clear he was just getting started.
Creation of Abbott spinoff AbbVie in 2011
In October 2011, Abbott made a strategic decision to partition itself into two distinct commercial organizations, Abbott and AbbVie. Abbott’s business model would consist of diagnostics, medical devices, generic drugs and consumer products. AbbVie would be a pharmaceutical and biotech research and manufacturing enterprise that was launched as a publicly traded company in 2013 ( NYSE: ABBV ). Miles White would continue as the senior leader of Abbott while longtime Abbott corporate executive Richard Gonzalez would lead the new AbbVie corporation. AbbVie has moved forward with numerous deals of its own including its latest acquisition of Allergan for $63 billion in 2019.
Kalo Pharmaceutical and Russian drug company Veropharm acquisitions, Abbott Animal Health sale
White picked up the pace in deals again during 2014 in terms of buying and selling assets. In quick succession Abbott, retaining its NYSE symbol moniker “ABT”, acquired CFR Pharmaceutical Kalo Pharma Internacional S.L. for $2.9 billion and Russian drug manufacturer Veropharm for $410 million. This deal included three manufacturing facilities in Russia for Abbott to establish a presence in this enormous limited market access nation. On a smaller yet still strategic scale, Abbott sold off its animal health unit to Zoetis for $225 million in 2014.
Alere and St. Jude Medical acquisitions in 2016
White kept the pedal to the metal in mergers and acquisitions for 2016 as Abbott picked up Alere for its rapid point of care diagnostics products aligned with infectious disease, molecular, cardiometabolic, toxicology and other patient testing for $5.8 billion.
Abbott moved forward with another buy in 2016 that was almost 5 times the size of the Alere deal by acquiring St. Jude Medical for $25 billion. St. Jude was primarily built up as a company through a string of more than 15 acquisitions dating back to 1976. Its portfolio included patient care products such as implantable cardio-verter defibullators (ICD); pacemakers; electrophysiology catheters; vascular closure products structural heart repair products and neurostimulation devices as well as diagnostic and testing products for cardiac mapping and visualization systems; optical coherence topography (OCT) imaging systems and other medical technology.
Sale of Abbott vision care unit
Sharpening its business focus further, Abbott sold their vision care unit to Johnson & Johnson for $4.3 billion in 2017. Abbott had built up the vision care business with its acquisition of Advanced Medical Optics for $1.4 billion in 2009.
As chairman of the board, Miles White will still have an important role in Abbott’s affairs. As successor, Robert Ford is at the helm of a global healthcare juggernaut which White has grown from a $75 billion company into a $149 billion enterprise. As the future unfolds, patients, medical professionals, Abbott employees and investors will be expecting more great things from Ford's and White's leadership.
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Another vaccine breakthrough by Merck
Merck ( NYSE: MRK ) has announced its Ebola vaccine, Ervebo, has been approved by European regulators.
The product, which has already been deployed in its investigational format in the Democratic Republic of Congo ( DRC ), was cleared by Europe’s “Committee For Medicinal Products for Human Use ( CHMP )" and will be manufactured in Germany. Merck anticipates it will be able to start shipping Ervebo product to customers by the 3rd quarter of 2020.
Ervebo’s journey from development to approval
The development of Ervebo was a clinical research and product licensing journey. Canada’s National Microbiology Laboratory was the original developer of the immunization which it then licensed to NewLink Genetics of Ames, Iowa. When the 2014 Ebola outbreak was triggered, Merck licensed it and went to work on further developing the vaccine along with other collaborators.
Ervebo is an advanced product that is the result of rigorous research and development efforts. It is genetically engineered to express a glycoprotein from the Zaire ebolavirus so as to provoke a neutralizing immune response to the Ebola virus. Merck was able to not only fully prove the efficacy of the immunization but also demonstrate its ability to mass produce it at premium quality levels to assure reliability and safety of the product.
Until full commercial production is underway, the prototype / investigational formulation of the vaccine will continue to be deployed in Congo which has a population of about 92 million people through oversight by the U.S. Federal Government, World Health Organization ( WHO ) and vaccine alliance GAVI. Ervebo requires the administration of only one injection for it to be effective; another investigational Ebola vaccine being distributed in Congo to counter the Ebola outbreak is produced by Johnson & Johnson and requires two injections.
The U.S. Food and Drug Administration expects to review the product for potential approval to be used within the United States during the first half of 2020.
Ongoing Ebola outbreak threat
Why and how Ebola is such an enormous health threat
Ebola Virus Disease ( EVD ) is an uncommon and deadly disease in people and nonhuman primates. Viruses causing EVD are found primarily in sub-Saharan Africa. People can get EVD through direct contact with an infected animal (bat or nonhuman primate) or person; including the dead bodies of EVD victims.
Ebola virus has a harmful and often fatal impact on the ability for blood to clot. This condition is described as hemorrhagic fever virus as the clotting disruption it causes leads to internal bleeding from blood leaks in the small blood vessels of the body.
The Ebola virus creates further issues as it causes severe inflammation and tissue damage. Due to being so deadly as well as contagious, Ebola is a major challenge for the individuals it infects and furthermore is a ruthless danger for caregivers and medical professionals who not only care for the Ebola patients but must also take thorough precautions to protect themselves.
Ebola's Deadly History
The Ebola virus was initially discovered in 1976 near the Ebola River in DRC. Over the last 40 years, there have been several severe Ebola outbreaks. Previous to the current outbreak ( which is now ranked as the second worst to date) the West African Ebola epidemic resulted in about 30,000 EVD cases and more than 11,000 deaths between 2014 and 2016.
Merck is a global leader in vaccine / immunization development
The commercial development of Ervebo is another vaccine development victory for Merck who has had a long standing commitment to global vaccine development. Its HPV STD and Oncology vaccine, Gardasil, has saved millions of lives and generated considerable savings for consumers, medical professionals and payers.
Twitter: Healthcare Marketing Guy
A pivotal element in global healthcare marketing initiatives
The global healthcare marketplace continues to evolve. Pharmaceutical manufacturers, medical device manufacturers and healthcare service companies have promising opportunities through emerging markets. These patient / customer bases are multiplying in population and in financial resources generating a greater demand and means for better healthcare.
Seeking new revenue streams dependent upon regulatory, clinician and payer factors
Pharma, device and health services firms, always seeking growth and new revenue streams, can look to these regions and countries to extend their reach and boost bottom lines. Comparatively speaking, many of these markets are experiencing exponential population and financial growth while numerous North American and European markets have matured and have slowing, flat or regressing clinical and commercial opportunities. Further challenges are presented by well-entrenched incumbent competitors able to maintain more than their “fair share” of the market.
Key growth drivers in emerging markets
A combination of factors improves the alignment of potential for growth of clinical and commercial opportunities in emerging markets. They include these and other developments:
- Commercial vibrancy based on greater import / export activity
- Political stability
- Improved educational resources
- Domestic / international academic healthcare interests
- Domestic businesses partnering with outside commercial organizations / investors
- Diversified economies expanding beyond agriculture and basic manufacturing
- Better access to information and technology via Internet, wireless, mobile
Changing healthcare needs
As emerging markets evolve, their healthcare challenges and requirements develop new characteristics. They encompass these and other factors:
- Birth rates climb and life expectancy lengthens
- Legacy illnesses / disease native to specific locales and regions decline but remain a threat in rural or remote areas
- New diseases and health challenges emerge based on a higher quality of living including alcoholism, diabetes, hypertension, obesity, sexually transmitted diseases
- Increasing populations increasing strain on metropolitan living / sanitary conditions and surrounding natural resources
Examples of emerging market nations / regions
Multiple continents and geographic centers host emerging markets. The primary emerging market leaders ( listed alphabetically ) are:
- South Africa
- South Korea
Setting the stage for clinical and commercial success
In established or emerging markets, growing from scratch or expanding from a sliver of market share and sales can be daunting and costly. By identifying and accounting for hurdles upfront, it’s easier to avoid bottleneck delays and cost overruns to maintain momentum. Strategic preparation focused on the specific attributes of a new market instead of a generalized approach will enable you to develop the necessary building blocks to succeed as your competition struggles.
Prioritizing the right potential markets from the start
The array of emerging markets requires selectivity and alignment according to your organization and its products or services. Prioritizing the best ones increases your chances of success and establishes a base of experience and education to succeed in future ones. Assuming commercial viability of your product or service has been confirmed based on these considerations; these are 6 pillars of strategy to build your growth on.
Pillar One: Embrace the regulatory environment, structure and process
Nations and regions have their own way of governing clinical and commercial healthcare activities within their borders. Do not assume your teams can learn on the go. Be certain you have staffed up with persons who have experience in the specific market you are centered on and have existing contacts within regulatory agencies, provider organizations and supply chain entities. This helps assure you navigate the approval process and can speed forward into the market once your offering receives clearance.
Pillar Two: Understand patient care topography
Treatment protocols and access to care can differ greatly within the boundaries of even small nations. Neglecting to engage even one or two centers of care like a remote hospital or clinic can cost you hundreds or even thousands of patients. If those entities are missed, your losses could multiply if their patient base expands due to marketplace growth changes and competitors exploit your errors. Stratify points of care and their nuances:
Be cognizant that an area can robustly change based on investment in manufacturing, shipping or other commercial activity. New business opportunities quickly attract new workers with healthcare needs to their locales
Pillar Three: Familiarize yourself with clinicians, protocols, customs
Established nurses, doctors, pharmacists and other members of the healthcare provider community need to be consulted early and often. This will accelerate your learning curve and help these future customers become intimately familiar with your company, its products and services and increase their comfort level. Do not rely on assumptions, syndicated reports or second-hand “expert” knowledge to base your strategy and tactics on. Even small disconnects will leave gaps competitors will fill quickly.
Be prepared that “new” is not always immediately perceived as better. Certain drugs, medical devices and procedure protocols have been in place for decades in many emerging markets. Think simplicity, utility and economy; generic drugs, basic devices, outdated apparatus and equipment retrofitted for improvised use to make do with whatever was available at the time and thus has become the standard for care.
Effectively introducing new therapies, devices and equipment accompanied by new methods takes time and money. Engaging the key clinician stakeholders and accounting for their personal, professional and organizational personas will make for a more productive introduction and quicker acceptance of your offerings. Distinct care, cost and overall outcome advantages must be featured in a value proposition meeting the requirements of each emerging market you enter and the decision making stakeholders involved.
Pillar Four: Unconventional or restrictive distribution and procurement processes
Emerging markets have their own unique ways to facilitate the flow of goods and services into and through points of care. Reflect on how wholesalers, distributors, suppliers, GPOs, dealers and other supply chain, logistics and trade relations entities differ within cities, states, nations and regions in established markets. This goes for evaluation, procurement, materials management and requisitioning processes and procedures within healthcare provider organizations. The primary difference is your organization has become familiar with these channels and routines.
You will now have to repeat this process in an emerging market. Be certain to act on it quickly because your competitors could thwart your success early on if they adapt earlier than you. The sooner you accept and adjust your processes in accordance with the emerging market’s structure and material flows the better your operations will perform and ease the way for customers to use your products and services.
Pillar Five: Contracts and pricing
While emerging markets usually possess a surge in economic prosperity, do not assume this translates to a maximum in your margin ask. It is also necessary ( and this should have been a part of your emerging market commercial viability assessment ) to understand the contracting, pricing, exclusivity and other features within each emerging market you choose to enter. The similarities between emerging markets may seem to mirror each other but even one financial requirement or clinical mandate may disadvantage your marketing, sales and pricing strategies from the start.
Supply chain players and provider organization processes aside, knowing the payer landscape inside and out for each emerging market you choose to enter is a pivotal advantage. By possessing this, you have the opportunity to lock in a new market with the assurance your products and services will flow freely in the direction of your customers and their payments back to you will be just as smooth.
Government-sponsored healthcare can be a norm in emerging markets you will have to account for. As emerging markets develop, government healthcare programs may improve while conventional payer business models become more common as outside companies establish their presence and introduce benefits plans to workers plus organizations native to the marketplace modernize their healthcare offerings. Updated or new healthcare plans offered by insurance carriers or employers will still need to meet the cost, coverage and feature requirements of government regulators.
Improvement of government payer healthcare benefits and the presence of more commercial healthcare insurance plans entering an emerging market are good building blocks to center market access contracts and pricing strategies on.
Pillar Six: Maximize competitive immunity
Throughout development and execution of your market access strategy, continually refine and reinforce your competitive position. Emerging markets are attractive to all players; many will deploy all means necessary to enter them including drastic price plays, unrealistic guarantees and other measures. Anticipate these threats from the start and be certain your contracts are well-secured and have sound contract extension / renewal strategies in place to minimize opportunities for competitors to penetrate your established base of market share and sales. Monitor government or provider policy changes that may disadvantage your position and move in advance to rectify any weaknesses these create.
Taking the journey into emerging markets can be a rewarding venture by avoiding the mistake of focusing too much on the raw potential of a new opportunity and not centering on intricacies involved to assess, develop and maintain successful market access strategies and tactics from the beginning. Launching a product or service in an established or emerging market can be costly and risky no matter how innovative they are. It is important the resources allocated to entering emerging markets ( time, money, staff and other provisions ) are deployed efficiently and effectively to minimize waste and maximize traction.
In emerging markets, it is imperative to account for the customs, needs and requirements of regulatory gatekeepers, logistical channels, clinical and commercial stakeholders to formulate an effective market access strategy -and do it better than your competition.
LinkedIn: John G. Baresky
Twitter: Healthcare Marketing Guy
A substantial private equity play
Reportedly Walgreens ( NASDAQ: WBA ) is exploring options to take itself private. Officially known as Walgreens Boots Alliance, the global pharmacy and consumer healthcare leader going private would create one of the largest leveraged buyouts in history.
A consumer retail, pharmacy, healthcare services, supply chain leader
Taking Walgreens private may involve an estimated range of $50 billion to $60 billion to execute the transaction. Most of the company’s global scope and scale are overlooked by consumers and even those in the healthcare sector:
- Founded in 1901, their present CEO, billionaire Stefano Pessina, owns about 16% of the company
- On a daily basis, Walgreens interacts with over 8 million customers in stores and online
- They operate more than 9,000 stores in the United States and more than 13,000 units worldwide in 11 countries.
- Walgreens owns 28% of AmerisourceBergen ( NYSE: ABC); one of the world’s largest drug wholesalers
- They are a minority share owner of Option Care Health; one of the largest home infusion providers in the nation servicing patients in all 50 states and administers over 2 million doses of various IV therapies per month
- About 78% of the population in the United States lives within 5 miles of a Walgreens store or a Walgreens-owned Rite Aid or Duane Reed store.
- Walgreens has an active partnership with Blue Cross Blue Shield affiliated prescription benefit manager Prime Therapeutics known as AllianceRx Walgreens Prime
- The company has select business collaborations underway with grocery retail giant Kroger ( NYSE: KR )
The company recently announced a corporate cost cutting initiative with a goal of $1.8 billion in expense reduction by 2022 -an amount that was increased from an original objective of $1.5 billion.
One portion of it consists of closing about 40% of its in-store clinics as it initiates new strategies to boost profitability. The clinics selected to close are those which are operated by Walgreens. The remaining store-based clinics operated through partnerships with healthcare provider organizations such as hospitals or healthcare systems will remain open. About 150 clinics are impacted by this and slated to be closed by the end of the year. Over 200 clinics will continue to run through the existing healthcare provider partnerships.
Opportunities to partner with an industry leader
This announcement triggered hospitals, health systems and other healthcare provider organizations located near the units with clinics designated to be closed to inquire about taking over those operations. TriHealth, a 5-hospital healthcare system in Cincinnati, Ohio has already moved forward for the opportunity to operate 7 of the in-store Walgreens clinics in their area.
Investment required for a Walgreens Boots Alliance private equity deal may involve several players
The estimated $50 billion to $60 billion required to take Walgreens private is quite a large sum. It is likely more than one investment firm would be needed not just for the funding but to share some of the risk involved. Private equity firm KKR already has a stake in the company from past deals with the organization. A key consideration in taking the company private is managing its current debt load which is about $17 billion. Reportedly Walgreens is working with investment banking advisement firm Evercore to assess what is involved to proceed further.
Does the prospect of Walgreens going private trigger someone else to buy them?
Based on its many attributes, Walgreens is an extraordinarily valuable company and potentially a target for another type of ownership change. It generates over $136 billion in annual sales. Conceivably another company could make a run at acquiring Walgreens before they went private. Key considerations for another retailer to buy Walgreens would include the financing of the deal itself, integrating the new organization and assuring profitability while servicing their existing debt and the new debt of the deal --which would have the added burden of Walgreens' existing $17 billion debt load.
Unique potential that demands a solid suitor
It is very unlikely their largest retail pharmacy rival, CVS, to even consider acquiring them based on antitrust issues and their recent acquisition of insurance company Aetna but there are several other potential buyers to think about.
Despite Walgreens' debt load and the scale of a deal, their consumer retail and pharmacy business savvy plus technology and logistics leadership are undeniably platinum assets not to mention excellent store locations and large share ownership of AmerisourceBergen.
Largest contenders would have to confront enormous operations and financial challenges
On the surface, there are some big retail and online players to consider. Once the fiscal and organizational details are looked at more closely, only a small number of companies are viable contenders:
Amazon is a viable long shot but several factors must be considered. They generate about $233 billion in annual sales. They are not acquisition or risk adverse. Walgreens would give them direct penetration into numerous retail markets and access to millions of everyday consumers and prescription drug customers. Amazon has already stepped out of its online-only business model through its acquisition of Whole Foods in 2017 for $13.4 billion and opening of Amazon Go stores. Walgreens stores gives them a strategic storefront presence without having to commit to larger retail footprints like grocery outlets or mass merchandisers. The Walgreens store concept is based on walk-in consumer convenience as are Amazon Go stores.
Amazon is seeking to widen its business in healthcare and fortify its PillPack unit. A Walgreens deal would be gargantuan even for them. It offers incredible opportunities as well as challenges which makes it conceivable for Amazon to at least mildly consider.
Kroger is currently collaborating with Walgreens on a few initiatives. Kroger recently announced it was moving forward with cost cutting initiatives. The combination of Kroger, the nation’s largest grocery chain, and Walgreens would be a formidable tandem. Kroger is the world’s third largest retailer with over $119 billion in yearly sales; they trail only Walmart and Costco Wholesale. Their combination is viable; it would reasonably diversify and complement their existing business models and customer bases.
Netherlands-based Ahold could be another contender based on domestic and global market potential. Ahold operates stores in numerous global markets as well as the United States. Their annual sales are roughly $73 billion. Picking up Walgreens would widen their business model and add revenue streams to their bottom line in the U.S. and Europe but financially it's out of their reach.
Grocery chain Albertsons ( NYSE: ABS ) generates about $60 billion in annual sales. Their acquisition of Walgreens would be a stretch but enable them to broaden their organization beyond the grocery sector and give them exposure into more geographic markets. The financial scale of the deal even without the $17 billion debt load is not something Albertson's can consider in their plans.
Costco ( NASDAQ: COST ) produces over $142 billion in yearly sales could pull it off but may not be the best fit in their business model. Acquiring Walgreens would indeed diversify their business model which could be a primary reason for them not to explore a deal outside of the scope of where they have had such great success. It would indeed provide them opportunity to augment their overall presence in consumer health and pharmacy sectors. Such an extreme departure from their winning commercial formula has its pros and cons. Financially Costco could have the fiscal horsepower to undertake such a deal but likely not consider the rewards to be worth the risks.
Target Corporation ( NYSE: TGT ) generates about $75 billion in annual sales --its relationship with CVS a major hurdle to overcome. Buying Walgreens would be a significant hurdle for them financially and involve another sticking point. Target’s pharmacy units within their stores are owned / operated by CVS. If Target were to acquire Walgreens, the CVS pharmacy ownership arrangement would someway have to be undone. Target Corporation is not going to entertain an acquisition of Walgreens.
Walmart ( NYSE: WMT ) is an interesting and qualified prospect for numerous reasons. A number of former Walgreens pharmacy executive leaders are presently working at Walmart headquarters within the U.S. pharmacy business unit. Walmart generates over $514 billion in annual sales. Walmart and Walgreens have been dueling over consumer and pharmacy sales for years despite their differing big box versus chain drugstore business models. Walmart has experimented with smaller footprint stores to efficiently and profitably gain access to more retail customers. Buying Walgreens would give them that access plus bolster their consumer health and pharmacy business.
Undoubtedly antitrust concerns would come into play but there may be enough differentiation based on the pairs' big store / mass merchandiser and convenience retail / pharmacy organizations that regulators would approve the combination.
There is a lot for Walgreens, its competitors, investors and potential suitors to consider. Based on this lineup, Amazon Kroger and Walmart are potential suitors; Costco a runner up based on a presumed reluctance to tamper with its unique and successful business model. The attractiveness of a present-day opportunity to acquire Walgreens is great, the long-term commitments and challenges still have to be considered. A takeover by public or private entities requires the new ownership to undertake swift, strategic action to boost Walgreens profitability without disrupting day-to-day operations and whittle down its $17 billion debt load; a tough prescription to fill.
LinkedIn: John G. Baresky
Twitter: Healthcare Marketing Guy