There have been several noteworthy developments in the drug space recently, which will likely have a material impact on the companies in this sector and the markets they serve. Companies mentioned in this review include Pfizer Inc. (PFE - Free Pfizer Stock Report), Merck & Co. (MRK - Free Merck Stock Report), Valeant Pharmaceuticals International Inc. (VRX), and Allergan Inc. (AGN).
Pfizer Bolsters Vaccine Portfolio
Earlier this month, the New York-based drug giant announced that it had entered into a definitive agreement to acquire Baxter International’s vaccine business and part of a production facility for $635 million. The deal will give Pfizer access to Baxter’s meningitis vaccine (NeisVac-C) and its encephalitis vaccine (FSME-IMMUN), in addition to the Austria-based facility where these products are made. The transaction is scheduled to close by the end of this year, pending customary closing conditions and regulatory approvals. Pfizer does not expect this will have an impact on its 2014 financial guidance issued in late-July.
Merck Gains Approval for Sleeping Pill
On August 14th, the second-largest U.S. drugmaker announced that it had won FDA approval for Belsomra, a new treatment for insomnia that is considered to have fewer side effects than older pills such as Ambien. Regulators approved a lower-dose version of the drug after previously rejecting a high-dose version that Merck had sought to bring to market last year, due to safety concerns. The company expects Belsomra to be available by late 2014 or early 2015. Analysts project the drug could generate annual sales upwards of $300 million by 2017.
Pfizer Gains Backing for Expanded Prevnar Usage
On August 14th, a key advisory panel in the U.S. recommended Pfizer’s Prevnar 13 vaccine for people ages 65 and older to help prevent pneumonia and meningitis. The Centers for Disease Control and Prevention’s Advisory Committee on Immunization Practices, also known as ACIP, voted to add Prevnar 13 to a list of recommended vaccines which include Merck’s Pneumovax 23. The panel made its decision following a clinical trial, conducted by Pfizer, which showed patients taking Prevnar 13 experienced 46% fewer episodes of community-acquired pneumonia than patients taking a placebo. It is worth noting that under the 2010 Patient Protection and Affordable Care Act, insurance companies are required to cover vaccines recommended by ACIP without asking patients to pay a share. The FDA first approved Prevnar 13 for use in children in 2010, then added age 50 and older in 2011. The vaccine is currently Pfizer’s second-highest grossing product with global sales of nearly $4 billion in 2013.
Allergan Looks to Fend off Valeant
Botox maker Allergan is said to be seeking potential takeover bids to avert the well-documented $53 billion hostile takeover from Valeant Pharmaceuticals. According to multiple sources, Allergan has approached Salix Pharmaceuticals and at least one other company in hopes of striking a deal to avoid coming under Valeant’s grip, but neither company has commented on the matter. Since Valeant’s takeover proposal was first unveiled back in April, Allergan has rejected three separate advances from Canada’s largest drugmaker, with the latest coming on May 30th. However, the board of directors has not budged and continues to believe that at $53 billion in cash and stock, the most recent offer still significantly undervalues Allergan’s assets and longer-term prospects.