Today we learn that Lilly is acquiring Avid Radiopharmaceuticals:
Lilly will acquire all outstanding shares of Avid for an upfront payment of $300 million, subject to adjustment based on existing cash on hand at closing. Avid stockholders will also be eligible for up to $500 million in additional payments contingent upon potential future regulatory and commercial milestones for florbetapir.
Big pharma has an emerging relationship with diagnostic companies. Some, such as Genentech, Roche, and Abbott, manage to blend the two business quite well. For Genentech, their 10+ year partnership with Dako on HER-2 is well known. By contrast, Roche and Abbott have diagnostic business units which are distinct from their pharmaceutical and other businesses. In fact, Abbott Diagnostics has one of the broadest arrays of products and services in the diagnostics market, including molecular diagnostics.
So what to make of this Lilly-Avid transaction?
First, it is interesting that Lilly is internalizing a diagnostic company while also developing a drug to delay Alzheimer’s disease progression. Initial results appear promising. One can envision strategy where both the diagnostic and the drug are marketed concurrently. But why the acquisition as opposed to a joint venture? It’s hard to say, but given the competitive nature of the Alzheimer’s space, it is possible that Lilly was driven by defensive measures as much as anything.
Second, is early diagnosis in Alzheimer’s beneficial? Memory loss can be attributed to any number of diseases, such as thyroid disorders, depression, and even vitamin deficiencies. So if this diagnostic increases awareness, then it may drive more patients to seek treatment for heretofore undiagnosed medical conditions, which is a desirable benefit.
However, as a recent editorial pointed out, will insurance companies pay for earlier diagnosis, especially in the absence of a corresponding therapeutic?
The Alzheimer’s progress is a perfect example of how our country will have to grapple with balancing exciting innovation with the appropriate use of “evidence-based” diagnostics in the coming decade. But how will diagnostics ever become evidence-based if health plans refuse to pay for them? If industry finances expensive clinical trials, should we really be attempting to regulate the cost of their drugs?
The author of this editorial, a physician, makes her views quite clear:
Until there is more effective therapy, I, for one, will not be doing the Alzheimer’s test. Instead, I will do my best to remain mentally and physically active, control my cardiovascular risk factors, eat my vegetables, consider taking fish oil, take an 81 mg aspirin when I am 65, and wait to see what the next decade of Alzheimer’s research will bring in terms of therapeutics. Hopefully innovation will not be stifled by policy change within our country.