More Concerns About Unaffordable Hep C Treatments



Our friends at Pharmaphorum posted an overview of the recent WHO guidance for the treatment of hepatitis C.

Of note,

These new oral drugs are able to cure almost all patients of the disease (in combination with standard treatment), increasing the cure rate in patients and also cutting the length of treatment needed.

But the high cost of the drugs is causing concerns about access in rich and poor countries alike.

WHO has addressed the issue directly, and says it will provide support to countries to implement its new guidelines, and will “assist to make the new treatments available and consideration of all possible avenues to make them affordable for all.”

We share the concerns of the WHO regarding pricing. As we stated in an earlier post,

That $28,000 wholesale price is not a typo, folks.

If interested, the full WHO guidance document is available here.

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Indian Pharma Industry: Is the sun setting…or rising?



Much ink has already been spilled discussing the acquisition of Ranbaxy from Daiichi by Sun Pharma in an all stock transaction. A good analysis by a former Ranbaxy executive provides some interesting insights:

The valuation of Ranbaxy is attractive at this point in time when USFDA and regulatory issues are at a peak. And Sun Pharma has been known to purchase companies and turn them around in the quickest possible time. Is it the right time for DS to exit at a loss? This writer doesn’t think so. Why throw in the towel when things can’t get worse? They can only get better.


The rationale for the transaction appears to center on a few key points:

  1. A consolidated entity will compete more effectively in the rapidly growing Indian market.
  2. Sun has experience turning around troubled companies.
  3. Sun will focus on resolving Ranbaxy’s US FDA problems…problems which are already well documented here and here.

It’s increasingly clear that the importation of branded and generic products (both Rx and OTC) from India will continue to grow. India is already the second largest exporter of OTC and Rx drugs to the US. Armed with industry fees, the FDA is “blitzing” the Indian pharma industry with inspectors, inspecting three times as many plants in 2013 as the FDA sis in 2009.

With this greater emphasis on inspections comes, of course, a greater number of problems found. For example,

The recent trip by our FDA Commissioner to India highlights the importance of the US-India pharma industry relationship…and its challenges:

In my talks with regulators and companies here in India I have placed a great deal of emphasis on why quality matters. As I explained, quality is linked to product safety and without a direct focus on quality, the potential for patient harm increases significantly.

In recent years the FDA has identified significant lapses in quality by some companies operating in the U.S. and around the world. As a result, American consumers have had to endure greater risk of illnesses, recalls, and warnings about the products many of them rely on each day. This is unacceptable. Consumers should be confident that the products they are using are safe and high quality and when companies sacrifice quality, putting consumers at risk, they must be held accountable.

Where does this leave the Indian pharmaceutical industry?

First, with the pendulum swinging towards greater enforcement, the FDA will continue to identify problems with manufacturers in India. Many of these problems will be small and not-widely publicized. But they will be found.

This, in turn, will cause some companies to exit the US market entirely, focusing instead on local markets. We question this approach, since it is a very low margin business strategy of questionable sustainability.

Enforcement & compliance issues will require investments which, in turn, will drive prices of products from India upward.

At what point will India lose its cost advantage?


Exuberant over Inhaled Insulin Again?


A scene from Casper Street in Danbury?

Afrezza finally approved!

Yesterday, MannKind Corporation annouced that the FDA voted 13-1 in favor of an approval for Afrezza. You can find the press release here.

We’ve Seen This Movie Before

For nearly a year, an inhaled insulin product (Exubera, Pfizer) was on the market. While Exubera was as effective as short-acting insulin, the high cost of the system relative to injectable insulin made it a commercial failure in the US. In fact, it was never approved in the UK  due to cost concerns.

Now to be fair to MannKind, Exubera had a range of issues:

  • Physicians were reluctant to train themselves and their patients on the proper use of the device
  • Physicians found themselves ordering lung function tests for their diabetes patients
  • The device itself was large and unwieldy
  • A “Dear Doctor” letter from Pfizer warned doctors that Exubera may have been associated with lung cancer

According to Nektar, the company who originally developed Exubera:

“The fact is that it hasn’t done well, and we know it has done miserable. It’s one of the worst performing products for new launch that I could ever recall. That doesn’t mean the product is flawed. The product is excellent. The launch has been flawed and Pfizer has been very open about admitting that they have really done a very poor job of launching this drug.”

Mann On

Now Afrezza appears to be a much smaller, simpler device judging by the pictures.


From scanning various articles, lung function is not an issue with Afrezza…another point for MannKind.

So how will Afrezza perform commercially? That’s obviously an open question.

Assuming there is a need for physician and patient education, it’s going to take some deep pockets. And it will likely depend on what the final label actually says in order to finalize the projections and deal valuation.

Stay tuned…

Where Is Biotech’s WhatsApp?

What’s biotech’s equivalent of the Facebook/WhatsApp deal? (Image Courtesy

This week, the financial press is going bonkers over the acquisition of WhatsApp by Facebook for $19 billion in cash, stock, and Facebook tchotkes.

We’re not experts in this space, so we’ll defer to others to explain all of this too us. For an excellent explanation of the “Why” behind the transaction, check out Benedict Evans’ lucid post.

For Sequoia Capital’s perspective, their difficult-to-read blog provides a detailed explanation for the deal. Don’t like the numbers? Robert Cyran at the NY Times places it all into perspective.

Closer to home, and hidden in all the hoopla, was the acquisition of Forest Labs by Actavis for a “mere” $25 billion. As Karl Schmieder points out:

Karl Tweet

What are the LP’s thinking right now?

Somewhere, there are LPs who are invested in biotech VC funds who are scratching their heads. Sequoia Capital supposedly only invested $8 million into a company that was acquired for $19 billion 3 years later.

This kind of speed, ROI, and efficient use of capital is simply impossible in our world.

Now we know what a lot of you are saying. The world doesn’t need another messaging app. What the world does need are better treatments for cancers, fibromyalgia, pain, etc., etc. And we totally agree.

And, as Bruce Booth has eloquently pointed out many times in the past, it is very possible for limiteds to generate excellent returns in biotech early stage investing:

Both in an analysis by Bijan Salehizadeh and myself in Nature Biotech (here), as well as in an unpublished analysis from Correlation Ventures, healthcare venture capital actually outperformed all other venture sectors in the past decade, in particular with realized returns.

Nevertheless, with limited under increasing pressure to deliver returns from the high-risk portions of their portfolios, you can’t blame some of them for thinking twice about investing in biotech funds.