Abstract
Patent expiries, tightening healthcare budgets and a stricter regulatory
climate in the aftermath of the Vioxx withdrawal presented major challenges to
the pharmaceutical industry in 2006. These tougher operating conditions may
partly explain why companies that are less reliant on pharmaceuticals seem to
have performed so well last year. Johnson & Johnson, which only has 43% of its
revenue coming from pharmaceuticals, for example, toppled Pfizer from its
position at the top of the total revenue table for 2006.
The tough operating conditions can also be seen reflected in the general wave
of industry restructuring among generics and speciality pharma companies.
Among the generics players, consolidation changed the landscape quite
dramatically last year with Watson Pharmaceuticals acquiring Andrx to become
the third largest player in the US market, Barr Pharmaceuticals (formerly
known as Barr Laboratories) acquiring the Croatian firm Pliva, and a number of
smaller acquisitions by Indian companies, Dr Reddy' s and Ranbaxy Laboratories.
A similar story can be seen in Europe. In Germany, for example, Bayer beat
Merck KGaA to acquire Schering AG. Merck KGaA, meanwhile, went on to absorb
Europe' s largest biotech company, Serono, into its business. Other European
deals included Danish Nycomed' s surprise acquisition of Altana Pharma at the
very end of the year, and the purchase by Belgium' s UCB of Schwarz Pharma.
Biotech companies also saw considerable movement with, among other deals,
Crucell acquiring Berna Biotech for $476 million and Genzyme acquiring Anormed
for $584 million.
Mergers among the top players are rare these days, if only because there are
so few potential partners. There was one major acquisition in 2006 (when
Schering AG became part of Bayer) although in Japan, traditionally so averse
to mergers, Dainippon Sumitomo Pharma was created from Dainippon
Pharmaceutical and Sumitomo Pharmaceuticals at the very end of 2005.
A fair number of interesting smaller companies were bought by the larger
players in a bid to replenish their pipelines. Last year saw Pfizer buy
Powdermed and Rinat Neuroscience, for example. Merck & Co acquired Abmaxis,
Glycofi and Sirna Therapeutics; Astrazeneca bought Cambridge Antibody
Technology; Novartis bought Neutec Pharma; Abbott Laboratories acquired Kos
Pharmaceuticals, and Lilly extended its long-standing research partnership
with Icos by bringing it into the fold.
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