Pharma News Analysis

MPM Capital Makes First Investment in Indian CRO Sai Advantium

This is big news! MPM has followed an investment into SAI after Seqquoia's investment means that SAI is onto becoming an even more dominant player. The management of SAI has been strengthened lately and is one of the best and most professional. Kudos to Krishna and Dr. Ranga Raju!

“MPM Capital, the largest venture capital investor dedicated solely to healthcare, announced today that it has made a $20 million investment in Sai Advantium Pharma, a leading chemistry-driven drug discovery and development service company headquartered in Hyderabad, India. This is the first new capital investment in Sai Advantium, MPM Capital’s first investment in

India

, as well as one of the largest life sciences venture capital investments made in the country thus far. MPM Managing Director William Greene, M.D. is joining Sai Advantium’s Board of Directors. Sequoia Capital is an existing investor and also has representation on the company’s Board of Directors.

According to

Dr.

Greene, “We have been evaluating investment opportunities in

India

for some time, looking for quality management teams in the life sciences who are leading companies poised for dramatic growth. Sai Advantium stood out as a leader in one of the most exciting emerging areas for global biotech and pharma, namely the outsourcing of drug discovery and development support. We have been deeply impressed by the determination of the founders an senior management team to be the best in this critical space.”

Dr.

Greene added, “The company is adding capabilities and building an absolutely world class team of scientists who know how to develop complex molecules and who understand what pharma and biotech partners really need and want. Already a leader in servicing the small- and mid-size biotech community, the capital improvements, decision and customer support tools and capacity expansions made possible by this investment should position Sai as the preferred partner for global pharma players of any size.”

MPM indicated that it intends to help the company approach biotechnology companies in its own network as well as big pharma partners with which it has strong relationships. Several of its portfolio companies are already enthusiastic customers,

Dr.

Greene noted.

He continued, “The pressure on global drug companies to increase productivity and reduce costs continues to escalate, and Sai is in a position to respond. In fact, analysts project that the global preclinical discovery and development outsourcing industry is poised to grow to $20 billion by 2010.”

Dr.

Ranga Raju, Sai Advantium Chairman & CEO, said, “We are delighted to have an investor and partner with great domain expertise and investment success. They bring to us a great perspective on the emerging needs of our customer, willingness to work with us to build our range and depth of services and give us reach into great scientific leadership.”

Source: BusinessWire

Told You So: Indian Pharma's M&A Frenzy Continues

Ok, so here goes the "I told you so".... In many of my recent blog posts, I have predicted the increased M&A activity by Indian pharma companies... Here is a very brief summary of seven stories...

1. Dr Reddy’s buys BASF’s contract manufacturing biz Mint 
2. Strides Arcolab acquires 17.7% more in Genepharm Australasia The Economic Times 
3. Ranbaxy acquires a major stake in Orchid Pharma...  Hindustan Times
4. Jubilant Organosys acquires Canada's Draxis for $255 mn Economic Times
5. Veeda completed the acquisition of DICE, a CRO based in Brussels, Belgium Veeda
6. Siro Clinpharm buys German CRO... The Hindu Busienss Line
7. Nicholas Piramal acquires Anafortan and CEFL Groups... Trading Markets

8. Manipal AcuNova Ltd completed the acquisition of ECRON GmbH, Europe... AcunovaLife

There are many more... and more to come! 

Back from Hiatus

It has been almost two months since my last blog here on PharmaNewsAnalysis.com and there are some legitimate reasons for it. However, the main reason is that there is so much happening in our industry that I have been swamped with work and travel (By no means, I am complaining...). However, I am overwhelmed by your attention, requests for constant blogs and continued interest in this blog. Thank you all for subscribing and passing this blog to your colleagues, friends and peers in the industry. I do hope that I will be more regular here. With that behind me, allow me to share with some key takeaways from the last 2 months. The following are based on many assignments that we are involved in:

1. More Divestments: Expect more Pharma Companies to divest their old or small products as well as plants in the US and EU.
2. More M&A Activity: Expect more Indian/Chinese companies to acquire in the US, EU and also within India
3. More Layoffs: Expect more job cuts and layoffs
4. More Cost-Cutting: We are already seeing a hugfe way of cost cutting measures being put in place at all of our clients... from limits on travel to conference attendance to raises, etc.
5. Bigger Outsourcing Deals: We have never seen more urgency from our clients to outsource and leverage external resources than the last 2-3 months.
6. Newer Generic Pharma Business Models: Newer and nimble Generic Pharma companies (virtual, etc.) are joining hands with larger companies to compete with bigger Generics... Business models are out of box and lots of money is being raised...
7. Hillary/Obama/McCain:  Most pharma executives are worried about the outcome from the Presidential elections....

So, where does that leave us? I would welcome comments...

By the way, I am in the process of launching a new company - it is still in stealth mode... but if you have interest, please drop me an email and I may just let you peek in...

Top 10 Trends for Pharmaceutical Industry in 2008

With 27 days left in 2007, it is time to look forward to 2008. Based on my recent conversations with pharma executives, VCs and suppliers, the top ten issues or trends in 2008 will be:

1. Outsourcing & Off-shoring to Continue: While outsourcing and off-shoring seem to have taken off in 2007, it will be accelerated even more in 2008. Pharma companies are getting more and more comfortable, experienced and used-to with doing business globally, especially in India and China. Outsourcing companies in both the countries have scaled up significantly and companies like GVK Bio, SAI, Advinus, WuXi, Hikal and others have received significant private equity money as well. Look out for even more outsourcing and off-shoring deals in these two countries across the value chain, including but not limited to: drug discovery, clinical trials, data management, manufacturing of APIs and formulations (late stage). I.e.: Sanofi-Aventis opens R&D centre in Goa, India. “Sanofi-Aventis has opened its largest Asian and first Indian pharmaceutical development centre in Goa, with an investment of Rs. 100 crore (almost $25 million)...This is the group’s single largest investment in India, as part of its strategy to expand its presence and accelerate growth both in India and Asia, a note from the company said. The centre is operational with around 50 employees, a company official told Business Line, indicating that the number could increase. The centre will be an Asian hub for analytical and pharmaceutical formulation development, with the capacity to develop 12 pharmaceutical compounds per year. No further details were given.”
2. Global Licensing: Licensing is not a new phenomenon in our industry, however, licensing from companies in India and other emerging countries is relatively a new business practice. Look for more deals where pharma and biotech companies will partner with companies like Glenmark, Nicholas Piramal and others.
3. Layoffs and Lean Operations: Pfizer, J&J, BMS, Wyeth and many others have been announcing their plans for layoffs and lean operations. This trend will definitely continue will global pharma companies. However, Chinese and Indian pharma and contract research and manufacturing services companies will continue to ramp up and hire additional people. 
4. Growing importance and dominance of generic companies: Watch for Barr, Ranbaxy, Mylan, Teva, Actavis, Dr. Reddy’s Labs to become even more prominent, important and dominant as they keep launching more and more generics and also keep moving up the value chain by focusing on their NCEs.
5. Challenging times for Wholesalers: Wholesalers and distributors will face more hurdles in 2008 as they face more problems with their business models. More and more retailers, hospitals and PBMs (customers) and manufacturers (suppliers) are trying to figure out the true role (and value) of wholesalers and how to compensate them. Wall Street Analysts have not been kind to this sector and it is not likely to change anytime soon.
6. M&A / Consolidation: It is likely that 2008 will see even more M&A and consolidation. However, the major twist will be that a great deal of buyers will come from outside the US.
7. Eliminating Hospital Infections: Companies like Cardinal Health are already putting a lot of energy, resources and focus on the prevention and treatment of hospital infections. In 2008, in addition to treatment, pharma industry will work more and more towards preventing infections and creating solutions that treat infections in an expedited manner. This is a huge shift when the onus was solely on hospital staff.
8. Prevention of Medical errors: In previous posts, I have talked about the recent problems related to medical errors. Medical errors are almost as big, if not bigger, than hospital infections. Pharma companies are already working on informatics and other IT tools to prevent medical errors in partnerships with healthcare institutions.
9. Emergence of new global players: Pay attention to companies like Actavis, Ranbaxy, Nicholas Piramal, Dr. Reddy’s, Zydus, Wuxi Pharmatech to take lead in a wide range of M&A activities. More and more of these companies have the dreams to become leading pharma companies not just in their own countries or regions but also globally.
10. Additional pressure, limelight and scrutiny of US Pharma industry due to elections: Whether it is Hillary Clinton, Obama, Rudy or Mitt Romney….look for more rhetoric, more pressure and more limelight on the US pharma industry’s practices. Thanks to the upcoming elections, pharma industry will be sure to become a punching bag for many politicians and Presidential candidates.