When tomorrow never comes... the rising cost of health care

"This weekend, I had the opportunity to read Matt Miller’s outstanding upcoming book, The Tyranny of Dead Ideas. In his chapter on the folly of employer-provided health insurance, Miller gives us today’s startling factoid: 'It’s crazy but true: Starbucks spends more on health care than on coffee; General Motors spends more on health care than on steel.'"

Daniel Pink

What is the world coming to when the cost of basic health care is so exorbitant? The National Coalition on Health Care has some startling facts:

"In 2007, total national health expenditures were expected to rise 6.9 percent — two times the rate of inflation.1 Total spending was $2.3 TRILLION in 2007, or $7600 per person. Total health care spending represented 16 percent of the gross domestic product (GDP). U.S. health care spending is expected to increase at similar levels for the next decade reaching $4.2 TRILLION in 2016, or 20 percent of GDP."

When we look back at Starbucks and GM, we find that in 2007, employer health insurance premiums increased by 6.1 percent, which is two times the rate of inflation. The annual premium for an employer health plan covering a family of four averaged nearly $12,100. For many in more expensive cities that will only cover a family of two people.

Washington's focus on drug costs is in many ways displaced, because like earmarks it represents a very small proportion of the total budget. Meanwhile, the health care system is riddled with inefficiencies, excessive administrative expenses, inflated prices, poor management, and inappropriate care, waste and fraud. These problems significantly increase the cost of medical care and health insurance for employers and workers and affect the security of families.

But is anything done about this excessive waste and bloated administration?

Rising medical costs correlate to drops in health insurance coverage. That's not a good thing because ultimately, people who do drop coverage and then get ill will end up paying more for their health care if something goes wrong. If you get cancer or need a bone marrow transplant, it could wipe you out.

There is no doubt that health care reform is essential, the issue is what's the best way to go about it? In the current Presidential election, the two candidates have very different approaches to the problem. McCain is offering a $5,000 tax credit towards the cost of the annual health care plans. Obama believes that health care is a right and people should not be denied access, while there should be stricter rules for insurers.

In the McCain approach, one key detail missing from the plan is whether the tax credits created by eliminating employer-based tax benefits would keep up with the cost of medical care. This plan favours the young, fit and healthy. Those who are older, unfit and have a family history of medical problems will likely end up with higher costs.

In contrast, cost is the key detail missing from the Obama health reform plan. The campaign has not said how large the tax would be for businesses that opt not to offer insurance, or how small a business would have to be to be excluded from the requirement. If the payroll tax is too low, say 6 percent, many businesses may opt to pay it instead of offering insurance, sending their employees into the public program and boosting federal costs. Overall, it sounds very similar to the successful MA health care plan introduced by then Governor Mitt Romney, where no one was denied coverage, but the plan cost was adjusted according to people's means.

Either way, whichever candidate gets in will have to grapple with many of the same issues and the inertia that has confounded health reform for decades.

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New data suggests MMR vaccine is NOT linked to autism

The MMR vaccine is not associated with autism, according to a new article published in the online scientific journal, PLOS. Scientists at the Mailman School of Public Health of Columbia University declared no link can be proven in their report.

The study provides more evidence against a link between the vaccine and autism than any in the past. As part of the research, the investigators replicated the 1988 study that detected a link and found nothing.

A case-control study was conducted looking at the timing of the onset of autism and gastrointestinal disorders, in relation to the vaccine.

The study also looked for the presence of measles in the bowel tissue of 25 cases and 13 controls.

Neither investigation supported the hypothesis that the measles component of the vaccine can lead to inflammation in the bowel and the release of neuroactive chemicals that promote developmental neuropathology.

If the hypothesis were true, the administration of the vaccine should precede the GI symptoms and the GI symptoms should precede the onset of autism. A cohort of 25 children with both autism and severe GI disorders was matched for age with 13 children with similar GI symptoms but not autism and the findings compared.

The median age of the autistic children and the control group was 5.5 and 5.1, respectively, and they got the first dose of MMR vaccine at about the same age, 15.3 versus 16 months.

The children were selected because their GI symptoms were sufficiently grave that a biopsy was indicated for clinical reasons, which allowed the researchers to obtain tissue samples for the current study and duplicate the original investigation in 1998 that raised the issue in The Lancet. That study reported the measles virus RNA in bowel tissue of 77% of children who had both autism and GI disorders, but not in children in a non-autistic control group.

Since then several studies have looked at the timing of the disorders and found no link between the vaccine and either autism or GI symptoms, but none has repeated the original investigation, until now.

In this study, using three different labs and modern molecular methods, the researchers found evidence of measles viral RNA in one case and one control, but otherwise they found no differences between the groups.

Equally, the temporal sequence of events did not support a link between the vaccine and either autism or GI disorders:

- The first appearance of GI symptoms averaged 12 months in the autism group and two in the controls.
- 13 of the 25 cases had the vaccine before the onset of autism.
- 16 of the cases had the GI symptoms before the onset of autism.
- And five of the cases had the vaccine before the onset of GI symptoms

The researchers were confident that the measles hypothesis is nullified, but added the finding doesn't rule out a link between autism and other vaccines, mercury compounds, PCBs, cell phones, or anything else.

Despite the concern over autism, the vaccine has shown itself to be safe and well tolerated, while significantly reducing the burden of disease, according to the CDC.

Data shows that the vaccine has been invaluable: before it was introduced in 1963, up to four million people were newly infected each year, up to 500 died, and 48,000 were hospitalized.

As of the end of July this year, the CDC had reports of 131 cases of measles in the U.S. (the highest number for the period since 1996), with 15 people, mostly young children, in the hospital and no deaths.

Sources:

PLOS (open acccess, free download of article)

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Genentech and Roche

The recent news that Roche are looking to purchase the remaining shares in Genentech has certainly caused a a big stir in the Pharma industry.

One of the main reasons the partnership blossomed was because Roche left Genentech largely alone and they had very clear marketing distinctions with Genentech responsible for the US and Roche handling the rest of the world.

The two cultures are very different with a conservative Swiss company versus a dynamic US biotech, so it will be interesting to see what happens. If the deal goes ahead, the big question is will Roche continue to leave them alone, or will it change the relationship?

This looks a good deal for Roche on paper, but if I were Genentech, I'd probably be a little nervous; will the creativity and dynamism go down the pan if it become more integrated with a big Pharma company?

Time will tell on both fronts.

Medicare Part D - new data available

Academy Health has published a useful report on Medicare Part D and what information is available as part of the CMS Medicare Part D claims data.

You can download the report here.

Roche Helps Catch Tour de France Cheater

I loved this story posted in Pharmalot today.

The company's scientists cooperated with the doping authorities by cleverly adding an extra innocuous molecule in their long acting EPO product, Continuous Erythropoiesis Receptor Activator (CERA). This would then be traceable in the blood tests taken during the Tour de France.

Image via WikipediaYou could see where the cyclists were going - if the drug was released more slowly into the body, they might escape detection while still gaining the benefits. Little did they know that effectively they were taking a marked product and the authorities would have incontrovertible proof of cheating.

Nice one!

What do you think? I'd love to see the makers of regular EPO (Amgen, Johnson and Johnson) and steroids follow suit - it's a simple but elegant solution that does not harm the users who do need benefit for legitimate means.

Is this an example of science and sport in perfect harmony, or not? Should we have more of it or is it an infringement on your rights?


News Sources:

Bloomberg
CNN

New tools for finding well organised information on cancer and biotechnology

One of the things I hate most about traditional search engines such as Google, Yahoo and Ask Jeeves is that they just return pages and pages of disorganised information on whatever topic you type in the search box.

There are some cool alternatives out there that organise the information by topic so that you can find what you want much more quickly and easily.

For example, I took two of these new search engines and did a search on 'biotechnology'. Here's what they produced compared to Google:

Google

Kosmix

Mahalo


What a difference!

I've started using Kosmix for more organised searches on diseases and medical related items. Try typing in something like lung cancer or breast cancer and see how well they order the results. I'm not a big Wikipedia user because some of the science and technology pages aren't that accurate - they're only as good as the writer, but Kosmix allows you to search for a wider field for interesting and accurate information, right at your fingertips.

Looking for new ways to find the latest stuff on cancer?

Or indeed any science and medicine topic?

This is one very cool online tool:

Medworm

Lilly to acquire SGX Pharmaceuticals

In a surprise announcement, Lilly declared today that they have signed a definitive merger agreement with SGX Pharmaceuticals in an all-cash transaction. Under the terms of the agreement, Lilly will acquire all of the outstanding shares of SGX common stock at a price of $3.00 per share, for a total value of approximately $64.0 million. Lilly were one of the existing companies who had partner deals with SGX.

SGX is a biotechnology company based in San Diego. It is focused on oncology drug discovery and development.

The acquisition will give Lilly an opportunity to integrate SGX's structure-guided drug discovery platform into its drug discovery efforts. It will also give them access to FAST™, SGX's fragment-based, protein structure guided drug discovery technology, and to a portfolio of pre-clinical oncology compounds focused on a number of high-value kinase targets.

One of the promising agents, SGX393, may be active in Gleevec resistant T315I mutations in CML, which are also resistant to other therapies currently available including Tasigna (nilotinib) and Sprycel (dasatinib).

The acquisition, if successful, will give Lilly a promising oncology pipeline for the future.

Source:

Lilly

The other side of cancer vaccines...

Recently, there has been quite a surfeit of information in the news about various vaccines such as Oncophage, Gardasil and Cervarix.

In theory, they sound promising either as protection from cancer developing, as in the case with the HPV vaccines for cervical cancer or as maintenance therapy after initial treatment with other agents or surgery, as with other vaccines.

There are downsides though, as Merck are discovering this week. CBS, CNN and other news channels are running stories on Gardasil's side effects including paralysis and wart outbreaks. That's not good news for a company that has gone through the scandals associated with Vioxx and Vytorin, followed by an ongoing battle with the FDA over the approval of Cordaptive.

Meanwhile, the WSJ reported that Wall Street had become a little nervous with news of flattening sales and thus the stock price took a hit. The stories of serious adverse events may lead to further skittishness over the next few weeks until they are addressed with robust data.

This is a big headache all around for a pharma company and a PR nightmare. Once stories get out about serious adverse events, more often come out of the woodwork.

Panel urges stricter diabetes testing

Yesterday, a panel of FDA advisers voted 14-2 that the FDA should require drug makers to show that experimental diabetes drugs don’t increase cardiovascular risks.

If the FDA takes the panel’s advice, it could be more expensive for drug makers because it takes a much bigger, longer trial to prove heart safety than to prove blood-sugar control.

AstraZeneca and Bristol-Myers Squibb could be on the short list of those affected by any changes; the companies are planning to submit their diabetes drug saxagliptin for FDA approval soon.

Merck could benefit from the changes because its diabetes drug Januvia has already been approved, and would compete with saxagliptin, which is in the same class.

GlaxoSmithKline’s Avandia found itself at the center of a storm last year after an analysis suggested the drug raised the risk of heart attacks. The company claims the drug is safe, and it remains on the market, at least for now. Ironically, that debate may well have led to the FDA being pressured to reconsider how it approves diabetes medications.


Sources:

FDA
CNN

Can the pathogenesis of pulmonary hypertension be reversed?

Pulmonary hypertension (PH) is diagnosed by observing an elevation in mean pulmonary arterial (PA) pressure above 25 mmHg at rest or 30 mmHg with exercise. Patients usually present with much higher levels of PA pressure, but only vague and insidious symptoms of increasing fatigue and dyspnea. Some patients are diagnosed only after syncopal episodes.

Category I PH, also known as PA hypertension (PAH), includes idiopathic PAH (IPAH), familial PAH (FPAH), and acquired PAH (APAH).



Recent research has suggested that it might be possible to reverse the pathology of pulmonary arterial hypertension (PAH), a disorder that can be rapidly progressive and fatal despite current treatments including prostacyclin.

The role of chronic inflammation and autoimmunity will be important in the development of novel models of PAH. Emerging treatments for the disease are currently aimed at inducing apoptosis of abnormal vascular cells that obstruct blood flow and also at promoting regeneration of “lost” distal vasculature.

Sources:

J. Clin. Investigation

New clue to Alzheimer's found in brain protein

It has been known for a while that the brains of people with the memory-robbing form of dementia are cluttered with a plaque made up of beta-amyloid, a sticky protein that accumulates in the neurons of the brain.

The big question, however, was whether this is a significant cause of the disease or a side effect.

Other suspects included tangles of a protein called tau; some scientists thought this was the cause.



Researchers at Harvard Medical School have begun to address these issues and look at what caused Alzheimer's symptoms in rats by injecting them with one particular form of beta-amyloid. Injections with two other forms of beta-amyloid did not cause dementia, which may explain why some people have beta-amyloid in their brains but do not show disease symptoms.

The injected rats had impaired memory function, especially for newly learned behaviors. When the mouse brains were inspected, the density brain cells was reduced by 47 percent with the beta-amyloid seeming to affect synapses, the connections between cells that are essential for communication between them.

If the results are confirmed in humans, they this discovery may lead to interesting new therapies to either remove, reduce or prevent the build-up of the particular form of beta-amylin that causes dementia.

News coverage from CNN

Merck buys theatre advertising for cancer vaccine ads

Has anyone seen the ads in US cinemas for Gardasil?

Apparently, Merck purchased ad time from May 30th through June 26th. The commercial will run during the trailers before SATC but also at screenings of The Incredible Hulk, Get Smart, The Happening and You Don't Mess with the Zohan among others. They're all films that will potentially attract the 19 to 26-year-old females, the likely target for the vaccine shots.

Merck is also hoping the Food and Drug Administration will soon approve Gardasil for women into their 40s, so perhaps the SATC campaign is also intended for them?

The company plans to file for the FDA approval of Gardasil for young men and boys who can carry and transmit HPV. Given the selection of summer movies Merck's marketers have made, I suspect the commercials are an attempt to raise awareness among guys as well.

Interesting approach.

Meanwhile, GSK are winning the battle for Europe, snapping up the tenders with it's cervical cancer vaccine, Cervarix. Unfortunately, Cervarix doesn't protect against genital warts although Gardasil does.

FDA and EMEA to Consider Additional Test Results When Assessing New Drug Safety

In the first use of a framework allowing submission of a single application to the two agencies, the Food and Drug Administration (FDA) and the European Medicines Agency (EMEA) worked together to allow drug companies to submit the results of seven new tests that evaluate kidney damage during animal studies of new drugs. The tests measure the levels of seven key proteins or "biomarkers" found in urine that can provide additional information about drug-induced damage to kidney cells, also known as renal toxicity.

The new biomarkers include KIM-1, Albumin, Total Protein, β2-microglobulin, Cystatin C, Clusterin, and Trefoil Factor-3. Both FDA and EMEA have long required drug companies to submit the results of two blood tests, called blood urea nitrogen (BUN) and serum creatinine, to evaluate renal toxicity. In addition to those tests, the FDA and EMEA will now consider results from the seven new tests as part of their respective drug review processes. A decision by the sponsor to collect information using the new tests is voluntary, if collected, it must be submitted to FDA.

Such human tests could one day open the door to the approval of more powerful drugs, especially for diseases where renal toxicity currently prevents promising experimental drugs from being approved. With more sensitive tests for renal toxicity, FDA could approve such drugs because health care professionals could closely monitor patients and halt the drug if early signs of renal toxicity appear.

Development of the new biomarkers was led by the Predictive Safety Testing Consortium (PSTC), whose members include scientists from 16 pharmaceutical companies. The PSTC was organized and led by the Critical Path Institute, a nonprofit organization that works to support FDA research collaborations that improve the development of medical products.

Researchers from Merck and Novartis AG identified the new biomarkers, tested them to prove their accuracy and usefulness, and then shared their findings with the other consortium members for further study. The consortium subsequently submitted applications for use of the biomarkers to FDA and EMEA.

The project is the first in which a group of drug companies has worked together to propose and qualify new safety tests and then present them jointly to the FDA and EMEA for consideration. The FDA and EMEA laid the groundwork for these specific joint-agency biomarker reviews in 2004 when they developed a framework called the Voluntary Exploratory Data Submission review process.

The new process allowed the PSTC to submit a single biomarker data application to both regulatory agencies, and then to meet jointly with scientists from both agencies to discuss it in detail and to address additional scientific questions posed by the regulators. Each regulatory agency then reviewed the application separately and made independent decisions on use of the new biomarkers.

Big pharma and innovation

The next few years are likely to be tough for the pharma industry with a number of blockbusters going off patent and pipelines looking thinner than usual across the board. Companies are looking at ways of driving the innovation process.

The FT reported that Patrick Vallance, the head of drug discovery at GlaxoSmithKline, saying research at the company would be reorganized to become 'more biotech-like' in efforts to stimulate innovation. The plan was to split drug discovery into small units focused on specific disease areas, reward people based on successful 'value creation', while providing 'disincentives' against destroying value.

Meanwhile, Pfizer and the University of California, San Francisco (UCSF), announced a partnership in which the company will contribute $9.5 million to early-stage research at the university over the next three years.

Usually, industry funding targets specific projects, but in this case, researchers at the UCSF's Institute for Quantitative Biosciences will collaborate more broadly with the company, with both parties working together to identify promising ideas in different health disciplines. The academic researchers and their institution will retain patents to any inventions, while Pfizer will have the right to negotiate licenses on the technology.

Alnylam and Takeda Form Strategic Worldwide Platform Alliance in RNAi Therapeutics

Alnylam Pharmaceuticals, Inc. (Nasdaq: ALNY) and Takeda Pharmaceutical Company Limited recently announced that they have formed a strategic platform alliance in RNAi therapeutics in the fields of oncology and metabolic disease with the option to expand to additional therapeutic areas. This alliance is the first major RNAi therapeutics partnership between a Japanese pharmaceutical company and a U.S. biotechnology company, representing a new frontier in the advancement of RNAi therapeutics to patients on a global basis.

The cost? $100 million to play, $50M in technology transfers and options/extras for a non-exclusive license in two therapeutic fields that is valued at potentially over $1 billion in future research and development and commercial milestones, upon successful commercialization of multiple products. Wow, that's some deal for an unproven technology and a company with a poor pipeline clearly needs to spend it's way out of the hole.

So what exactly is RNAi? Well, it is a new approach for the discovery of breakthrough medicines that utilises a natural mechanism found within the body to inhibit expression of certain genes. Harnessing the activity of RNAi may create an opportunity to develop specific and potent new medicines for the treatment of a broad range of diseases, including those that are difficult to treat with today’s drug approaches. The discovery of RNAi was awarded the 2006 Nobel Prize and the advancement of RNAi is recognized as one of the most important advances in biomedical sciences in decades.

This collaboration clearly shows that Takeda means business and provides the company with broad, worldwide, non-exclusive access to and enablement with Alnylam’s RNAi therapeutics platform technology and intellectual property in the fields of oncology and metabolic disease, with the right to expand the number of therapeutic fields in the future. The agreement also includes the transfer of platform technology from Alnylam to Takeda, a collaboration and cross-license of delivery technologies between the two companies, and a drug discovery collaboration on certain RNAi therapeutic targets, subject to certain Alnylam third party obligations.

Takeda becomes Alnylam’s strategic partner for RNAi therapeutics over a five-year period and the only Asian company to obtain a right of first negotiation to develop and commercialize Alnylam RNAi therapeutic development programs for the Asian market, excluding Alnylam’s ALN-RSV01 program. In addition, Alnylam obtains opt-in options to co-develop and co-commercialize Takeda RNAi therapeutic programs in the U.S. market on a 50-50 basis.

At Takeda’s option, the scope of the partnership can be expanded to include additional fields with a $50 million per field expansion payment. Alnylam is also eligible to receive research and development funding related to the drug discovery collaboration. In addition, Alnylam is eligible to receive up to $171 million in development and commercial milestone payments and significant royalties per product. Alnylam plans to update financial guidance when it announces its second quarter 2008 financial results.

Market trends: New drug fights MRSA

Scientists at Destiny Pharma in the UK hope they have developed a drug which can destroy the most virulent strains of MRSA. Destiny is dedicated to the development of novel antimicrobial products. Their XF series compounds have a mechanism of action that is fundamentally different from all existing antibiotics. As a result, it may offer potential advantages in controlling the drug-resistant bacteria that are becoming more common both in the community and hospital setting. Destiny are currently testing the drug, XF-73, in the clinic and it may potentially be available in hospitals by 2011.

Photo: Destiny Pharmaceuticals

Study results of the new drug, which is applied as a gel into patients’ noses, showed methicillin-resistant Staphylococcus aureus bacteria (MRSA) did not develop resistance to the compound despite being exposed to it 55 times. XF-73 has been extensively studied in vitro and shows great potential. To date, it has shown:

* Rapid bactericidal activity
* No emergence of resistance in stringent multi-passage testing
* Broad spectrum of activity against Gram-positive bacteria, including multiple strains of MRSA


Methicillin-resistant Staphylococcus aureus (MRSA) infection is a global problem. First reported in the early 1960s, MRSA can cause life-threatening infections in patients admitted to hospitals. When such infections occur, they are known as healthcare-associated MRSA (HA-MRSA). Many hospitals in the UK now have MRSA specific teams to handle the infections.

Photograph: BBC

According to the Centers for Disease Control and Prevention (CDC), 57% of Staphylococcus aureus found in US hospitals in 2002 were methicillin-resistant, compared with just 2% in 1974. There has been a dramatic increase in MRSA resistance in the UK from 2% in 1990 to >40% in the early 2000s. Today, 60-70% of all ITU (Intensive Therapy Units) Staphylococcus aureus infections in the US and the UK are methicillin resistant.

Approximately one-third of patients who carry MRSA develop infection, including the more serious invasive infection – which may result in death. The mortality rate from MRSA blood infection is 64% and there has been a 15-fold increase in MRSA-associated deaths since 1993 (see graph below). Unfortunately this is becoming a public health issue on a global scale unless new treatments are developed and marketed to destroy MRSA.



Adapted from "Hospital stays with MRSA infections 1993-2005
Source: AHRQ, Center for Delivery, Organization and Markets, Healthcare Cost and Utilization Project, Nationwide Inpatient Sample, 1993-2005."

Cervical Cancer: could Pharma companies do more?

Cervical cancer is linked to the human papillomavirus (HPV) and can be prevented by innoculation with a vaccine or detected early by Pap smears. It is not very common in the USA or Western Europe because the introduction of frequent pap smears has reduced its incidence quite considerably.











It is, however, much more common in the developing world. For example, it kills 33,000 women in Latin America and the Caribbean a year, according to a new study. Based on the western experience, better screening and an affordable vaccine for girls could reduce the deaths, which could increase to 70,000 a year by 2030 if nothing is done, according to a recent study.

The study was sponsored by the Sabin Vaccine Institute, the Pan American Health Organization (PAHO), the Centers for Disease Control and Prevention and others. It compiled 15 years of research and is the first major assessment of the effects of the human papillomavirus in the region. The goal of the study was to estimate the burden of the disease on the region and to calculate how many years of life could be saved in each country with Pap smears or affordable vaccines. It is the first major assessment of the effects of the human papillomavirus in the region.

The virus, which is sexually transmitted, and causes most cases of cervical cancer, infects 20 percent to 30 percent of young women in the region, as well as 20 percent of young men.

Not enough cases are detected early, however, so it is a common cause of cancer death in developing countries. In the United States, where Pap smears are a routine part of medical care paid for by health insurance, just 2.5 percent of all cancer deaths among women are from cervical cancer. In Haiti, 49 percent are. In Latin America, the countries with the highest rates were Haiti, Bolivia, Paraguay, Belize, Peru, Guyana, Nicaragua, El Salvador, Colombia and Venezuela (see map above).

A vaccine that prevents infection by the most dangerous strains of the virus costs $360 in the United States, far more than the health systems of most Latin American countries can afford.

"We found scenarios where from an economic perspective, widespread adoption of an HPV vaccine makes sense, but we also wanted to be clear that even at a reduced price, the vaccine would have significant financial implications for national health care systems," said Cuauhtémoc Ruiz Matus, Chief of the Immunisation Unit, PAHO.

Recently, the former Merck CEO, Roy Vagelos noted at a conference that he wished more companies would do more philanthropy. Merck and GSK are two companies who market cervical cancer vaccines (Gardasil and Cervarix). I wonder what efforts they are making globally in Latam and Africa where the disease is very prevalent and preventable?


Sources:

PAHO
NY Times
Executive Summary of the study (downloadable report)

Market Intelligence: China muscles in on pharma competition

Hot on the heels of news that Wal-Mart and Target have lowered the cost of prescriptions for cheap generics, China is preparing to compete in the generic market.

Reuters reported on the Chinese strategy as follows:

Pharmaceutical information group IMS Health Inc said last year's first okay from the U.S. Food and Drug Administration for a Chinese generic, a copy of AIDS drug nevirapine, was a sign of things to come.

China is already the world's biggest producer of active pharmaceutical ingredients (APIs), the chemical raw materials needed to manufacture medicines, but to date it has not been a significant supplier of finished generic pills.

Zhejiang Huahai Pharmaceutical Co Ltd won a U.S. green light last July to sell generic nevirapine, once the patent held by Germany's Boehringer Ingelheim expires in 2012. At least 10 other Chinese companies are set to follow suit with other generic products, according to IMS. Some could be available as early as this year. The result will be increased competition in a generic drugs industry that is already struggling with tumbling prices.

Overall, the Chinese move is expected to drive down generics prices below current market rates. After the recent heparin scare where questions were raised about the quality of the raw and integrity of materials in China, consumers and healthcare professionals may be nervous.

Takeda's bid to become a world class oncology player

Takeda recently offered to pay $8.8 billion for Millennium, the Cambridge based Biotech company that manufactures Velcade. The $25/share offer, a hefty premium to Millennium's recent share price, reflects the ongoing demand for new products by pharma and Takeda's drive to be a world-class oncology player. If the deal terms remain the same, Millennium will become the 8th largest market value in the biotechnology industry, roughly twice as much as the next ones in line for takeovers; Cephalon, ImClone, and Vertex.

Takeda is clearly aggressive about becoming a player in the global oncology market. Previously, it had a $640 million two-part, 13-compound deal with Amgen and its even more recent $320 million worldwide deal for Cell Genesys’ GVAX prostate cancer immunotherapy. The tremendous advantage of the dollar’s low value relative to the yen is a major factor why Takeda could afford to pay the 65% premium to Millennium’s closing price, even without a share of the valuable ex-US Velcade rights owned by J&J.

What is Takeda getting for its money? In addition to Velcade, Millennium has 10 drugs currently in clinical trials, primarily focused around oncology and inflammatory bowel disease. The company’s next most advanced product, MLN-0002, an antibody against the gut-specific alpha-4 beta-7 integrin for ulcerative colitis and Crohn’s disease, has yet to enter Phase III clinical trials and isn’t likely to be approved before 2011 or 2012 so the pipeline is very much a long term project, something the Japanese are renowned for.

It also means it gets to rebuild a pipeline. By acquiring Millennium, Takeda will help address a short term revenue problem. The patents on two of Takeda's biggest-selling products, ulcer drug Prevacid and diabetes treatment Actos, expire in 2009 and 2011, respectively. Revenue from Millennium's sole marketed product is growing quickly and is widely expected to reach as much as $345 million this year.

In addition, sales of Velcade could get another big boost this summer when the FDA rules on an application from Millennium to sell the drug as a first-line treatment for multiple myeloma. Currently, the drug's labeling indicates it should be used only as second-line treatment. A label allowing for broader usage of the drug would likely result in more patients using Velcade for longer periods of time and generate more revenues.