Sanofi-Aventis announced its $18.5 billion bid for Genzyme to the public for the first time yesterday, after weeks of speculation in the press. Sanofi’s “bear hug” letter revealed that it has been attempting to engage Genzyme in merger talks for weeks. The letter is intended to prompt Genzyme to enter negotiations; however, Genzyme’s board immediately reiterated its unwillingness to discuss the “opportunistic proposal” without an increase in price.

While Genzyme CEO Henri Termeer has successfully fought off takeover speculation in the past, things are different for the company now, and Genzyme may ultimately have to succumb to Sanofi (or another bidder, should one emerge). As Genzyme’s manufacturing quality problems have continued to harm its reputation and share price, the board of directors has gained several new members representing dissident shareholder groups. Led by activist investors Carl Icahn and Ralph Whitworth, the investor groups are pushing for increased levels of change within Genzyme and might ultimately be more open to outside bids.

If Genzyme doesn’t change its tune and begin negotiations, and if another bidder doesn’t emerge, Sanofi will likely make the bid a hostile one, exerting pressure on the board to accept the existing offer by taking it directly to shareholders. The tactic would follow in the footsteps of Roche‘s takeover of Genentech last year, in which Roche eventually won the biotech prize. Sanofi may first have to raise its bid though, as Roche did, to appease shareholders and ease the bite of its initial hostile efforts.

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Photo by Bob Haarmans, used under a Creative Commons license.

Should genetic testing kits be available over the counter – alongside pregnancy tests and the like? This topic has come up for debate in 2010 and Congress and the FDA have increased their scrutiny of whether such kits, which analyze a person’s genetic makeup to determine their risk of developing certain medical conditions, as well as potential drug interactions, should be available to consumers without first meeting regulatory approval.

The debate intensified a few months ago when Walgreen shelved its plans to sell over-the-counter genetic tests made by diagnostics firm Pathway Genomics. The retailer balked on its promotional efforts after the FDA announced that it would be examining whether the tests were being marketed accurately and whether they needed FDA clearance.

Just last week the FDA sent a fresh round of warning letters to genetic test makers including Interleukin, Sequenom, and CyGene Laboratories. The agency also held numerous meetings on the topic, including a congressional hearing where the Government Accountability Office released a report finding that tests from several companies returned significantly conflicting results. The GAO’s conclusions are troublesome as patients could potentially make incorrect medical choices based on inaccurate results, and it begs the question of whether the tests have been perfected enough to be marketed at all.

Currently personal DNA tests are sold over the Internet or through physicians, and Walgreen would have been the first retail outlet to sell such products. Walgreen and the test makers have stated that the testing kits are similar to paternity and pregnancy tests already sold as OTC products and shouldn’t need FDA approval. However, because the results of the genetic tests could lead customers to take medical steps that they may not otherwise have taken, these tests should probably be more rigorously inspected and regulated before entering the direct-to-consumer market.

The FDA’s warnings will require test manufacturers to submit evidence that their tests do not meet the agency’s definition of medical devices, and have prompted firms such as Pathway and Navigenics to withdraw plans to market these tests directly to consumers. The agency has stated that it is working to ensure that any gene testing kits marketed over-the-counter are based on sound science and are not marketed under false or exaggerated medical claims – definitely a good idea from this blogger’s point of view.

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Photo by Patrick Lentz, used under a Creative Commons license.

Most recently, Johnson & Johnson‘s McNeil Consumer Healthcare unit has had to cease production at a Pennsylvania plant that supplied a number of brand name over-the-counter medications including Tylenol, Motrin, and Benedryl. As the FDA investigated, McNeil halted manufacturing operations at the location after potential contamination issues came to light and prompted a recall of several children’s liquid medications.

A recent update suggests that production at the J&J plant won’t resume until 2011, as a number of process improvements and upgrades are required for the plant to regain compliance. While consumers can readily access alternative products or generic versions of the popular cold remedies, the lack of selection is easily apparent on store shelves. And while prosperous J&J won’t suffer much financially from decreased sales of the products, the company will have to work to re-establish its good old boy reputation with US consumers.

Another US drugmaker, biotechnology firm Genzyme, has also experienced contamination troubles at one of its US manufacturing plants in the past year, but in this case the closure of the plant caused a widespread shortage of its hard-to-produce rare disease therapies, wreaking havoc on patients who depend on the drugs and putting a dent in the company’s bottom line. Genzyme is feeling ripple effects from its inability to regain full production, such as shareholder dissent and increased competition from rivals elbowing their way into the company’s near-exclusive market.

The FDA appears to be making good on its promise to crack down harder on US drug manufacturers, as well as foreign importers, not only in the area of good manufacturing practices but also in regards to marketing, sales, and research and development tactics pursued by the industry’s players. Hopefully the agency’s actions will cause more companies to take a closer look at their own operations before contamination issues, recalls, and shortages bring ill effects upon the consumer market.

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Photo by Justin Lai, used under a Creative Commons license.

While consolidation in the home health care arena has been fairly common in recent years, as has the partnering of home nursing and hospice care agencies, new developments in the US health care market look to be prompting an even bigger wave of tag-ups among heavyweight players and small-time contenders alike.

This week home health firm Gentiva, which operates about 300 agencies across the nation, agreed to acquire Odyssey HealthCare, which operates 100 US hospice programs, for some $1 billion, marking one of the largest combinations to date in the niche industries. While there are several big name players in both the home health (Amedisys, LHC Group) and hospice (Vitas) markets, consolidation has not become as widespread as in some other health-related industries, and many local agencies continue to fly solo.

However, US health care reform measures are anticipated to continue to squeeze out small-time nursing and hospice providers as insurance and government service reimbursement levels are lowered and overall medical costs continue to rise. Hospice and home care are a natural tie-in since the services are complimentary and sometimes serve the same patients.

The agreement between Gentiva and Odyssey, along with a smaller agreement announced this week between LHC and the Idaho Home Health and Hospice organization, is being perceived in the investment community as the kick-off for a volley of merger activities to come.

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Photo by Jess, used under a Creative Commons license.

 An ongoing legal battle over whether companies can file patents on human genes — yes, really — is heating up, and I can promise you haven’t heard the end of it.

In late March a federal court threw out two patents linked to breast and ovarian cancer held by genetic testing company Myriad Genetics. The company plans to appeal the ruling, and my guess would be that it will make it to the Supreme Court. The outcome could have a huge impact on the entire gene-based pharmaceuticals industry.

The fact that these genes are indeed patented is nothing new — about 20% of the human genome has already been patented by companies that “discovered” them (through isolation and purification methods) and have developed genetic tests and drugs based on the genes. The companies are able to reap sole profits from these products due to their exclusive patents.

But patients object to the ownership of genes (a forehead-slapping concept for any person to grasp, truly) because they cannot get a second opinion on results of genetic tests like Myriad’s, and also because the tests are sold with an extremely high price tag. The idea of companies being allowed to own genes seems absurd to begin with when examined on the basic premise (used by the federal judge in the Myriad Genetics case) that naturally occurring substances cannot be patented.

The biotechnology companies that own these patents in turn argue that they should hold rights to genes that they’ve put time and money into discovering. They also contend that if they can’t patent their discoveries, they won’t be able to fund the development of new products based on those genes.

Now, the companies can get additional patents on the products later on, but without the initial gene patent they are not guaranteed market exclusivity for those products, and they can’t profit on partering or licensing the gene to other developers. Universities also profit from licensing out genetic patents to development firms.

However, some argue that research companies should be competing based on the quality of their discoveries and technologies, instead of playing “who patents the gene first,” and that the invalidation of single-gene patents will open the door to better, broader genetic-testing methods.

It seems pretty obvious that the federal judge ruled wisely in this case, but for some the issue is not so cut and dried, and the decision could end up being repealed. While pharmaceutical development firms’ methods are easy to criticize as they are generally focused on achieving the highest profit, they also provide the means to improve modern medicine through new discoveries. However it turns out, resolution of this case needs to allow for what’s best for the general public, which to me means access to the most innovative medical care possible, including second opinions on diagnostics and a variety of treatment options.

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Photo by Christian Guthier, used under a Creative Commons license.

The bill’s most contentious element — the implementation of insurance subsidies and penalties for individuals and businesses – comes into play in 2014, along with the widening of Medicaid coverage for low-income families and the establishment of a health insurance exchange to increase competition in the industry.

One industry that will undoubtedly benefit over the long run is the hospital business. Consolidation and layoffs have been a common theme for hospital operators in recent years, largely due to the increasing number of uninsured patients knocking at their doors. The bill’s ultimate goal of leveling the playing field for Americans who have thus far been unable to afford health insurance on their own will also be a boon to struggling hospitals.

Private practice physicians and clinics are also likely to benefit from an increase in insured patients, though both doctors and medical centers could be hurt by cuts in Medicaid and Medicare reimbursement rates. In addition, certain emergency clinics will receive special funding increases under the bill.

Health insurance companies are also likely to benefit, as in theory more consumers will be flocking to their doors (many with government subsidies in hand) to purchase health care coverage. However, health insurers will also fall under stricter regulations and a (hopefully) more competitive business landscape. The long-term care insurance industry will also be impacted by the bill as consumers are encouraged to enroll in a federal program.

While drug and medical device manufacturers will be paying industry fees to help pay for the legislation’s enactment, they will also benefit as more US citizens are able to afford prescription drugs, surgeries, and other procedures. Some health reform supporters feel that the bill’s impact on medical costs in this arena weren’t heavy enough, and that price controls should have been inflicted on the drug industry, but these companies will at least feel some impact from the changes in Medicare pricing coverage.

A wide number of facts and myths are circulating about the health care bill, and hopefully the American public will gain clarity as details are explained. Some elements of the bill as it exists now could still be changed as the Senate and House hash out details this week, and many republican legislators remain determined to try to strike it down altogether. But ultimately, the health overhaul is looking to be a major victory for Obama’s White House agenda. Hopefully the legislation will be a positive step towards fixing the broken American health care system and reducing the nation’s soaring medical costs.

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Photo by Carl Clifford, used under a Creative Commons license.

This NYT article outlines the proposed legislation, which will soon be introduced in Congress, on one of my favorite soapbox topics — junk food in schools. The legislation aims to ban junk food outright in schools and require all schools to meet certain nutrition guidelines in their cafeteria offerings.

A few years back President Clinton began urging changes in school nutrition and exercise programs (including the removal of sodas and candy bars from vending machines) and was highly successful in his program, which received cooperation from many food and beverage companies and state governments. But federal legislation is the only way to ensure that all US schools are following through on the changes.

While no school can force students to eat their broccoli, requiring changes in the mealtime menu and snack options is the only way to ensure that all of the offerings are nutritious, and it is the best way to encourage children to make healthy choices. Parents and school administrators cannot always be watching over their shoulders.

The Obama nutrition initiative is already receiving cooperation from companies such as Coca-Cola, PepsiCo, and Sodexo, as well as from the Department of Agriculture and the Food and Drug Administration. The White House is also working to bring grocery stores to underserved locations and increase funding for community farmers’ markets, and Michelle Obama is encouraging family physicians to play a more active role in recommending health and exercise regimes for overweight patients.

Obesity has become an incredible epidemic in the US, and despite progress in the battle to reduce obesity levels in our country, it remains a great cause for concern. This is especially true for our children, who by forming bad eating habits at a young age will have an even more difficult time shedding the negative health impacts of being overweight throughout their lifetimes.

I for one hope that more food and beverage companies, communities, health care providers, and schools will jump on the Obamas’ childhood obesity bandwagon and that politicians will unite to support stricter federal nutrition guidelines.

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Photo by Andrew Maiman, used under a Creative Commons license.

Whether concern over the vaccine’s safety or a noticeable dip in ailing cohabitants has caused the lack of response in citizens is unknown. Regardless of the reason, governments in developed nations have begun to cancel or reduce pending vaccine orders and sell or donate excess supplies. Health departments in Germany, France, Italy, and the UK are among countries reducing the number of shots they will receive in coming months, citing reduced demand and the determination that only one shot per person would be necessary.

While the major global vaccine manufacturers (including GlaxoSmithKline, Sanofi-Aventis, Baxter, Novartis, and CSL) have already profited from widespread sales of the vaccine, these order reductions will have a negative impact on the profits they thought they would receive in 2010.

In fact, as the pandemic has turned out to be less severe than predicted, some governments are investigating whether drugmakers had too much influence over the process. The World Health Organization is also coming under fire for encouraging such a strong reaction and plans to conduct an internal review over whether the massive vaccine push was warranted. But when it comes down to it, I imaging the findings won’t make much difference if similar situations occur in the future, as most governments and the WHO typically prepare for the worst when a virus has the potential to cause widespread deaths. It is impossible to accurately predict how swiftly an illness will spread or what final impact it will have.

Consumer concerns over safety and side effects were high even when the pandemic hit its peak in the fall, despite assurances that the vaccines had been safely produced and thoroughly tested. A handful of recalls after the vaccines were widely distributed probably heightened skepticism, while some would-be patients likely became desensitized to the issue after a media frenzy surrounded the illness throughout most of the year. But the tapering off of seriously ill patients with confirmed cases of H1N1 is probably the largest culprit in slowing consumer response.

Meanwhile, health experts insist the swine flu could make another wave this year, or even mutate into a stronger form in coming years, and here in the US the CDC is still avidly encouraging folks to get the vaccine.

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Photo ©Sanofi Pasteur

Not too big of a surprise that Pfizer wants to stick its nose into the generic biotech (or follow-on biologics) market — it’s a steadily rising trend in the pharmaceutical industry these days.

While the wave of companies adding traditional generic drugs to their repertoire has been growing for some time, generic biotech drugs are becoming an increasingly popular avenue of expansion for pharmaceutical firms as well, especially in the face of recent and impending regulatory changes which seek to allow greater consumer access to value-priced medications.

Biological drugs, often used to treat serious or rare diseases including cancers and hereditary conditions, often come at a high cost. They are also difficult to manufacture, as troubles at biotech firm Genzyme have recently spotlighted.

Pfizer, the world’s top drugmaker, has been scrambling to ensure that it keeps its lofty position, and it is moving into a variety of high-growth fields to achieve this goal. The company entered the generics market through two partnerships formed earlier this year, and it now plans to utilize its expanded position in the biotech industry (gained through its recent merger with Wyeth) to begin developing and making generic biotech drugs.

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Photo by Erich Ferdinand, used under a Creative Commons license.

Consumer goods manufacturers seem to be taking product advertising to a new level. According a recent Ad Age article, we shouldn’t be surprised if we find ourselves viewing ads for Dr. Scholl’s while enjoying a break at a favorite coffee shop or food chain.

Schering-Plough (which changed its name to Merck in a massive merger just last week) has reportedly taken a chunk of its TV advertising budget for consumer health products including Claritin, Coppertone, and yes, Dr. Scholl’s, and plunked it down on an experimental venue called “digital out-of-home” advertising, which includes digital message boards in places like restaurants, malls, and even taxis.

While TV spots will probably continue to be at the top of the advertising budget for health and consumer product makers, it’s not surprising to see companies branching out into new venues in this growing age of information advancements. I’m just not sure how well foot care products will market next to hamburgers. But time will tell whether this health care firm is boosting a trend or taking a bad risk.

While digital advertisement screens pop up in more and more places, the Internet also continues to grow as a leading alternative advertising venue. We all know how annoying banner and pop-up ads are when you’re trying to surf the web, but the tactic must work because they just don’t seem to be going away. Prescription drug firms may find that venue lacking though, as the FDA is working to increase regulation of web drug ads.

I imagine that consumer product makers will have to continue to be creative and innovative when it comes to advertising, especially with the popularity of TiVo and digital records that block out ads. Who knows what will come next?

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Photo by Journeys Coffeehouse under a Creative Commons license.