About Kristi Park

It was just October, when Biogen Idec announced it was looking for a buyer, that everyone was hot and bothered about the prospects of a big deal. In particular, Pfizer — with so much of its profit depending on drugs soon to lose patent protection — was mentioned as a possible suitor. Pfizer could use a nice healthy biotech, so the conventional wisdom went, to shore up its pipeline and its portfolio of marketed products, and, more importantly, it had the cash to buy. Sanofi-Aventis was another frequently mentioned name.

Plus, Carl Icahn — the man behind AstraZeneca’s $15 billion purchase of biotech MedImmune — had been agitating for a sellout, and had reportedly put up a $23 billion bid for Biogen Idec himself. Biogen Idec’s stock soared amidst all the speculation.

Now, two months later, all that speculation has come to nothing. Biogen Idec announced Wednesday that it couldn’t seal a deal and would remain an independent company.

So what happened? Well, it looks like a number of things contributed to Biogen’s Idec’s inability to make a match:

• Soon after making its decision to pursue a sale of the company, Biogen Idec released disappointing third-quarter results that may have made prospective suitors nervous.
• Those same suitors could also have been scared off by co-marketing deals with Genentech and Elan, under which the latter companies have options to acquire the rights to key Biogen Idec drugs in the case of a buyout.
• Third, the company’s multiple sclerosis drug Tysabri has struggled with safety issues, having been pulled off the market temporarily in 2005 when some patients developed a fatal neurological condition; it was reintroduced the next year under a risk management plan.
• And finally, Biogen Idec’s soaring stock price may have simply made the company too expensive, especially considering some of the drawbacks mentioned above. Sanofi-Aventis CEO Gerard Le Fur, for example, went so far as to admit publicly in November that “the price is a little high.”

And so, Biogen Idec remains single, and Pfizer remains without a significant biotech operation, though it’s trying. The generic woes of Pfizer and the rest of Big Pharma still loom large, and as the Wall Street Journal reported last week, the druggernauts will have to revise their business plans significantly — by expanding into biotech or significantly restructuring their operations — to survive the potentially lean years ahead. At least for now, they’ll have to do it without Biogen Idec as a partner.

According to the New York Times, it is — and has been for a while. Reynolds American — which makes Camel, Winston, and Pall Mall cigarettes — says it won’t run cigarette ads in consumer magazines and newspapers during 2008. The announcement comes amidst a dispute between Reynolds and a consumer group called Campaign for Tobacco-Free Kids, which complains that a recent Camel ad in Rolling Stone harkens back to the Joe Camel cartoon character (an image now banned because of its appeal to kids).

The decision represents only one step in Big Tobacco’s ongoing retreat from print advertising. Philip Morris, for example, hasn’t used magazine ads for its cigarettes for three years; and expenditures on print ads have made up a miniscule part of Reynolds advertising budget in recent times, with direct marketing and promotions in stores, bars, and online accounting for most marketing expenses.

That might explain why Campaign for Tobacco-Free Kids isn’t exactly doing cartwheels over Reynolds’ announcement. The group says the decision is a cynical attempt to avoid controversy and doesn’t go far enough: Instead, the company should make its decision to forgo print advertising a permanent one and also curtail its other promotional activities.

But in the meantime, maybe Reynolds’ New Year’s resolution to stop hawking its products in magazines will be a boon to readers who’ll make their own 2008 resolutions to stop lighting them up.

In a global economy, who’s to keep you from ingesting a little diethylene glycol with your cold medicine?

The New York Times raised the question in an extensive report last week on the regulatory voids that allow Chinese chemical companies to produce and export substandard (and sometimes downright poisonous) drug ingredients.

It points to two tragic cases since the 1990s that killed or disabled hundreds in Haiti and Panama, when drugs using Chinese-made ingredients ended up containing diethylene glycol, a toxic solvent used in antifreeze, among other things.

The problem isn’t necessarily with China’s pharmaceutical companies (China National Pharmaceutical or China Shineway, to name two) because they are regulated by the country’s food and drug agency. But there are some 80,000 chemical companies in China that aren’t regulated by that agency, and many of them produce active pharmaceutical ingredients (API) used to produce finished drugs.

Nothing so awful as the Haiti and Panama tragedies has occurred in the US, which is perhaps the safest pharmaceutical market in the world. But that doesn’t mean there’s no reason for Americans to be concerned.

First of all, Big Pharma has signaled its intentions to outsource more API manufacturing to China and India, with AstraZeneca being the most recent drug giant to make news on that score. A sound regulatory structure needs to be in place to allow that to happen safely.

Secondly, drugs with unregulated Chinese ingredients routinely make their way into the US via Internet pharmacies hawking counterfeit drugs.

And third, even the Food and Drug Administration, with all its regulatory muscle, isn’t currently capable of inspecting foreign drug makers with the rigor and frequency necessary to insure the safety of American imports. A Congressional sub-committee heard testimony from the GAO on Thursday to that effect.

Congress heard similar reports about the FDA 10 years ago and not enough has changed since then. But with the pharmaceutical world finally waking up to the cost-efficiencies of outsourcing, now might be a good time to make a change or two.

As the wildfires rage on in Southern California, Bloomberg reports on an early estimate of insurance costs for the disaster. The Insurance Information Institute, an industry trade group, says the fires may cost insurers upwards of $500 million, though it calls that number “very preliminary.”

State Farm and Farmers are the largest providers of homeowners insurance in the state, but it is excess and surplus (i.e. non-traditional) insurers like Lloyds of London that are most at risk. That’s because many providers of standard homeowners insurance have avoided issuing policies in areas prone to wildfires.

However, with 1 million people having left their homes and many of the fires still out of firefighters’ control, some are calling that estimate wishful thinking. Portfolio consulted some of its own insurance experts, who said the final costs will “far exceed” the $500 million mark.

In case you still thought social media sites were just for teenagers spreading rumors and bands posting their MP3s, along comes news of Pfizer’s new collaboration with Sermo, a kind of MySpace for doctors. The AP has a rundown of the deal and a brief description of Sermo’s business model. (You can also watch a video of Sermo CEO Daniel Palestrant describing how Sermo works and what it’s good for at The Health Care Blog.)

People are certainly interested in the tie-up, which allows Pfizer’s medical staff to interact with doctors on the site, and reaction in the blogosphere has been swift and varied. Here’s a small sample of first responses:

• Pharmalot questions whether Sermo’s docs will welcome Pfizer into the community and also points to the danger of Pfizer promoting drugs for conditions other than the ones they’re approved for (an illegal practice called off-label marketing).
• HealthCareVox pooh-poohs this idea, saying Pfizer will be able to put controls in place to prevent off-label marketing. (In the process, however, it reminds readers of a sticky situation AstraZeneca got itself into when one of its employees made questionable edits to the Wikipedia entry for Seroquel.)
• Pharma Marketing Blog contends that Pfizer isn’t interested in marketing its products outright on Sermo; its real plan is to spy on doctors and enlist the ones it feels can influence others informally.
• And finally, Douglas McIntyre at BloggingStocks believes the deal will be a disaster for Pfizer because Sermo’s doctors will be able to criticize Pfizer and its products more than Pfizer will be able to promote itself.

I have no idea whether this hook-up will work out for Pfizer, of course, but this last critique strikes me as a basic misunderstanding of the marketing potential of social media, despite the reduced ability marketers have to tightly control the message. Web 2.0 isn’t going anywhere, and companies, including Big Pharma, will do well to find a way to use it.