Monday, April 26, 2010

Good By Mike! (Canary in the Mine?)

I learned this week that Mike Huckman of CNBC and Pharma’s Market ( ) is leaving for a PR firm. His last day is May 7th. I’ve always enjoyed reading his blog which set a very high standard and was always topical. Unfortunately, since his blog is part of a corporate website, we probably won’t see his past blogs much longer. I encourage readers to check out his blog before it disappears. Mike, good luck and thank you for all your past journalistic contributions!

OK, now, what’s on with my aside about Mike being a canary in the mine? In the old days, really old, like before black and white television without remotes, coal miners would take canaries with them into the mines to give early warning about the buildup of dangerous gases. Canary falls over dead, miners skedaddle, you get the idea.

Don’t worry. I’m not suggesting that anything that drastic is going to happen to Mike. But, what I am suggesting is that when a journalist of his caliber who has been covering the pharmaceuticals industry for the last several years for a major media outlet to go into another line of work, you have to ask yourself what’s going on.

Lately, I’ve been blogging about the lack of momentum and direction in Big Pharma. Mike’s departure seems to me to be yet another sign of an industry in trouble. (No, I’m not talking about the media industry. I don’t cover that. For more on that industry, check out Julia Boorstin’s Media Money blog ( ) on CNBC.) Mike covered an important industry for a major news network. Now, he’s going off to join the corporate rat race. (Yes, I know that CNBC has its own corporate rat race but you get the idea.) There may be a replacement but somehow I suspect that it’ll be a young wannabe on a part time basis.

Less newsprint, no new products, declining revenues and profits, and no drama don’t make for a good situation for Big Pharma. The auto industry is in a lot of trouble but everyone wants to know what will happen next at General Motors. Will the Chinese, or won’t they, buy Hummer? Will Toyota survive? Soap operas are made of this stuff. Ratings will thrive. Phil LeBeau (Behind the Wheel ( ) at CNBC) won’t be leaving anytime soon. Big Pharma lacks that kind of plotline.

I’m starting to feel a little lonely out here. To say nothing of trying to divine where this industry is going. But, I enjoy this and Big Pharma is certainly a challenging assignment. Good luck to Mike and everyone else out there covering life sciences!

As always, we welcome your feedback. Please contact us at We look forward to hearing from you.

Contributed by Guy de Lastin

Sunday, April 25, 2010

FDA Recalls Pfizer's Antipsychotic Drug Geodon due to Overdosing in Clinical Trial

Our colleague, Lee Howard of "The Day" newspaper in Connecticut wrote the following article that appeared in his newspaper this week ( He was kind enough to ask for our view and we in turn are publishing that article:

"Pfizer Inc. has received a warning letter from the U.S. Food and Drug Administration reproaching the company for failing to monitor properly studies of its antipsychotic drug Geodon that led to excessive doses being administered to 13 children and at least 20 adults.

The letter, addressed April 9 to Martin Mackay, president of Pfizer's PharmaTherapeutics Research & Development division and first reported Tuesday by the Reuters news service, said the FDA had found an internal company report dated Nov. 7, 2006, that indicated "dosing errors" had occurred.

The initial seven overdoses, for a medication trial in 2006 that the FDA redacted in its warning letter but which Pfizer confirmed was Geodon, were blamed on a lack of proper training. But six more children in another study more than a year later received excessive doses as well even after personnel were retrained, according to the FDA.

One patient received overdoses for 30 days, and others reported tremors and other side effects from the mistake, the agency said in its letter, available online at

"We conclude that you did not adhere to the applicable statutory requirements and FDA regulations governing the conduct of clinical investigations," the agency added.

Among the FDA's findings:

• Pfizer failed to officially designate someone sufficiently trained in medical issues to answer questions that would lead to informed consent, as required by regulations.

• Pfizer monitors visited one of the studies nine times but never picked up on the overdoses; instead, a company data management unit made the discovery.

• Pfizer failed to keep study investigators informed about new observations regarding reactions to the drug, especially about adverse effects and safe uses.

Pfizer said in a statement through its director of worldwide communications, Kristen E. Neese, that it is "committed to fully addressing FDA's concerns."

Neese pointed out that many of the FDA's insights about the drug-trial problems were first uncovered and reported by Pfizer itself, as part of its monitoring and quality assurance processes.

"Since that time, Pfizer has instituted several new measures designed to improve monitoring and execution of clinical trials, including our oversight of clinical investigators," Neese said.

Neese said Pfizer will identify to the FDA in the next two weeks several clinical-trial enhancements that the company believes will present similar issues in the future.

Larry Rothman, a blogger on the drug industry and chief executive officer of Pharma Flex, a temporary staffing firm in Fort Lauderdale, Fla., said warning letters regarding clinical trials are rare. Generally speaking, he said, trials are very closely monitored both because of potential hazards to patients and because drug companies must show rigor in their administration of the experimental medications to get statistically meaningful results.

"This is a very unusual event," he said, "but it looks like Pfizer did their best to fix it."

The warning letter to Pfizer followed at one-month investigation last year by two FDA inspectors. Pfizer subsequently acknowledged problems with its clinical investigations, but a July 2009 response letter to the investigation "did not contain a detailed outline of procedures or processes that would be implemented to present future occurrences," according to the agency.

The FDA also noted that the failure to properly monitor its investigations was a repeat violation, since the agency had sent a similar letter to the company after a 2005 inspection that showed widespread overdosing of study subjects."

Thursday, April 22, 2010

Big Pharma – Will It Get Any Better?

I’m still on this kick that life sciences and Big Pharma, in particular, are stuck and aren’t getting better anytime soon. I’ve been out trolling the Net looking for any hints of anything that might indicate either I’m wrong or there’s a turnaround coming soon. And, guess where this is going, I’m not finding much. In fact, I’m not finding anything. (I’m not counting spin doctoring materials churned out by Big Pharma. If you read those you’d run out and load up on their stocks.)

What I am finding tends to support what this blog has been saying for a while, Big Pharma’s not going anywhere anytime soon but down. I’d like to call out a blog which I recently came across whose author, Pharmboy a member at Phil’s Stock World, has recently posted a blog entitled “The Calm Before the Storm – Big Pharma Is Gonna Have Big Problems and Pfizer is the Biggest” ( ) that gives a detailed analysis of the trends affecting the industry.

Pharmboy (that’s a great name for a blogger isn’t it?) predicts that Big Pharma revenues will stop growing by 2014. He notes as this blog has that growth will have to come from acquisitions and explains how picking the right science will be essential for making the right investments. This is an important point, because some of the larger pharmaceutical companies are run by what I call professional managers, MBA types with a good handle on numbers, marketing, branding, and the like but who really don’t have a clue about the basic sciences let alone the complex, advanced theories that are behind modern drugs. The recent financial meltdown on Wall Street shows what happens when senior management loses touch with their products.

The blog also lists the major drugs coming off patent in the next several years and estimates that these represented $49.9 billion in 2009 revenues. One point where Pharmboy differs from this blog is that he believes some of the pharmaceutical companies, Novartis (NVS) and Merck (MRK) actually have good drug pipelines while Abbott’s (ABT) is weak but could be augmented by acquisitions.

Pfizer (PFE) is singled out for criticism for paying too much for Wyeth (WYE) and not keeping an eye on the science. He also writes about the inefficiencies and lack of innovation in a larger organization like Pfizer.

I’ve called out Pharmboy’s blog because it’s a very good summary of the issues facing Big Pharma today. What I want to know is when will the main stream media begin to take a closer look here as well? Finally, how about the financial community? When will they begin to challenge the valuations of Big Pharma?

As always, we welcome your feedback. Please contact us at We look forward to hearing from you.

Contributed by Guy de Lastin

Sunday, April 18, 2010

Life Sciences Industry – What’s Going On?

Maybe I’m numb or going through withdrawal after the passage of the Patient Protection and Affordable Care Act but things seem to be awfully quiet in the life sciences industry lately. I look at other industries, financial services, automotive, and things are hopping. Even railroads have mergers and acquisitions going on.

While I can’t admit to exhaustive research in the life sciences industry, I just haven’t seen a lot of momentum behind anything lately. There are no blockbuster products, no big mergers and acquisitions, or no big research ideas. (I apologize to all those researchers slaving away but they really need to get better publicists.) Business seems to be atrophying. What’s going on?

Are we looking at an industry that’s going away? Now, I’m sure some of you are wondering what I’m rambling about this time. Am I maybe overreaching here? I don’t think so. History’s on my side. Remember the personal computer industry? That went through a similar cycle of boom and bust, if somewhat more accelerated. Once upon a time the media was full of stories about new products, companies, and ideas. Not to mention the personalities? Anyone remember Adam Osborne? (In case you’re curious, he died back in 2003 in India.) Today, the industry’s products are commodities manufactured in China. Some might even argue that with new innovations like iPads or PDA’s personal computers are going the way of the buggy whip.

When I visit Mike Huckman’s blog ( ) I don’t see any trends developing. (No criticism of Mike is intended, whose blog is one of my favorites (I wonder if he will continue as he is rumored to be leaving CNBC for a PR firm this month), he can only write about what’s out there.) There almost seems to be a defensive posture in the industry. Products are being recalled, regulators are becoming more aggressive, and healthcare reform weighs on the industry.

So what does this mean? If the personal computer industry is any example then consolidation, lower prices, and possible business failures are safe guesses. Maybe this is life science’s high water mark. Or, maybe not. One thing’s for sure, the life sciences industry is in a state of flux. Big time.

All the old rules seem to be changing now. At least as far as life sciences go. The challenge will be identifying what will be the clues to the turnaround, if there is a turnaround.

I’m going to make another one of my predictions. The life sciences industry is going to go way for a while. A long while. The industry’s business fundamentals are askew. Globalization isn’t helping. The regulators are struggling. My blog last week about Myriad Genetics (MYGN) and its legal problems is another piece of evidence. Healthcare reform is beginning in the States. A new generation of companies and managers are needed. I’ll be following this one.

As always, we welcome your feedback. Please contact us at We look forward to hearing from you.

Contributed by Guy de Lastin

Saturday, April 17, 2010

Oracle Spends Big to be a Leader in Pharmaceutical/Biotechnology Clinical Software

On Friday, April 16, 2010 Oracle (ORCL) announced that it would pay $685 million to acquire Phase Forward Incorporated (PFWD) and integrate it into the Oracle Health Sciences Global Business Unit. This seems to be a carefully considered strategy to dominate clinical development software and provide a one stop superstore of this software when integrated with the previous acquisitions by Oracle of Siebel and its eClinical Suite as well as Relsys a key provider of drug safety and risk management solutions with advanced analytics for the life sciences industry. This may very well be the oft described clinical ecosystem that many senior Pharmaceutical R&D executives have been seeking a way to improve efficiencies and lower costs.

This acquisition does not come cheap—a premium of 30% over the prior day market price and a price that represents over 3.1 times 2009 revenues of $213 million or an astonishing 61 times net profit of $11.2 million-suggests that Oracle sees significant synergies in its product lines.

In our opinion this is a win-win combination for Oracle and Phase Forward since the extraordinary marketing power that Oracle brings should boost Phase Forward Sales while the Phase Forward products fill in significant gaps that Oracle has. Additionally, the concept of Software as a Service (SAAS) has been furthered within Oracle based on Phase Forward's Integrated Clinical Research Suite (ICRS) which could be the glue between Siebel eClinical and the Relsys Product Suites. The possibility of a full service “cloud computing” offering is a distinct possibility in our thinking. The challenge of seamless integration of all this can be problematic and articulation of the value proposition to their clients will need to be clearly defined.

The other questions left to ponder is what will key competitors such as Microsoft and SAP do to be competitive in this space and what acquisitions will come next. One further issue to consider is the enormous potential for consulting and support services and what moves the market leaders (IBM, Accenture, TCS, Infosys, Capgemini, etc.) and more specialized players will do to garner parts of this business.

Sunday, April 4, 2010

Myriad Genetics – A Sign of the Future?

I’m going to step away from my recent blogs about the Patient Protection and Affordable Care Act because I think time is needed to see what happens next and there is so much else to blog about in life sciences these days. And, thanks to Federal judge Robert Sweet of the U.S. Circuit Court in New York City, I’ve got a great topic for this blog.

You may have heard about this one already. Seems that Judge Sweet threw out the practice of patenting human genes by invalidating patents held by Myriad Genetics (MYGN) relating to breast and ovarian cancer. The American Civil Liberties Union (ACLU), the American Medical Association (AMA), the March of Dimes, and a slew of other interested parties got together and ganged up on Myriad. Talk about having a bad day. Obamacare’s passing probably didn’t make the mood at Myriad’s headquarters any better. (See Scott Canon’s article at The Kansas City Star for a very comprehensive summary .) While I may be over-dramatizing a bit here, I suspect that the emotional issue of access to affordable women’s health care probably contributed to Myriad’s misfortunes. Also, Myriad’s lack of a legal war chest as compared to more deep pocketed bio-tech players probably didn’t hurt either.

Given the American Idol winner-take-all nature of the U.S. legal system, we’re far from a final verdict here until we finish with the U.S. Supreme Court. (Listen to or read the interview between National Public Radio’s (NPR) Ira Flatow and Dr. Robert Cook-Deegan for more information on this aspect of the story .) Until then, there will be uncertainty in the bio-tech industry. For about two decades, there has been an assumption that human genes could be patented just like any other good idea. The little exception about naturally occurring substances didn’t seem to bother anyone except those dismissed as marginal extremists or socialists.

Well, guess what? Looks like the extremists and socialists weren’t so marginal after all. What we may be seeing here is a fundamental shift in how this country views, not all only healthcare, but fundamental research and science as well. Maybe the recent financial meltdown which many view as the result of greedy investment bankers on Wall Street has caused people to be doubtful of free market solutions for important matters like healthcare and who owns intellectual property like the human genome. I’d like to point out how in the final push for the passage of healthcare reform, supporters took aim on healthcare insurers. Rather effectively, too, I might add.

As for Myriad, check out Adam Feuerstein’s blog on ( ) for a financial overview of the company and its market value. This will be a company and a topic that we’ll becoming back to a lot in the future.

As always, we welcome your feedback. Please contact us at We look forward to hearing from you.

Contributed by Guy de Lastin