Tuesday, October 09, 2007

The Business of Diabetes: Q3 Business News

Dow Jones is reporting that shares of French pharmaceutical giant Sanofi-Aventis rose 2.8% in Paris amid market speculation that Pfizer is eyeing the purchase of a stake in Sanofi-Aventis from oil giant Total and cosmetics firm L'Oreal (which once owned a majority stake in Sanofi prior to its merger with Aventis), and supposedly Pfizer may also be mulling a full takeover. Sanofi Aventis is the manufacturer of the world's best-selling insulin analog: Lantus, as well as the rapid-acting insulin analog Apidra, and Amaryl, a sulfonylurea to treat type 2 diabetes. Traditionally, the French government encouraged companies own large shares of other French companies in spite of having no strategic interest via tax incentives. But these days, many French companies now trade in London as well, where investors look down on these cross-ownership holdings because it makes analysis of the true net worth difficult and therefore limits share potential. Also, as truly multinational companies, the French tax benefits are no longer as compelling as they were 20 or 30 years ago. As a result, many major French multinatinals are divesting their cross-holdings in an unprecedented fashion.

Regarding a Pfizer acquisition of L'Oreal and Total's Sanofi Aventis shares, "The question (of whether Pfizer can take over Sanofi-Aventis), iconoclastic not long ago, is now being openly asked," said analysts at Natixis in a note. The analysts noted that Pfizer is facing sales erosion and has very few products in final development. "Hence we think that it will have to either undertake regular adaptation of its costs or envisage a merger ... Sanofi-Aventis is the most plausible target for Pfizer."

It seems highly likely that L'Oreal and Total will divest their holdings in Sanofi Aventis, but whether Pfizer shareholders will see such an acquisition of those holdings as a wise investment remains an unresolved question. As of right now, it is only speculation, but the saying "where there's smoke, there is fire" certainly lends some credibility to this speculation. To be sure, Sanofi Aventis' has been much more forthcoming with investors in recent quarters, and while the company's new drug pipeline is undoubtedly more attractive than Pfizer's, its not smooth sailing for either company. The bigger question is whether Pfizer buying a stake or an outright acquisition would resolve fundamental problems for either company, or whether it would merely be another distraction?

In other diabetes business news, this Thursday (October 11, 2007), Biodel Inc.'s (Nasdaq: BIOD) Chairman and CEO, Solomon Steiner, will present a corporate update at the BIO InvestorForum 2007 in San Francisco at 11:00 AM PST (2:00 PM EST), which is a national investor forum to explore investment trends and opportunities in life sciences, with a focus on public and venture-stage growth companies as well as those poised to join the growth "watch list" in 2008. The news release for that can be found here. The company notes that interested parties may access a link to a live audio webcast of that presentation in the investor relations section of Biodel's website at http://investor.biodel.com/, but I've provided a direct link above. In any event, a replay of this presentation will be available for 14 days, (or until October 25, 2007).

The company will also present at the Insulin Congress on November 24, 2007, which if you can imagine, is an educational congress solely devoted to insulin therapy, and there may be useful take-aways from this event. This is not the first Insulin Congress, but I would imagine that more info. will be available on their website after the 2007 Insulin Congress is complete.

Meanwhile, the Pharmaceutical Executive's Marketing & Sales Summit will take place a few weeks earlier (November 4-6, 2007) in Philadelphia. Normally, this type of event would be just another sales conference, but its worth noting that this year will feature keynote addresses from Deirdre P. Connelly, who is the President of Lilly USA; Martin Soeters, now President of Novo Nordisk (formerly Senior Vice President of Novo Nordisk North America and President of Novo Nordisk Inc., the company's U.S. affiliate). As I reported a few weeks ago, Martin Soeters is being moved to take up the position as Senior Vice President of the Europe region at Novo Nordisk's world headquarters in Denmark, which will occur officially on January 1, 2008, so this will likely be Martin Soeters' last presentation in his current capacity. Mr. Jerzy Gruhn will assume the U.S. roles currently held by Mr. Soeters. Finally, Christopher A. Singer, EVP and COO, PhRMA, the pharmaceutical industry's trade and lobbying group will also give a presentation. Mr. Singer will speak on how industry executives can deal with the current environment, in which drug pipelines have little in the way of likely blockbusters, as well as increased government and public scrutiny. I usually disagree with PhRMA on most of their positions, but it will be interesting to hear what strategic directions they are suggesting for their members!

There are likely to be some interesting take-aways from all of these presentations and meetings, so you may want to visit the links I have provided here.

Finally, in recent months, we have been hearing a lot of praise for gastric bypass surgery in treating obesity and type 2 diabetes. However, today, Jacob Goldstein of The Wall Street Journal's Health Blog writes that a study being presented today at the annual scientific meeting of the American College of Emergency Physicians in Seattle suggests that patients should proceed with caution, and that there is always a dark underside to this surgical procedure. Specifically, the number of people showing up at emergency rooms with complications months or even years after the surgery is increasing dramatically. The problem that's sending many patients for emergency care: internal hernias. I have said this all along: there is no easy way out. Anyway, although this story has absolutely nothing to do with type 1 diabetes (or The Business of Diabetes, for that matter), but it was in today's Wall Street Journal Health Blog, and as a patient advocate/reporter, I do like to call attention to those issues that are sometimes overlooked, thus I'm including a link to the story here. That's all for today!

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