Three pharmaceutical deals
Merck (German) buys Serono
The closely-held German pharmaceutical/chemical company Merck KGaA (not to be confused with unrelated US-based Merck & Co.) bought a 64% stake in closely=held Serono SA, A Swiss firm, and has offered to buy out the rest of the shares. If it does, the total will add up to $13.3 billion.
Merck KGaA had tried to buy German rival Schering earlier this year, but lost out of Germany's Bayer AG.
Merck's biggest pharmaceutical products are cardiovascular drug Concor the cancer drug Erbitux, and diabetes treatment Glucophage. But, according to the Wall Street Journal ("Merck KGaA of Germany
To Buy Swiss Rival Serono", 9/21/06)"Merck's pipeline virtually dried up in June when its Parkinson's disease drug Sarizotan failed in late-stage clinical tests, leaving only some cancer drugs in early-stage tests." Merck also makes over-the-counter remedies, thyroid treatments, and over 400 generic drugs. The company also makes a variety of chemicals, including liquid crystals and pigments.
Serono's leading product is Rebif, a treatment for multiple sclerosis. It is also a leader in infertility treatments. Its Raptiva a is an important anti-psoriasis drug.
Hospira buys Mayne
US-pharmaceutical company Hospira won an auction to buy Australian generic drug company Mayne Pharma for $2 billion, Hospira beat out. Hospira beat out Israeli generic drug company Teva Pharmaceutical and Swiss Novartis-Sandoz, the leading players in the generics market.
Hospira, which sells a variety of hospital-related products, was spun off from Abbott Labs in 2004. One of its biggest areas is in injectable drugs. Mayne's specialty is in generic injectable drugs, especially those for cancer treatment. It also has a major international presence, something Hospira lacks.
The deal will make Hospira #1 worldwide in intravenous generics. With generics expected to grow much faster than the rest of the drug market, Hospira finds itself dominant in an important sub-segment.
Hospira also makes IV drug equipment, medical monitors, and syringes.
Wal-Mart's disruptive move
Wal-Mart's announcement that it will sell a range of some 291 generic drugs for $4, including drugs for including ones treating cardiac disease, asthma, diabetes, thyroid, glaucoma, and Parkinson's. It hasn't been fleshed out yet, but it certainly puts a stick into the ant nest of pharmaceutical sales.
It has to have the big drug chains in the US (CVS, Walgreens, etc.) scurrying for a response. It certainly makes a wreck of much of Medicare Plan D prescription plan, especially the insurers who carry it. And it may well give a big push to generic drug companies at the expense of Big Pharma. As Wal-Mart does at the best, it may trigger a major anti-inflationary pressure in the area where inflation is greatest, healthcare cots.
We are often critical of Wal-Mart, but it does have the power to restructure the market on its own, and that can have very positive effects. In light of Wal-Mart's less than stellar record with employee health insurance, it is a big PR coup, with eh company looking like a healthcare hero not a villain.
