article | Jianshi Bureau Chen Guangjing
edited by | Jianshi Bureau Yandongxue
This article comes from the "Jianshi Bureau" a medical and health brand under the "Financial World" weekly magazine. Reprinting without permission is strictly prohibited
. There is also a hindered strategic adjustment of multinational pharmaceutical companies.
April 2, the official website of Novartis issued a statement saying that it had reached a joint agreement with Aurobindo to terminate the agreement to sell Sandoz US generic drug and dermatology business to Aurobindo.
According to the statement, Novartis made the above decision because the relevant transactions require approval from the U.S. government departments. The transaction failed to obtain approval from the Federal Trade Commission (FTC) within the scheduled time limit.
Aurobindo is an Indian pharmaceutical company and ranks sixth in the US generic drug market. According to previous reports, Aurobindo reached an agreement with Novartis in September 2018 to agree to invest US$1 billion to acquire Novartis generic drug business, including Sandoz's dermatology treatment business and three manufacturers, as well as Novartis' generic drug business.
These businesses earned US$600 million in the first half of 2018. Indian media reported that if the transaction can be completed smoothly as scheduled, Aurobindo will become the second largest manufacturer of dermatology drugs and the second largest generic prescription drugs in the United States, and will add nearly 300 types of drugs. The termination of the transaction not only caused a generic drug giant to die in the womb, but also disrupted the process of Novartis' strategic adjustment. Before this, Sanders' revenue had declined for many years. Judging from the 2019 financial report, Novartis' Sanders' revenue was US$9.731 billion, a year-on-year decrease of 1%. The price reduction of products in the US market caused a performance loss of about 6%.
This also means that if you cannot take action as soon as possible, the related businesses will also put greater pressure on the company's performance.
It can be seen that in recent years, the global generic drug market has been in a trend of price reduction, and the era of low profits for generic drugs has arrived in full swing. On this basis, multinational pharmaceutical giants such as Pfizer, Bayer, and Novartis are accelerating the divestment of generic drugs, and at the same time increasing investment in innovative research and development of drugs such as tumors and immunologic preparations.
However, in 2020, due to multiple impacts such as the epidemic and antitrust, the process of multinational pharmaceutical companies' established divestiture of generic drugs will be more hindered, including the merger of Pfizer and Mailan, which has also announced a postponement. Although we cannot be willful and "sell" and "buy, buy, buy, buy, buy, buy, buy, buy, and buy, with the continuous advancement of volume-based procurement in China, the pace of strategic adjustment of multinational pharmaceutical companies has not slowed down but has accelerated.
transaction failed
Novartis Sands generic drug performance pressure upgrade
According to Novartis' plan, the transaction with Aurobindo should have been completed in 2019.
At that time, Sandoz former CEO Richard Francis had said that by divesting related businesses, the company would refocus its business on biosimilars and difficult-to-made generic drugs, such as injections, respiratory and ophthalmic drugs.
Unfortunately, the above transaction plan has not been approved by the FTC. A Novartis spokesman said in an interview with the media that termination of the transaction does not involve other fees, and Novartis will provide the latest information about Sandoz's business when it releases its first quarter announcement on April 28.
FTC is a federal agency in the United States that enforces a variety of antitrust and consumer protection laws. It was founded in 1914 with the goal of ensuring that national market behavior is competitive.
As multinational pharmaceutical business adjustments become more frequent, large-scale mergers and acquisitions are increasing, and the pressure from antitrust review is also increasing. It can be seen that many mergers and acquisitions, including Bristol-Myers Squibb's acquisition of Xinji and Takeda's acquisition of Shire, have also been forced to postpone due to antitrust review.
pic/Visual China
Aurobindo's market share increased rapidly after acquiring Sandoz's business, which undoubtedly brought monopoly risks, which ultimately directly led to the failure of the above transaction. This also puts greater pressure on Sanders and even Novartis' performance in 2020.
In fact, over the years, due to factors such as the price reduction of generic drugs in the United States, Sanders' performance has been declining - a decrease of 2% in 2017; a decrease of 3% in 2018, which has begun to detract from Novartis' performance growth.Judging from the 2019 financial report, Novartis's innovative drug revenue increased by 8% year-on-year, Sanders fell by 1% year-on-year, and Novartis' overall revenue increased by 6%.
Therefore, Novartis has been reorganizing Sandoz to review slow-growing departments. Before reaching an agreement with Aurobindo, it was reported that Sandoz would become an independent autonomous unit within Novartis.
Thereafter (March 2019), Sandoz CEO Richard Francis announced his resignation, succeeding Francesco Balestrieri, regional director of Sandoz, who has been in the commercial operation of generic drugs for the past 8 years.
Although the chairman of Novartis once publicly stated that there is no plan to sell Sandoz, the industry analyzed that after the failure of this transaction, Novartis will further make adjustments to Sandoz.
volume-based procurement impacts
global pharmaceutical giants strategic adjustments are more frequent
. Aurobindo, although the transaction with Novartis failed, its pace of entering the European and American markets has not stopped.
As a month ago (March 3), Pfizer announced that it had signed an agreement with Aurobindo, which handed over the distribution rights of a batch of oral generic drugs under its subsidies to Pfizer's generic drug department. It involves 39 types in the United States and 31 types in Europe, including 11 types in France. In addition, there are 12 European and American sales rights for antibiotic injections and 5 new varieties to be launched in the United States in July, with specific details not disclosed.
At the same time, after the wave of decline in generic drugs in the United States, global generic drugs have ushered in the era of low profits. Especially after China began to promote national volume procurement at the end of 2018, and has leveled the profit heights of the last piece of generic drugs, multinational pharmaceutical giants are also stepping up their divestment of generic drugs.
pic/Visual China
htmlOn March 9, the Canadian pharmaceutical factory of GSK was acquired by Baorui Pharmaceutical for NT$830 million, including the original manufacturer's 5-year drug OEM contract.
htmlOn March 2, some media reported that GSK intends to divest part of its antibiotic business. Including: franchise of cephalosporin drugs such as Zinnat and Fortum. Related businesses generate $200 million in revenue each year.
htmlOn March 1, Takeda Pharmaceutical announced that it has reached an agreement with Brazilian pharmaceutical company Hypera S.A. to sell non-core products in the Latin American market for US$825 million, including 18 prescription drugs and consumer health care drugs. Hypera S.A. is a leading position in Brazil related fields.
Before this, Merck, Sanofi, Bayer, AstraZeneca and others also announced strategic adjustment plans.
Judging from the recent publication of documents by the State Council, the National Health Insurance Administration and other departments, both national volume-based procurement and regional alliance volume-based procurement will become the norm. With this as a fulcrum, multinational pharmaceutical companies' enthusiasm for divesting generic drugs will further increase.
