Shire bid for Bax­alta high­lights or­phan drug’s ap­peal & growth


Faced with ex­pir­ing patents and grow­ing com­pe­ti­tion from gener­ics, phar­ma­ceu­ti­cal com­pa­nies in­creas­ingly view or­phan drugs as a key path­way to growth.

In the latest sign of the ap­peal of medicines to treat or­phan, or rare, dis­eases, Dublin-based Shire an­nounced Tues­day that it pro­posed a US$30 bil­lion takeover of U.S. com­pany Bax­alta, tout­ing a com­bi­na­tion that would cre­ate “the global leader in rare dis­eases.”

Shire said the merged com­pany would have mul­ti­ple US$1 bil­lion-plus “high-value rare dis­ease fran­chises with sub­stan­tial bar­ri­ers to en­try.”

Shire ex­ec­u­tives high­lighted he­mophilia and im­munoglob­u­lin ther­apy as two ar­eas of “com­ple­men­tary” as­sets, and said both com­pa­nies have also worked on on­col­ogy drugs.

But Bax­alta promptly re­jected the of­fer, say­ing Shire’s bid “sig­nif­i­cantly un­der­val­ues” the com­pany and say­ing it in­tends to pur­sue growth as a free-stand­ing com­pany.

The pro­posal from Bax­alta comes amid a pe­riod of heavy deal- mak­ing through­out phar­ma­ceu­ti­cals and health care. Last week alone, Is­raeli pharma- ceu­ti­cal gi­ant Teva an­nounced it would buy the generic drug busi­ness of Al­ler­gan for US$40.5 bil­lion while health in­surer An­them said it would buy Cigna for US$54.2 bil­lion.

Ear­lier trans­ac­tions driven by or­phan reme­dies in­cluded Roche’s 2009 ac­qui­si­tion of U.S. com­pany Ge­nen­tech and the 2014 takeover of Ser­agon Phar­ma­ceu­ti­cals. Pharma giants like Pfizer and Glax­oSmithK­line have also moved to for­tify their rare dis­ease port­fo­lios.

There are some 7,000 or­phan dis­eases af­fect­ing an es­ti­mated 25-30 mil­lion peo­ple around the world, most caused by ge­netic fac­tors. Ex­perts es­ti­mate about 450 or­phan treat­ments un­der de­vel­op­ment.

The lim­ited op­tions to ad­dress ail­ments such as Crohn’s dis­ease and cys­tic fi­bro­sis can mean treat­ments for pa­tients fetch be­tween US$100,000 and US$400,000 a year per pa­tient.

The drug Cerezyme, used to treat Gaucher’s dis­ease, costs more than US$300,000 per year in 2014. Cerezyme is man­u­fac­tured by Gen­zyme, which was bought by Sanofi in 2011 for US$20 bil­lion.

Treat­ments for rare dis­eases ac­counted for about US$20 bil­lion in an­nual sales in 2000. By 2020, those pay­ments are ex- pected to reach US$176 bil­lion, ac­cord­ing to an Oc­to­ber 2014 re­port by Eval­u­atePharma.

“The in­dus­try has rushed to de­velop or­phan drugs in re­cent years be­cause they cost their de­vel­op­ers less to put through clin­i­cal tri­als, and com­mand higher prices when they do launch,” Eval­u­atePharma said.

The push to­wards or­phan drugs has been pro­pelled by public poli­cies, such as tax cred­its for re­search and de­vel­op­ment into rare dis­eases, public sub­si­dies, a length­en­ing of patent du­ra­tions and stream­lined test­ing pro­ce­dures.

Health reg­u­la­tors re­quire pharma com­pa­nies to test drugs aimed at mass mar­kets on thou­sands of pa­tients. Or­phan drugs, by con­trast, are typ­i­cally tested on dozens.

In 2014, 17 of 39 medicines ap­proved by the U.S. Food and Drug Ad­min­is­tra­tion were for rare dis­eases.

Re­search into the se­quence of the hu­man genome has ad­vanced knowl­edge of rare dis­eases, as has the use of more so­phis­ti­cated method­olo­gies, such as test­ing on robots.

Pa­tients groups have also made it eas­ier to con­duct such re­search, by rais­ing funds and pro­vid­ing lists of pa­tients will­ing to par­tic­i­pate in tests.

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