Top Pharma Deals in March 2018
If the first two months of 2018 saw pharma and biotech firms receive more money than what all biotech companies raised throughout 2013, March witnessed the biggest takeover transaction of the year so far — health insurer Cigna Corporation acquired pharmacy benefit manager (PBM) Express Scripts Holding for around US$ 67 billion.
Healthcare shakeout in the United States continues
As part of a shakeout in healthcare that has indeed gathered momentum in the United States, primarily in response to the growing frustration over drug pricing, health insurer Cigna Corporation has agreed to buy pharmacy benefit manager (PBM) Express Scripts Holding for around US$ 67 billion.
As of 2017, Express Scripts is the largest of the remaining independent PBMs. The deal would give the two companies substantial bargaining power over drug prices in the US.
Healthcare spending has been rising rapidly, accounting for an estimated 18 percent of the US economy in 2017. PBMs, such as Express Scripts, negotiate drug benefits for insurance plans and employers.
The medical supply chain has become cumbersome. Insurers, PBMs, drug distributors, pharmacies, and large medical groups — all get a cut of the profits from caring for patients. Bringing these businesses under one roof could streamline costs and improve care.
The deal could help Cigna compete with players like CVS Health Corp and UnitedHealth Group Inc. The former recently acquired Aetna Inc. for around US$ 69 billion, linking its pharmacies and drug-benefit plans with the insurer’s coverage.
There are lots happening in the PBM space. In March, Andrew Witty, former CEO of GlaxoSmithKline who retired from the British drug major a year back, announced he was taking a leadership role in managing drug benefits in one of the largest, fastest growing outfits in the US.
Witty has been named the new CEO of UnitedHealth’s Optum division, a PBM group and healthcare analytics company. Optum has 140,000 staffers around the world. It earns roughly half of UnitedHealth’s revenue (which was US$ 201 billion in 2017) from its three key subsidiaries — OptumHealth and OptumInsight as well as OptumRx.
Merck continues its cancer drug deal making
Japan’s Eisai Co and US-based Merck & Co announced a potential multibillion-dollar deal to develop and sell Eisai’s cancer drug Lenvima, which is already approved in dozens of countries as treatment for thyroid cancer and advanced kidney cancer (when used along with another medicine).
As per the deal, the Japanese drugmaker could potentially receive up to US$ 5.76 billion if it proves a success. This includes an upfront payment of US$ 750 million. The remaining US$ 5.01 billion will be paid by Merck for development achievements and sales milestones, a joint statement said.
Merck will be entitled to half of all global Lenvima sales revenue, even for its already approved uses for thyroid cancer and advanced kidney cancer.
The deal is similar to a multibillion-dollar oncology collaboration Merck struck with AstraZeneca Plc for its cancer drug Lynparza last year.