< PreviousM&A ROUND-UP 10 Pharma Business International www.pbiforum.net T he first half of 2023 has shown a clear appetite for M&A in the pharmaceutical industry as expectations of a recovery from slower years of dealmaking grow. However, while recently revealed deals such as Pfizer’s $43bn swoop for Seagen have stirred excitement, trepidation is being reignited with news that the U.S. antitrust watchdog, the Federal Trade Commission (FTC), is planning to block the industry’s largest acquisition of 2022 — Amgen’s $28bn acquisition of Horizon Therapeutics. With the outcome of the lawsuit yet to be seen, Pharma Business International reflects on the spate of deals that have been announced since our last issue. Merck - Prometheus Biosciences Merck (known as MSD outside the United States and Canada) is set to acquire Prometheus Biosciences, through a subsidiary, for $200.00 per share in cash for a total equity value of approximately $10.8bn. The transaction is expected to close in the third quarter of 2023. A clinical-stage biotechnology company pioneering a precision medicine approach for the discovery, development, and commercialization of novel therapeutic and companion diagnostic products for the treatment of immune-mediated diseases, Prometheus’ lead candidate, PRA023, is a humanized monoclonal antibody (mAb) directed to tumor necrosis factor (TNF)-like ligand 1A (TL1A), a target associated with both intestinal inflammation and fibrosis. “At Merck, we are committed to delivering on our purpose to save and improve lives and continue to identify and secure opportunities where compelling science and value creation align,” said Robert M. Davis, chairman and Chief Executive officer, Merck. “The agreement with Prometheus will accelerate our growing presence in immunology where there remains substantial unmet patient need. This transaction adds diversity to our overall portfolio and is an important building block as we strengthen the sustainable Is a dealmaking surge ahead? Since Pharma Business International’s last issue, a flurry of fresh deals has been announced in the pharmaceutical industry. Is a dealmaking surge ahead? Pharma Business International 11 www.pbiforum.net M&A ROUND-UP © stock.adobe.com/ juliasudnitskaya innovation engine that will drive our growth well into the next decade.” Astellas Pharma - Iveric Bio Meanwhile Astellas Pharma has entered into a definitive agreement to snap up 100% of the outstanding shares of Iveric Bio for $40.00 per share in cash for a total equity value of around $5.9bn. In the acquisition, Iveric Bio will become an indirectly wholly-owned subsidiary of Astellas. Iveric Bio focuses on the discovery and development of novel treatments in the ophthalmology field. The company announced in February 2023 that the U.S. Food and Drug Administration (FDA) accepted for filing a New Drug Application (NDA) for its lead product candidate Avacincaptad Pegol (ACP) for the treatment of Geographic Atrophy (GA) secondary to Age-Related Macular Degeneration (AMD). The NDA has been granted priority review. “We are pleased to reach an agreement with Iveric Bio, a company with exceptional expertise in the R&D of innovative therapeutics in the ophthalmology field,” said Naoki Okamura, president and CEO, Astellas. “Iveric Bio has promising programs including ACP, an important program for GA secondary to AMD, and capabilities across the entire value chain in the ophthalmology field. We believe that this acquisition will enable us to deliver greater VALUE to patients with ocular diseases at high risk of blindness.” Baxter International/BioPharma Solutions - Advent International/Warburg Pincus Moreover, medtech company Baxter International is to divest its BioPharma Solutions (BPS) business to Advent International, the private equity investors, and Warburg Pincus, a growth investor. Under the terms of the definitive agreement, Baxter will receive $4.25bn in cash, subject to certain closing adjustments, with net after-tax proceeds currently estimated to be approximately 12 ÁM&A ROUND-UP 12 Pharma Business International www.pbiforum.net $3.4bn. The transaction is expected to close in the second half of 2023. “Today represents an important step in Baxter’s ongoing transformation journey as we continue to execute against our strategic priorities, enhance our focus and create additional value for all our stakeholders,” said José (Joe) E. Almeida, chairman, president and Chief Executive Officer at Baxter. “BPS has long been recognized worldwide as a trusted and preferred partner of contract manufacturing services for the pharmaceutical and biotech industries. Advent International and Warburg Pincus have extensive experience helping innovative healthcare companies advance their mission and strategic priorities. I am confident that under their stewardship, BPS will continue to build on its leadership position, foster world-class talent, invest in new capabilities and capacity, and provide leading-edge, high-quality solutions for its clients.” GSK - BELLUS Health A further deal has seen GSK agree to acquire BELLUS Health, a late-stage biopharmaceutical company working to better the lives of patients suffering from refractory chronic cough (RCC), for $14.75 per share of common stock in cash representing an approximate total equity value of $2bn. The acquisition gives GSK access to camlipixant, a potential best- in-class and highly selective P2X3 antagonist currently in phase III development for the first-line treatment of adult patients with RCC. Luke Miels, chief commercial officer, GSK, said: “Patients suffering from severe forms of refractory chronic cough can experience over 900 coughs daily, resulting in quality-of-life issues. Camlipixant, a novel, highly selective P2X3 antagonist, has the potential to be a best-in-class treatment with significant sales potential. This proposed acquisition complements our portfolio of specialty medicines and builds on our expertise in respiratory therapies.” © stock.adobe.com/Steve CukrovPharma Business International 13 www.pbiforum.net M&A ROUND-UP Swedish Orphan Biovitrum - CTI BioPharma Finally, Swedish Orphan Biovitrum (Sobi) has agreed to make a $1.7bn cash offer for CTI BioPharma, a biopharmaceutical company focused on blood related cancers and rare diseases. Sobi is to commence a tender offer to acquire all issued and outstanding shares of CTI for $9.10 per share. The transaction complements and further strengthens Sobi’s haematology franchise by adding VONJO (pacritinib), a novel oral kinase inhibitor that inhibits JAK2, IRAK1 and ACRV1, while sparing JAK1. VONJO obtained accelerated approval by the FDA in February 2022 for treatment of adults with intermediate or high-risk primary or secondary (post- polycythemia vera or post-essential thrombocythemia) myelofibrosis with a platelet count below 50 ? 109/L. “CTI represents a perfect fit for Sobi’s haematology franchise today, adding a powerful and highly differentiated new product that will make a significant difference for patients,” said Guido Oelkers, president and CEO of Sobi. “There is a large unmet medical need within myelofibrosis, in particular for patients suffering from thrombocytopenia who are inadequately treated by existing medicines. The combination of the talented team at CTI, together with Sobi’s broad US and global haematology capabilities, will help get this much needed new therapy to patients faster and more effectively. The acquisition of CTI is the latest in a series of transformative transactions Sobi has conducted to build its leading rare haematology franchise.” These represent just a handful of recent deals in the pharmaceutical industry, a sector to which M&A has always been vital for growth. © stock.adobe.com/Syda ProductionsPROCESS, CONTROL AND AUTOMATION 14 Pharma Business International www.pbiforum.net © stock.adobe.com/Onchira The next level The next level Pharma Business International 15 www.pbiforum.net PROCESS, CONTROL AND AUTOMATION T he quality production of medications and other pharmaceuticals depends on how well you monitor and control processes. This close eye is what keeps them safe and reliable, as well as consistently effective for the mass market. However, the focus and attention to detail needed for this task, especially on a large scale, inevitably becomes difficult to manage with manual solutions or human labour. To make sure your laboratory procedure, manufacturing practice and beyond meet the exacting standards enforced by the industry, automation is often – if not always – an essential tool for supervising your products in the making every step of the way. To break down the dual concerns for automation, process control incorporates industrial control systems as a means of regulating and economising a continuous production process. Monitoring, on the other hand, can be achieved by computerised systems which adjust controls whenever the need arises. Automation also boosts interconnectivity for a smooth yet detailed view of every process contributing to development, manufacture and quality control. Whenever there’s an error or flaw in proceedings, sophisticated warning systems can be applied alongside event reporting systems and status updates, leaving little to no space for mistakes and dangers to go undetected. There are multiple stages at which pharma manufacturers are required to gather data about quality, performance and overall consistency, and there just as many ways to go about this. There are a multitude of benefits to an automated line of processes, which we will go into later. But the materials and ingredients in a product and the processes they go through can be automatically monitored for effective control as well, either in-line, on-line, at-line or off-line. In-line control has systems integrated directly into the manufacturing process, and typically within the production line or equipment itself, allowing real-time monitoring of critical parameters. Examples of this may include sensors for temperature, pressure and flow rates, or automated control systems for adjusting process variables, with any of these enabling immediate adjustments and interventions to maintain stability and quality. On-line systems are closely related; these involve continuous monitoring and control of process parameters through dedicated instrumentation which, while separate from the main production line, is still connected to the process equipment. Data can be collected in real-time here also, but processes are instead analysed remotely or within a centralised control 16 Á Embracing automation in the pharmaceutical industry is not just a trend, but a necessity for ensuring the safety, reliability, and effectiveness of medications. PROCESS, CONTROL AND AUTOMATION 16 Pharma Business International room. Control signals may then be sent from there to the process equipment, to adjust parameters based on the information collected. Off-line systems take a step away from the bustle of the production line, instead monitoring activities from a different location. In these instances, samples or test materials are periodically collected from the manufacturing process and analysed in a separate laboratory or testing facility. This approach allows for detailed analysis and quality control checks, though it does not provide immediate feedback. However, the outside view of processes from this mode of testing can be used either for overall process optimisation, or for identifying long-term improvements. Finally, at-line monitoring for control purposes combines aspects of the in-line and off-line methods, collecting samples or test materials at specified points within the production process and analysing them in a nearby laboratory or testing area. This hybridised approach provides a balance between real-time feedback and detailed analysis, allowing for timely adjustments and quality checks in a manner that may not give instant feedback like fully in-line systems, but allows for thorough investigation into potential improvements to process and control. Whether you choose to incorporate in- line, on-line, off-line or at-line monitoring systems, or any combination of each, will depend on the requirements of your business’s manufacturing process and parameters. The importance of real-time feedback versus detailed analysis, which hangs in the balance when choosing your control and monitoring equipment, weighs differently based on your needs and points of focus. For keeping an eye on critical process parameters such as pressure and flow rates, or for environment and equipment monitoring, real-time feedback assures early detection and identification for quick corrective action. Precise insights prove more useful when considering process optimisation, root cause analysis or regulatory compliance. The more information you have access to, and the wider the view of your performance and investigation into quality incidents, the better it can be put to use for future quality, efficiency and customer service. Process automation in general is a great comfort in the pharmaceutical industry, ensuring consistent and high- quality production while lending ease to your compliance with regulatory standards. Through elimination of human error, it delivers precise control of process parameters, for reliable quality and significantly reduced batch-to-batch variability. Automated systems’ ability to operate continuously without tiring or losing focus further increases the safety and efficiency of throughput, while accurate and detailed documentation of process parameters, events and actions shows clearly where your processes are succeeding. Where you may not be up to standard, compliance monitoring systems can caution with the appropriate level of urgency. In a field such as pharmaceuticals, where life and death differences are all too real a concern for patient care, an automated warning system with machine accuracy can make all the difference to someone’s health. Even the smallest details, such as a misshapen product or a slight discrepancy in temperature or ingredient amounts, are worthy of close monitoring for any pharma business owner who’s serious about providing quality to customers. Machine vision, sensors and data collection equipment all contribute to the most difficult-to-spot flaws being identified instantly for immediate attention. What might be a minor detail in many other fields impacts any number of lives in this industry. Guaranteeing the dosage of a product, for instance, benefits from seeing ingredients through from end to end of the production line, in every component and from every angle. Automating this procedure provides the greatest confidence, both that your product is at its best, and for your customers’ knowledge that you have their health and wellness at heart.© stock.adobe.com/Aleksandr Matveev © stock.adobe.com/I ViewfinderTRAINING AND SKILLS DEVELOPMENT 18 Pharma Business International www.pbiforum.net W hile the sector did enjoy a boost to its reputation during the COVID pandemic, it will take some time before that translates into an increase in university graduates. At the same time, some companies are claiming that graduates are not fit for purpose, and job adverts are now suggesting that “entry level positions” must have at least two years of experience – a very unlikely proposition. What appears to be holding graduates back is a lack of interdisciplinary experience. To be clear, universities are not expected to teach this. A graduate course should leave a student with knowledge relevant to the job at hand, while learning to work on a team and adapt to a working environment is something that often takes time. Many graduates are already feeling lost and confused when starting work due to it being such a wild change for them, and while many employers like to complain about this, it’s worth keeping in mind that it has always been a big change, and that going back thirty or forty years, the individuals running companies likely felt the same way. Much of the impatience levied at new starters may be a result of economic pressures on the company however, with managers feeling less patient if the company is struggling financially. Training and developing new staff is a time consuming process, and even the best graduate in the world isn’t going to be able to slot into a role immediately. Most pharma companies won’t have access to the best graduates either, as demand and competition for graduates is fierce, and the pharma giants have more buying power (and often more patience) with new graduates. They can afford to take the time train and develop the next Skills shortages Skills shortages across the pharmaceuticals sector threaten to leave many companies struggling in coming years if they are not already. 20 Á Skills shortages Pharma Business International 19 www.pbiforum.net TRAINING AND SKILLS DEVELOPMENT © stock.adobe.com/StockPhotoProNext >