A survey of healthcare investors shows that they expect a “significant increase” in merger and acquisition activity in their industry this year.
That’s already been playing out in Orange County.
Last month, Valeant Pharmaceuticals International, an Aliso Viejo drug maker, agreed to be bought for $3.2 billion by Canada’s Biovail Corp.
Irvine breast cancer device maker SenoRx Inc. is being bought for $213 million by C.R. Bard Inc. of Murray Hill, N.J.
And LenSx Lasers Inc., a maker of lasers used to remove cataracts that’s based in Aliso Viejo, was bought for $362 million by Alcon Inc., a Switzerland-based diversified eye health company with more than 770 workers in Irvine.
The report detailed reasons why this activity level has picked up in OC, and elsewhere.
n For medical device makers and suppliers, as well as biotechnology and drug makers, respondents say desire for new products and services is expected to outweigh healthcare reform as the primary driver of deals in those markets.
On the other hand, healthcare reform is the most significant merger and acquisition driver for payers and providers, as well as service companies, respondents said.
n Financial buyers are expected to be the most active acquirers of healthcare services, which include healthcare information technology and data management, according to participants. By contrast, survey respondents believe that strategic buys will be more prominent in the biotech and drug markets.
n Some 61% of respondents believe there will be more private investment in public equity deals in the biotech and drug subsector.
Such deals, which attract hedge funds and other investors, historically have been a popular way for smaller public companies to raise money without doing a big secondary stock sale. The survey showed that 40% of participants believe those types of deals will become more prominent because healthcare companies aren’t able to access capital in the current market.
n Forty-one percent of survey participants said they expected American investors to focus their attention on China this year. Respondents said China’s “expanding middle class and its attractive pharmaceuticals market” are drawing interest from investors.
The survey was published by New York-based market tracker Mergermar-ket, along with Epstein Becker & Green P.C., a national law firm that includes an extensive healthcare industry practice and New York investment bank Rodman & Renshaw LLC. It was based on a series of interviews with more than 75 healthcare investors in the U.S.
Allergan’s Patent Challenge
Latisse, Irvine-based Allergan Inc.’s popular drug for growing eyelashes, is the target of a possible generic competitor—although it still has market exclusivity until late 2011.
Earlier this month, the Food and Drug Administration said that an undisclosed drug maker requested permission to market a generic version of Latisse via a patent challenge.
Allergan told the Wall Street Journal that it was aware of the FDA filing, but couldn’t make any other comment because it hadn’t been notified by the other company.
Allergan’s patent covering the make-up of bimatoprost, Latisse’s active ingredient, expires in 2012; the FDA says that Latisse has other patents covering the drug’s usage method that stretch until 2024.
Allergan expects Latisse, which was introduced in early 2009, to have sales of about $140 million this year, up from $73.3 million in 2009.
J.P. Morgan has said that it expects Latisse to hit $250 million in sales by 2013.
David Pyott, Allergan’s chief executive, has said that Latisse, which has an average cost of some $120 per patient, is bringing a younger customer to Allergan. Its traditional cosmetic bellwethers, including Botox Cosmetic for wrinkle smoothing and Juvéderm to fill out the lower face, tend to attract women in their 40s and 50s.
Even if the generic drug maker is successful in challenging Allergan’s patent for Latisse, it doesn’t mean a contender would hit the market quickly. There are laws that keep FDA approval of any generic drug on hold for 30 months if a patent owner sues a generic applicant for infringement.
Latisse came to market after Allergan researchers found that bimatoprost, also the underlying ingredient in the company’s Lumigan glaucoma drug, grew thicker eyelashes in patients.
Bits and Pieces
Irvine Scientific, a Santa Ana maker of devices used in the biopharmaceutical industry, said it opened a second facility in Tokyo. Irvine Scientific, which is owned by Japan’s JX Holdings said the facility will make cell cultures for producing biopharmaceuticals, vaccines and monoclonal antibodies … The Coalition of Orange County Community Clinics is set to receive a $100,000 donation as part of a settlement between the state’s Department of Managed Healthcare and Prime Healthcare Services Inc., a Victorville company that operates four OC hospitals. Prime and the department settled a lawsuit over a practice called “balance billing,” in which a hospital or doctor bills patients for money that they don’t owe … In other Department of Managed Healthcare-related news, Keith Wilson, regional medical director of HealthCare Partners Affiliates Medical Group, which bought Costa Mesa-based Talbert Medical Group earlier this year, joined the department’s Financial Solvency Standards Board. That group is designed to look at the impact of federal healthcare reform on the state’s managed healthcare plans and providers.
