The recent sale of Irvine-based IDM Pharma Inc. for $67 million to Japan’s Takeda Pharmaceutical Co. speaks to a new trend in the drug and medical device industry, one expert says.
Drug and device makers are “transforming into a niche-buster versus a blockbuster product development model,” said James Bova, a Costa Mesa-based principal and Southwest region life science sector leader for Deloitte Consulting LLP.
Takeda is buying IDM, maker of the Mepact drug for treating a form of bone cancer, as a way to boost its cancer business. The deal is expected to close this month or next.
One reason why larger companies may be attracted to the IDM Pharmas of the world is that “they have very good technology,” Bova said.
Device makers, major drug makers and larger specialty drug makers that are seeking out more niche products are finding that they can enter such markets more effectively through buying smaller companies, Bova said.
“You will see a lot more of that,” Bova said.
Abbott Laboratories bought Santa Ana-based Advanced Medical Optics Inc., now Abbott Medical Optics Inc., for $2.8 billion to enter the eye device and contact lens care fields earlier this year. And Bausch & Lomb Inc. acquired Aliso Viejo-based Eyeonics Inc. in 2008 to expand its market share of cataract products.
Larger specialty drug makers, such as Irvine’s Allergan Inc., also could look to buy companies and co-develop products, Bova said.
Allergan already works with Irvine-based Spectrum Pharmaceuticals Inc. on EoQuin, a bladder cancer drug.
Prescription Benefits
Many managed care companies have thought about tossing off their drug benefit management arms, which handle the prescription drug benefit plans of private and government organizations.
But not Minnesota-based UnitedHealth Group Inc., which owns Irvine-based Prescription Solutions.
Prescription Solutions has 10 million members and serves UnitedHealth’s Medicare and commercial clients, which UnitedHealth got when it bought Cypress-based Pacifi-Care Health Systems Inc. in 2005 for $9
billion.
The unit posted first quarter revenue of $3.5 billion, a 10% increase from a year earlier, according to a UnitedHealth Group’s release.
UnitedHealth Group’s product revenue increased 21% to $439 million in the first quarter compared to a year earlier, due to growth at Prescription Solutions, the release said.
The economic slowdown isn’t discouraging customers from using their benefits, said Jacqueline Kosecoff, Prescription Solutions’ chief executive.
The company has only seen a “very, very small” drop in prescriptions per month, Kosecoff said.
“It’s pretty stable,” she said.
Prescription Solutions has seen some behavior change among its members, including those who now are using less costly generic drugs or buying drugs through Prescription Solutions’ mail-order pharmacies.
The company operates mail-order pharmacies just over the county line in Carlsbad and in Overland Park, Kan.
Plans are in the works to hire 360 temporary and about 90 full-time workers in Costa
Mesa, according to Prescription Solutions. The new hires are set to work with doctors and members.
Prescription Solutions’ growth and UnitedHealth’s backing comes at a time when UnitedHealth’s competitors have sought to get out of the drug benefit management business.
Indianapolis-based WellPoint Inc., owner of Anthem Blue Cross, said in April that it would sell its NextRX drug benefit subsidiary for $4.7 billion to St. Louis-based Express Scripts Inc.
And an official of Cigna Corp., a Philadelphia-based health insurer, recently said his company would be open to looking at strategic options for its own drug benefit business.
“The price tag of the WellPoint acquisition certainly got a lot of people’s attention, ourselves included,” said Mike Bell, Cigna’s former chief financial officer who stepped down last month, at an investor conference.
Bits and Pieces:
Agendia BV, a Netherlands-based company that provides cancer diagnostic testing, has opened a clinical genomics laboratory in Huntington Beach. Agendia’s lead test is MammaPrint, which detects breast cancer Peregrine Pharmaceuticals Inc. of Tustin said that clinical trials for its Cotara brain cancer drug candidate have shown that patients who received Cotara have survived for a year or longer after treatment. Cotara is being developed for glioblastoma multiforme, a deadly form of brain cancer Tustin-based AMDL Inc. said it signed deals with GenWay Biotech Inc. of San Diego to commercialize its DR-70 cancer test in the U.S. and Canada.
