London-based pharma company Dainippon Sumitomo Pharma Europe (DSP Europe) has changed its name to Sunovion Europe.

The new name reflects the development of DSP’s European subsidiary into a more active commercial organisation, shortly to launch a new schizophrenia drug.

Sunovion Europe will focus on products to treat mental health and neurological disorders – including the atypical antipsychotic lurasidone hydrochloride, which it plans to launch in Europe shortly.

The company will also develop and market specialised drugs for disease areas where there is unmet medical need.

Lurasidone hydrochloride, a generic drug, has been submitted to the European Medicines Agency (EMA) for treatment of schizophrenia by DSP’s European partner, Takeda.

Dr Mike Taylor, Managing Director of Sunovion Europe, said: “This represents a significant landmark in the evolution of our European business as we prepare to commercialise our first drug in the UK.

“At Sunovion Europe we focus on the development and introduction of innovative medicines that improve people’s health and well-being. We will continue to focus on psychiatry and neurology, and over time will grow the European business to include other areas.”

Dainippon Sumitomo Pharma (DSP) is a multi-billion dollar company based in Japan. It was formed by the merger in 2005 of Dainippon Pharmaceutical Co. and Sumitomo Pharmaceuticals Co.

With a growing product portfolio and pipeline, DSP aims to become a major supplier of innovative treatments in psychiatry, neurology and oncology.

GlaxoSmithKline (GSK) plans redundancies in its European sales and administration force to help it cut £1bn from its annual European, R&D and manufacturing costs by 2016.

The London-based pharma giant said it will achieve most of the cost reductions through technical improvements in its R&D and manufacturing processes.

According to CEO Andrew Witty, the cost savings plan has been driven by drug pricing pressures across Europe as the recession continues to worsen.

He also noted that job cuts would primarily affect sales and administration staff across Europe, but did not indicate the likely numbers.

Witty emphasised that GSK has six new drugs (including treatments for HIV, type 2 diabetes, melanoma and asthma) under review by regulatory bodies, with late-stage clinical trial data expected for another nine products within two years.

The company aims to launch up to 15 products within three years, he told business analysts. But given the economic uncertainties affecting Europe, 2013 would be a year of “twists and turns” and “not everything is going to go smoothly”.

According to a company spokeswoman, the technical and staffing changes (including redundancy payments) will have a combined one-off cost of £1.5bn, and will primarily be focused on Europe.

Health spending is falling across Europe, leading to neglect of public health strategies, the Organisation for Economic Co-operation and Development (OECD) has warned.

The OECD report observed that austerity measures are leading governments to focus spending on acute care, while preventative strategies such as immunisation and smoking cessation are neglected.

Health spending per person in the EU has fallen from an average annual growth rate of 4.6% between 2000 and 2009 to −0.6% in 2010.

The UK is typical, with a drop in health spending of 0.5% in 2010 after a decade of annual growth at 4.9%.

Other countries further along the austerity road show a steeper decline – for example, health spending in Ireland fell by 7.9% after a decade of 6.5% growth.

As Shadow Chancellor, George Osborne stated in 2006 that Ireland’s economy was a model the UK should follow.

The OECD report notes that smoking and obesity are the major risk factors for cardiovascular disease, which caused 36% of all deaths in Europe in 2010.

Obesity rates have doubled across Europe since 1990, now at 17% of the population – and 25% in the UK.

“Governments under pressure to protect funding for acute care are cutting other expenditures such as public health and prevention programmes,” noted the OECD.

“In 2010, on average across EU countries, only 3% of health budgets were allocated to prevention and public health programmes in areas such as immunisation, smoking, alcohol, nutrition, and physical activity.”

The effects of this neglect of preventative healthcare will be seen in the coming years, the report warned.

Health decision-makers representing European nations have adopted a new World Health Organization (WHO) policy for sustainable public health.

The Health 2020 roadmap, which focuses on disease prevention and reducing health inequalities, was endorsed by the WHO Regional Committee for Europe during its meeting in Malta.

The policy targets major health challenges affecting Europe, including the increasing health inequalities within and between countries, the ongoing pressure on public service budgets, and the growing incidence of chronic diseases.

Zsuzsanna Jakab, WHO Regional Director for Europe, said: “There is a lot of action in different countries, by governments, donors, the private sector, nongovernmental organisations and other groups, but we need these different players to pool their knowledge and work together.

“So many factors affect health, and health has an impact on so many areas of our lives, that progress on public health can only come from whole-of-society and whole-of-government efforts.”

Representatives of the health systems of 30 countries voted to support the new pan-European policy.

The pharmaceutical industry spends as much as €91m per year on trying to influence EU policy, according to a new report.

The report, produced by the charities Corporate Europe Observatory and Health Action International Europe, contrasts the €40m lobbying spend registered by the industry with the €3.4m spent by health campaigning groups.

It also notes that adherence to the EU lobbying register is voluntary, and estimates the industry’s actual lobbying spend as £91m – including nearly €20m paid to in-house lobbyists.

Olivier Hoedeman of Corporate Europe Observatory commented: “There is an urgent need to strengthen the EU’s lobby transparency register and make it mandatory for lobbies to sign up and ensure that the information disclosed is reliable.”

Reports have linked industry lobbying to such controversial EU decisions as the enhancing of data protection, delaying the launch of generic drugs; and the major expenditure by member states on vaccines against H1N1 influenza that were not sufficiently tested.

In June 2010 the Social, Health and Family Affairs Committee of the Parliamentary Assembly of the Council of Europe said that poor handling of the H1N1 pandemic by EU health agencies had led to a “waste of large sums of public money, and unjustified scares and fears about the health risks faced by the European public”.

Richard Bergström, Director General of the EFPIA, said that the organisation and its members supported “full transparency of lobbying activities”. However, he argued, where industry associations such as the EFPIA tried to influence policy making with its views that should be regarded as democratic participation rather than commercial lobbying.

Pharmaceutical companies Lundbeck and Otsuka have formed a global alliance to deliver up to five new psychiatric and neuroscience drugs.

The Danish and Japanese pharma companies, both of which have a strong record in CNS products, have signed a sales and cost share agreement.

The alliance covers two near-term projects from Otsuka and an earlier-stage portfolio of psychiatric disorder treatments, encompassing psychotic, mood and behavioural disorders at all levels of severity, from Lundbeck.

The two companies have identified psychiatric disorders as a major area of unmet need.

Lundbeck is granted co-development and co-commercialisation rights to two Otsuka drugs: aripiprazole depot formulation (which improves compliance in users of the drug) and OPC-34712 (for schizophrenia and major depressive disorder).

Otsuka will have an option to co-develop and co-commercialise up to three early-stage compounds in Lundbeck’s R&D pipeline.

“With the addition of aripiprazole depot formulation and OPC-34712, Lundbeck has significantly broadened its growing psychiatry portfolio with exciting and unique treatments in an area of high unmet needs,” said Ulf Wiinberg, Lundbeck’s President and CEO.

“This collaboration further strengthens our US platform and allows us to be introduced with the US psychiatry community already in 2013."

Dr. Taro Iwamoto, President and Representative Director, Otsuka, commented: “We are very excited that Otsuka and Lundbeck have entered into a co-development and co-commercialisation agreement for aripiprazole depot formulation and OPC-34712, both potential key drivers of future growth for Otsuka’s CNS business.

“Lundbeck’s expertise in developing depression and anxiety treatments and Otsuka’s expertise in developing anti-psychotics will maximise the medical and commercial value of Otsuka’s portfolio in CNS. In addition, our partnership with Lundbeck will enable us to establish a strong platform to deliver these compounds to patients who need them.”

Through the sales and cost share agreement, Otsuka will receive up to US$1.8 billion from Lundbeck – which will see its psychiatry portfolio and US market penetration increase.

The combination of Otsuka’s strong presence in North America and Asia with Lundbeck’s strong presence in Europe, Canada and Latin America mean that the alliance will reach most of the global psychiatric market.

Generic manufacturer Mylan has agreed a $17.5 million deal with Pfizer for the exclusive rights to develop, manufacture and commercialise a portfolio of respiratory products.

As part of the deal, Mylan will have licensing rights to Pfizer’s generic equivalent to GSK’s Advair and Seretide.

Heather Bresch, Mylan President, says the agreement offers a “significant opportunity for our generics business”.

The agreement will also see Mylan retaining staff at Pfizer’s respiratory inhalation development team at Discovery Park in Sandwich, Kent. Other former Pfizer staff will be located in Cambridge.

Under the terms of the agreement Mylan will have rights to Pfizer’s dry powder inhaler (DPI) technology platform, as well as the opportunity to negotiate on existing compounds during different stages of their development in the Pharma giant’s pipeline.

Mylan will have to pay the costs for any remaining development and commercialisation for the transferred products. Additional payments will also be made once the deal is completed, depending on the regulatory and commercial success of the portfolio.

Advair Diskus and Seretide Diskus are inhaled fixed-dose combinations of Fluticasone Propionate and Salmeterol which are delivered via a DPI and used to treat asthma and COPD.

On completion of the deal, Mylan with gain the exclusive commercialisation rights for Seretide in the US, Canada, Australia and New Zealand, as well as in the EU and European Free Trade Association countries. The two companies will have the co-promotion rights to the product in the rest of the world.

New research shows that SME growth provides the best prospect for economic recovery in the UK. But, as private equity firm ECI notes, finding the cash to reach out to global partners and markets can be a critical hurdle.

With continued pressure on governments across the Western world to reduce their expenditure, together with sustained macro-economic uncertainty and a tightening of bank funding, times are not necessarily easy for the average healthcare company – which often relies on the public purse for reimbursement and debt funding for growth. One might therefore expect the short-term outlook for growth to be somewhat muted, despite the backdrop of positive longer-term demographic drivers of demand.

Hence it is interesting that a recent survey of UK SME businesses by ECI Partners, a UK-based midmarket private equity firm, has found executives to be generally positive about growth prospects over the next 12 months, with 74% of respondents anticipating headcount growth and 60% expecting double-digit turnover growth.

The results met with a warm response from the Government, with Mark Prisk, Minister of State for Business and Enterprise, saying: “It’s good news that despite a tough few months, nearly three-quarters of the SMEs surveyed by ECI are looking to recruit over the next year and half expect to see substantial profit growth in that period. Up and down the country, it is Britain’s SMEs that are driving our economic recovery.”

Reaching out

This year, the survey conducted each summer by ECI Partners gained responses from a total of 246 chief executives from UK growth companies from a range of sectors with turnover between £10m and £200m. The results paint a positive picture against the gloomy economic backdrop of the Eurozone crisis and sluggish UK economy, and suggest that there remains growth potential amongst SME businesses – which account for around a third of UK private sector employment.

Steve Tudge, a Managing Director of ECI, commented: “Despite the barriers to growth, which are principally cited as a weaker macro-environment and funding constraints, we continue to be optimistic about the prospects for good mid-market companies.”

Executives see the key growth drivers to be increasing international sales – with Europe and the USA remaining the dominant international markets, though India and China are becoming more important – and organic growth through investment in sales and marketing and new product development. Over 40% of companies are also planning to increase their use of overseas suppliers to improve their margins.

Internal cash flows are viewed as the most likely source of funding for this growth, though around half of respondents say they are likely to seek bank debt within the next 12 months (despite continued complaints about its cost and due diligence requirements) and around 40% are also likely to look at private equity backing. Fewer than 10% of companies see the public markets as accessible, perhaps reflecting the recent volatility and liquidity issues associated with the AIM market.

Healthcare respondents are less bullish about high growth than their peers in other sectors, and are noticeably less positive about growth than they were last year. This no doubt reflects, in part, the political uncertainty surrounding the current UK healthcare reforms and the public sector spending constraints that are impacting on the health and social care sectors.

Despite this, companies remain more confident of raising growth financing – and of raising it from private equity firms, with over 50% saying that was a likely consideration over the next year.

Financing growth

What does all this mean for SME healthcare businesses in the UK? The sector certainly faces challenges in responding to Government spending cuts, which are tending to put pressure on margins if not always on volumes.

However, opportunities for growth remain amidst these challenges, particularly for companies who are able and willing to venture beyond the UK in order to seek new customers and cheaper suppliers.

Of course, this internationalisation can put a strain on smaller businesses, which may lack the scale to fully support an international infrastructure. Private equity groups with experience and expertise in this process can potentially offer support to management teams in this position – whether by making introductions, sharing best practice or simply financing the required infrastructure.

There are significant sums of capital available for investment from the UK private equity industry, and there remains an appetite to invest in market-leading healthcare businesses. Thus private equity should be considered seriously as an option by management teams in the healthcare industry who are looking to fund growth to help their companies succeed in the current economic environment.

ECI is a private equity group that has been investing in mid-market growth businesses for over 35 years. It invests across sectors, with a focus on UK and Irish companies. Healthcare companies in its current portfolio include a primary care provider (Harmoni), assisted living specialists (Premier Bathrooms, DLP) and medical software companies (Clinisys, Ascribe).

Between 1,000 and 1,500 jobs are expected to be lost at Teva Pharmaceutical Industries as part of the company’s cost-cutting measures.

Reports from Israel claim the majority of the layoffs will be made in the US and Europe and mainly focused in Teva’s recently acquired Cephalon’s generic business.

The reports say that Teva is hoping to raise $500 million in synergies from its takeover with job losses expected to raise the majority of its target.

Teva has already said it is planning to cut sales, marketing and administrative expenses by $300 million, R&D by between $120 million and $150 million, and production costs by $50 million to $80 million. R&D savings would be achieved by cutting duplicate operations, the company said.

Teva has a history of job losses following takeovers of generic companies. In 2008 it bought US generic specialist Barr and reduced its workforce by 10%, reports say.

A reduction of 1,000 jobs at Cephalon would represent a loss of 27% roles before the takeover. But one company where job losses will be made, the reports say, is at Mepha, the Swiss generics manufacturer Cephalon bought last year. The company had 620 jobs prior to the acquisition.

The European Commission (EC) has authorised DuoCort Pharma’s Plenadren (hydrocortisone) to be marketed in the EU for the treatment of adrenal insufficiency.

The dual release hormone replacement therapy is the first pharmaceutical innovation in over 50 years for adults suffering from adrenal insufficiency, or cortisol deficiency.

Professor Gudmundur Johannsson, Chief Medical Officer at DuoCort Pharma, said: “Plenadren offers a welcome new treatment option to help patients suffering from adrenal insufficiency. It can improve therapy for many of the almost 200,000 patients in Europe who suffer from this disease and who need lifelong cortisol replacement therapy for their survival.”

The once-daily tablet is designed to imitate the normal physiological cortisol profile, with an outer layer that releases hydrocortisone immediately into the bloodstream and an inner core releasing the rest of the medicine gradually throughout the day.

Although glucocorticoid replacement therapy for adrenal insufficiency has been available for decades, complications have been linked to the medication, including premature death, impaired quality of life, increased risk of cardiovascular diseases, and decreased bone mineral density.

Adrenal insufficiency (cortisol deficiency) is a rare, life-threatening disease that affects patients in their active years. Patients require lifelong replacement therapy with hydrocortisone, the synthetic form of cortisol, replacing or substituting the hormones that the patient's adrenal glands are not producing.

DuoCort Pharma provides drug development with a focus on improving glucocorticoid therapy. The company is currently being absorbed by ViroPharma, who acquired the pharmaceutical company for an upfront payment of $33 million dollars in October.