European Notebook: U.S. Investors Tap Into Europe; New U.K. Pricing Scheme; Pfizer Dismayed By German Payers
Executive Summary
Europe's IPO window remains closed but the region still attracts U.S. investors; drug spending set to decline in Greece and Spain in 2014; Pfizer takes Bosulif off the German market because agreement on price unlikely with health insurers; no room for value-based pricing in the U.K.; European Parliament clears €80 billion in research funding under Horizon 2020.
The reason why Europe’s IPO window for biotech is still firmly closed is something of a mystery. Biotech IPOs in the U.S. have been numerous and well-funded, and IPOs in other business sectors in Europe are relatively buoyant. The U.K's Royal Mail raised more than £1.7 billion ($2.75 billion) in an IPO this October, for example, and the German property business, Deutsche Annington, raised just over €500 million ($675 million) in an IPO in July.
But U.S. investors are finding alternative ways to tap into Europe's life science efforts, particularly in highly promising therapeutic areas: France's Innate Pharma SA raised €20.3 million ($27 million) November 20 in a private placement entirely with U.S. investors, including QVT Financial LP, Redmile Group and Orbimed Partners, attracted by Innate's cancer immunotherapy antibodies.
Onno van de Stolpe, CEO of Galapagos NV, the Belgian drug discovery company, noted during this autumn's BioEurope 2013 partnering meeting that up to 80% of investors in its €54 million private placement in April 2013 were from the U.S. So it's possible for European companies to stay in Europe but to plug into the U.S. IPO buzz [See Deal].
More from Europe
Other European developments covered over the past month include:
- (Also see "German Pharma Balks As Second HTA Retrospective Assessment Includes Orphan Drugs" - Pink Sheet, 15 Nov, 2013.)
- (Also see "EMA Suffers Data Overload: High Response Volume Will Delay Clinical Trials Policy" - Pink Sheet, 13 Nov, 2013.)
- (Also see "EMA Shortens Regulatory Path For Antibacterials Against Multidrug Resistant Pathogens" - Pink Sheet, 8 Nov, 2013.)
- (Also see "EU Regulators/HTAs Alliance Lacks Specifics On Trial Comparators" - Pink Sheet, 20 Nov, 2013.)
Market Declines In Greece, Spain
Europe’s past five years of economic turmoil and austerity are probably one reason why biotech IPOs are rare in the region. But recent signs suggest some countries are starting to haul themselves from the mire. Ireland expects to emerge from the EU's bailout program on Dec. 15, while the EU's assistance program for Spain's banks is ending in January 2014.
Still, those and other countries in Europe continue to implement tough curbs on drug spending. Greece announced plans in early November to cut its 2014 drug spend to €2 billion, by reducing prices of off-patent drug prices to 30% or less of the originator's price. These plans are bitterly opposed by pharma, who note that even local generics manufacturers find it hard to stay in business. The government expects to spend €2.37 billion on drugs in 2013, compared with €5.5 billion in 2009.
In Spain, measures such as increased patient co-payments and the removal of certain product classes from reimbursement could lead to an 8% drop in the Spanish National Health Service's drug spending during 2013, and a 4% decline next year, according to industry association Farmaindustria. In 2013, the pharma market will be worth €15.2 billion, compared with €16.5 billion back in 2010.
In 2014, tenders for supplying some medicines might be held in different regions of Italy, if the country's preliminary budgetary plans for 2014 are approved. These plans have succeeded in uniting brand and generic trade associations with trade unions worried about potential job losses in the sector. The outcome of the ongoing debate on the legislation will be known over the next few weeks.
In Ireland, a country with numerous drug manufacturing facilities but hard hit by austerity, the local industry has taken a different tack, pointing out it has been playing its part in helping the country cope with the economic crisis. On Nov. 1, further drug price cuts came into play under an agreement struck a year ago between industry and the government that has already led to savings of more than €68 million in the nation's drugs bill over the past year. A new system of reference pricing and generic substitution is also being implemented to further reduce spending (Also see "European Notebook: AstraZeneca Snuggles Up To Potential Partners In New Cambridge HQ, Viagra Patents Expire In Europe" - Pink Sheet, 24 Jun, 2013.).
Pfizer's Orphan Pulled From Germany
On Nov. 15, Pfizer Inc. announced it was withdrawing Bosulif (bosutinib) from the German market because it saw "no prospect" of agreeing with the statutory health insurance funds on pricing. It therefore becomes the first medicine with orphan drug status -- for use in only a small group of patients with treatment-refractory chronic myeloid leukemia -- to be taken off the German market due to pricing issues.
Bosulif was granted a conditional approval in Europe because of the lack of any other effective therapy, so it is now difficult to understand why it now finds itself on the wrong side of health technology assessments in both Germany and the U.K, partly due to the lack of long-term comparator data (Also see "Pfizer’s Bosulif Too Expensive And Lacks Data, Says NICE" - Pink Sheet, 16 Jul, 2013.).
Body Blow To Value-Based Pricing
Having promised so much for so long, the U.K.'s ill-defined proposals for value based pricing (VBP) were dealt a body-blow Nov. 6 by the announcement of a new voluntary pharmaceutical price regulation agreement (PPRS) between the government and the pharmaceutical industry.
VBP now looks dead in the water. There are suggestions a broader view of a medicine's "value" could still be included in assessments by the National Institute of Health and Care Excellence (NICE), but this idea is the subject of further consultation and may not even be finalized before U.K. general elections in 2015 (Also see "U.K. Deal Reached For 5-Year Price Cap On State’s Branded Drug Regulation" - Pink Sheet, 6 Nov, 2013.).
Other countries, including the U.S., will likely watch with interest how NICE copes with defining value and incorporating such thinking in health technology assessments.
Under the new PPRS starting at the beginning of 2014, drug prices will be controlled by industry so that NHS drug spending will be flat over the next two years and will only increase some 2% in the subsequent three years. Spending on drugs by the NHS over and above those levels will be the subject of an industry rebate.
The U.K.’s NHS is going through another organizational convulsion, with community-based general practitioners roped into clinical commissioning groups that control health care spending in their locality. Taking charge at this important time is a well-known health care policy figure, Simon Stevens, president of global health at U.S.-based UnitedHealth Group Co.. Stevens takes over as chief executive of the NHS in April 2014.
EU's Seven-Year Budget Cleared
The European Parliament removed another layer of financial uncertainty on Nov. 19 by clearing the EU budget for the next seven years, 2014 to 2020.
The budget includes funding for the next phase of the well-regarded Innovative Medicines Initiative (IMI 2), the public-private partnership between industry and the EU, part of the EU's new €80 billion research and innovation funding program, Horizon 2020 (Also see "Europe To Drive Global R&D Collaborations With Pharma Companies" - Pink Sheet, 18 Mar, 2013.). The budget, which has been under debate for more than two years, will shortly be rubber stamped by the bloc’s 28 member states.