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DSM agrees to pay US$360 million

The Medical Technology Blog

DSM agrees to pay US$360 million for Kensey Nash

Welcome back to the Medical Technology Blog, we have a great post today provided by our medical newsletters team-leader, Lawrence Miller, Lawrence is all the editor Medical Industry Week, please read on…

Kensey Nash’s Board of Directors has accepted a US$360 million (EUR 275 million), US$38.50 per share offer, from Royal DSM, a Netherlands-based company active in health, nutrition and materials. The offer is subject to customary conditions, including antitrust clearance, and is expected to be completed by the end of the second quarter of 2012.

Kensey Nash operates across five major segment areas, namely spine (15 per cent of first quarter 2012 revenue), sports medicine (30 per cent), CMF and trauma (16 per cent), cardiovascular (17 per cent) and general surgery (9 per cent). The company produces biomaterials for tissue repair and regeneration, as well as devices and equipment for the delivery of biomaterials and cardiovascular procedures. The strategy involves developing core materials and then working with established medical device companies in selected markets. Key products include the AngioSeal reabsorbable closure device, polylactic acid screws and anchors, bone cement and collagen minerals and collagen patches for general surgery.

Kensey’s collagen/ECM platform is supported by partnerships with St Jude Medical (cardiovascular), Arthrex (orthopaedics/sports medicine), Stryker (spine) and Synthes (CMF and trauma/general surgery). The reabsorbable polymers partnerships include orthopaedic/sports medicine (Arthrex, Orteq and Stryker), spine (Medtronic) and CMF and trauma (Athrex). Kensey’s Bone composites are supported by alliances in spine (Stryker, Synthes, Medtronic and Zimmer) and CMF and trauma (Synthes).

In 2012, Kensey expects to record revenues of US88.5 million, and EBITDA of US$30 million. This is set to rise in 2013 to US$100 million and EBITDA of US$36 million. The growth is expected to come from existing products, entry into new markets and the resulting impact of Kensey’s recent settlement with St Jude Medical over the AngioSeal product line. For DSM, the deal represents an opportunity to expand into two new growth platforms of life sciences and material sciences with a portfolio of products spanning the Bio-Passive (medical coatings and polymers), Bio-Active (reabsorbable polymers and drug- delivery) and Bio-Interactive (therapeutic materials and regenerative medicine).

The much changed DSM has spent the last five years developing a coatings and material drug-delivery business focused on cardiovascular and ophthalmic applications, and has subsequently strengthened these areas and also moved into developing spinal applications. The company, which relocated its HQ to Berkeley, CA, in 2010, is pinning its growth hopes on the cardiovascular, orthopaedic and ophthalmic markets for expansion. The process will involve expanding and developing its range of biomaterials further, whilst at the same time growing an emerging drug-delivery business. DSM will also look at opportunities for regenerative medicine and tissue engineering.

Article Source: Medical Industry Week




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Sony’s Plan to Grow Medical Equipment Business

The Medical Technology Blog

Sony eyes growth in medical fields as company swings the axe in its higher profile electronics businesses

Welcome back to the Medical Technology Blog, we have a great post today provided by our medical newsletters team-leader, Lawrence Miller, Lawrence is all the editor Medical Industry Week, please read on…

Sony’s newly-installed management team have unveiled plans to cut a further 10,000 jobs in a bid to revitalise and grow the struggling electronics business to generate new value.
The plans, which will see the Japanese company focus on core areas of digital imaging, games consoles and mobile devices, aim to increase sales to ¥8.5 trillion, and provide a return on equity of 10 per cent, by the year ended 31st March 2015 (FY 2014). Sony’s 2011 sales were ¥7.2 trillion and have already been lowered for 2012 to ¥6.4 trillion.

Sony to grow medical equipment field - ¥50 billion sales by 2014?

Somewhat surprisingly, the turmoil in its high-profile electronics business, particularly with regards to televisions, is set to open doors for the company’s comparatively less profile medical peripherals division. In keeping with many of Japan’s electronic giants, Sony has been taken gradual steps into the medical field, particularly within the areas of medical-use printers, monitors, cameras and recorders. By the end of FY 2014, Sony is targeting sales of ¥50 billion (approximately US$630 million).

In a clear sign of its intention to grow the business, Sony also plans to enter the market for medical equipment components, where it believes its strength in various core digital imaging technologies offer significant competitive advantages in applications such as endoscopes. The latter has inevitably led to talk that the company may ultimately be interested in a tie-up with the scandal-ridden Olympus group, which is struggling to deal with a massive accounting fraud. Olympus’s diagnostic endoscopes dominate the worldwide market in this area. However, with Sony’s eye on other parts of its empire, and Sony’s less than impressive financial performance itself, a tie-up with Olympus seems a bit of a hefty deal to take on.
Such a takeover, however, cannot be entirely ruled out as Sony has also restated its determination to “aggressively pursue” other merger and acquisition deals that can expand its medical business, with the aim of developing the business into a key pillar of Sony’s overall business portfolio. The company recently entered the life science industry, where the company can apply technologies such as semiconductor lasers, image sensors and microfabrication, by purchasing iCyt, a manufacturer of cellular analysis equipment, and Micronics, a company that makes medical and diagnostics equipment.

It remains to be seen if three years from now the name Sony is regarded with more recognition than at the present time. However, given the current commentary coming out of the Japanese company, it seems at least one group of employees in the struggling company will be significantly more relaxed as the cost cutting programme swings into action.

Article Source: Medical Industry Week




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Medtronic’s Busy Period for Research & Development

The Medical Technology Blog

Welcome back to the Medical Technology Blog. Apologies for the lack of posts lately, busy times at Espicom, thanks for your patience. Today we have a detailed post taken from Espicom’s business publication, Cardiovascular Device Business, please read on…

Medtronic caps busy period for R&D with trial data from DES, pacemakers, heart valves and renal denervation study programmes

RESOLUTE US trial

According to two-year follow-up data from the RESOLUTE US trial, Medtronic’s Resolute drug-eluting stent (DES) maintains a powerful and persistent treatment option for a wide variety of patients with coronary artery disease, including those with diabetes mellitus.  The Resolute DES was approved by the FDA in February 2012, with a specific indication for the treatment of coronary artery disease in patients with diabetes mellitus.

The RESOLUTE US trial enrolled 1,402 patients across 128 US-based clinical trial sites. The two-year results among 1,359 patients include low rates of TLF (7.3 per cent), clinically-driven TLR (4.3 per cent), and def/prob ST (0.2 per cent). These results were achieved despite 34 per cent of the patients having diabetes mellitus, which typically drives higher event rates. Among the 474 patients with diabetes in RESOLUTE US, the Resolute DES showed low two-year rates of TLF (8.9 per cent) and clinically-driven TLR (5.7 per cent) and no def/prob ST (0.0 per cent).

Pooled analyses, provided by the worldwide RESOLUTE clinical programme, consisted of a large randomised controlled trial and a series of confirmatory single-arm studies involving nearly 250 sites in 32 countries. In total, the programme enrolled 5,130 patients who received a Resolute DES; about one third (n=1,535) of these patients had diabetes, a proportion that mirrors the US patient mix for percutaneous coronary intervention (PCI). For the pooled analyses related to safety and diabetes, two-year data on more than 5,000 patients from the RESOLUTE programme who received a Resolute DES were included. Individual trials, while designed for many composite endpoints, are often underpowered to show real differences for low-frequency, but clinically important adverse events such as ST.

The two-year update to RESOLUTE Pooled Safety showed very low rates of clinically-driven TLR (4.7 per cent) and def/prob ST (0.9 per cent), despite 46 per cent of the patients in the RESOLUTE programme being considered complex. Additionally, the two-year update to RESOLUTE Pooled Diabetes, which presents clinical outcomes in patients with and without diabetes who received a Resolute DES, shows consistently low event rates out to two years despite the higher-risk nature of the diabetes patient population.

In a separate development, two clinical trials relating to Medtronic’s Symplicity renal denervation system show that the treatment provides safe, significant and sustained blood pressure reduction for up to three years in patients with treatment-resistant hypertension. The system is not yet cleared for the US market, but has been available since April 2010 in certain parts of Europe, Asia, Africa, Australia and the Americas. The FDA granted Medtronic approval for the protocol for SYMPLICITY HTN-3, the company’s US trial of the Symplicity system, for treatment-resistant hypertension, in August 2011.

SYMPLICITY HTN-1 trial

Results from the SYMPLICITY HTN-1 trial showed sustained safety and effectiveness of renal denervation with the Symplicity system for up to three years, and results from the SYMPLICITY HTN-2 trial showed safe, sustained and significant blood pressure reduction one year following the procedure. Renal denervation therapy is a minimally invasive, catheter-based procedure that modulates the output of nerves that lie within the renal artery wall and lead into and out of the kidneys. These nerves are part of the sympathetic nervous system, which affects the major organs that are responsible for regulating blood pressure: the brain, the heart, the kidneys and the blood vessels.

SYMPLICITY HTN-1 is a series of pilot studies involving 153 patients at 19 centres in Australia, Europe and the US. Subjects in the trial maintained an average blood pressure reduction of -33/-19 mm Hg at 36 months (n=24) from baseline (p<.001) following treatment with the Symplicity system. An increasing proportion of patients who completed follow-up had at least a 10 mm Hg reduction in systolic blood pressure. At six months 71 per cent of patients were classified as responders, which increased to 100 per cent among the patients who completed three year follow-up. There was no evidence of renal impairment, no patients were hospitalized due to hypotension, and no procedure-related serious adverse events were seen.

The SYMPLICITY HTN-2 trial is an international, multi-centre, prospective, randomised, controlled study of the safety and effectiveness of renal denervation in patients with treatment-resistant hypertension. In total, 106 patients were randomly allocated in a one-to-one ratio to undergo renal denervation with previous treatment or to maintain previous treatment alone (control group) at 24 participating centres. At baseline, the randomised treatment and control patients had similar high blood pressures: 178/97 mm Hg and 178/98 mm Hg, respectively, despite both receiving an average daily regimen of five antihypertensive medications.

The one-year follow-up analysis included data from 47 patients initially treated, who at 12 month follow-up sustained their significant drop in blood pressure (-28/-10 mm Hg [p<0.001] from baseline) with no significant difference from the previously disclosed six month follow-up (-32/-12 mm Hg [p=0.16]). In addition, 35 qualified patients in the control group who received renal denervation six month post randomisation also showed a similar drop in blood pressure to the treatment arm at 6 months post procedure (-24/-8 mm Hg [p= 0.15] from 6 month treatment arm). Safety results were sustained with no significant decline in kidney function and no late vascular complications.

The Symplicity system consists of a flexible catheter and generator. In an endovascular procedure, similar to an angioplasty, the physician inserts the small, flexible Symplicity catheter into the femoral artery in the upper thigh and threads it into the renal artery. Once the catheter tip is in place within the renal artery, the generator is activated to deliver a controlled, low-power radiofrequency energy routine according to an algorithm that aims to deactivate the surrounding renal nerves. This, in turn, reduces hyper-activation of the sympathetic nervous system, which is an established contributor to chronic hypertension. The procedure does not involve a permanent implant.

ISSUE-3 study

In the area of pacemakers, Medtronic has released data from a double-blind, randomised study, ISSUE-3, which found that patients who suffered from fainting due to neurocardiogenic syncope had fewer fainting occurrences when treated with a Medtronic pacemaker. The data showed a statistically and clinically significant 57 per cent relative reduction of fainting recurrence in patients at two years. In the study, patients at high risk for syncope recurrence (asystolic neurally-mediated syncop) were identified through the use of Medtronic’s Reveal range insertable cardiac monitors (ICM), thereby allowing physicians to determine which patients could benefit from a pacemaker implant.

While a previous observational study, ISSUE-2 (International Study on Syncope of Uncertain Etiology-2), showed that the use of an ICM effectively diagnosed asystolic syncope, thereby leading to effective treatment outcomes, the ISSUE-3 study was needed to confirm these results through a more rigorous, randomised controlled trial. The ISSUE-3 study was conducted at 51 centres in Western Europe and Canada in two phases: a screening phase, followed by a treatment phase. From September 2006 to November 2011, 511 patients met the inclusion criteria and received a Reveal device to assist with the diagnosis of each patient’s syncope.

Results of the ISSUE-3 trial showed that fainting re-occurred in 185 of the 511 study patients (36 per cent) and was documented by the ICM in 141 (76 per cent) of these patients. The Reveal ICM diagnosed 51 per cent) of patients with reoccurring fainting as an asystolic event, indicating them for a pacemaker and making them eligible for the treatment phase of the study. These patients received a dual-chamber Medtronic pacemaker and were randomised 1:1 (pacemaker on and pacemaker off). The treatment phase showed significant reduction in recurrence of fainting in patients who received Medtronic pacemaker therapy. For patients receiving pacemaker implants, the fainting recurrence rate was 25 per cent when the pacemaker was turned on and the fainting recurrence rate was 57 per cent when the pacemaker was turned off.

Medtronic pacemakers are currently indicated for use in patients who have experienced one or more of the following conditions: symptomatic paroxysmal or permanent second- or third-degree AV block, symptomatic bilateral bundle branch block, symptomatic paroxysmal or transient sinus node dysfunctions with or without associated AV conduction disorders and bradycardia-tachycardia syndrome.

Meanwhile, the largest international, prospective, single-arm clinical trial evaluating Medtronic’s CoreValve system in patients with severe aortic stenosis who are at high-risk for surgical aortic valve replacement (SAVR) showed that, in a real-world setting, patients experienced high procedural success combined with positive clinical outcomes. The CoreValve system is currently limited to investigational use in the US, but has been CE marked since 2007 for treatment of patients deemed at high or extreme risk for SAVR.

ADVANCE study

The CoreValve ADVANCE study displayed survival rates of 95.5 per cent at 30 days and 87.2 per cent at six months, which are consistent with previously disclosed data from national registries in Europe. The procedural success rate was 97.8 per cent, and overall complication rates were low with stroke rates of 2.9 per cent and MACCE rates of 8.3 per cent at 30 days. Patients in the study experienced significant improvement in valve function (mean gradient decreased from 45.6 mmHg at baseline to 9.3 mmHg at 30 days).

According to Medtronic, the study is one of the largest multicentre transcatheter valve trials to date, with 1,015 patients (mean age of 81 years) consecutively treated at 44 transcatheter aortic valve implantation (TAVI) centres across 12 countries. Clinical endpoints in the trial were calculated according to Valve Academic Research Consortium (VARC) standardised definitions. All data were independently monitored, all adverse events related to the primary endpoints were adjudicated by an independent Clinical Events Committee (CEC) consisting of experienced cardiac surgeons and interventional cardiologists, and all cerebrovascular events (including stroke and other events) were adjudicated by an independent neurologist using neuroimaging and systematic NIH Stroke Scale assessments.

This article was taken from Cardiovascular Device Business, edited by Lawrence Miller, Espicom’s medical newsletters team leader.




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European Commission Investigates Synthes Takeover

The Medical Technology Blog

European regulatory authority casts an eye over Johnson & Johnson’s Synthes takeover

The European Commission (EC) has opened an in-depth investigation into the planned acquisition of Synthes by fellow orthopaedic company, Johnson & Johnson. The EC now has until 19th March 2012 to take a final decision on whether the transaction would reduce effective competition in the EEA.

The investigation has been prompted by concerns in Europe that the proposed acquisition would remove a competitor from some markets that are already concentrated. An initial investigation showed that the proposed transaction would combine two of the leading suppliers of spine devices and would strengthen the position of Synthes as the current market leader in trauma and CMF devices and of J&J in shoulder devices in a substantial number of EEA member states. The EC also has concerns that the remaining competitors in many of the markets may not be able to exert sufficiently strong competitiveness with the merged entity. The removal of Synthes may also have a negative impact on the level of innovation, leading to a reduction of choice for patients and potentially an increase in prices for the orthopaedic medical devices concerned. Consequently, at this stage, the acquisition raises “serious doubts” as to its impact on competition.

Synthes accepted a US$21.3 billion takeover offer from J&J in April 2011. The deal, which has a target completion date of mid-2012, would make J&J’s DePuy arm the largest orthopaedic device manufacturer in the world.




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The Medical Technology Blog

Abbott’s plan to break itself up into two businesses – one for medical products and one for research pharmaceuticals – has suddenly got the analysts’ thinking caps on.

Barely a moment after the surprise news went public, the talk was on the future of both businesses and their chances of survival. Overall, the changes have been welcomed and represent a key moment in the 123 year old company’s history. It’s been there before, on a smaller scale of course, with the formation and successful spin-off of its hospital products business into Hospira in 2007, which has since enjoyed strong growth.

Both of Abbott’s divisions have grown in stature and offer contrasting demands in terms of resources so the split into two businesses is bound to improve clarity amongst the investment community. The medical products business will have 2011 revenues of approximately US$22 billion and the research-based pharma unit will have an estimated US$18 billion sales turnover. However, without the protection of the other, both companies could swiftly find themselves the target of deal makers.

With clarity comes opportunity. Abbott’s upstart research business finds itself just outside of the biggest players of the pharmaceutical market, but with a hot drug on its hands in the form of Humira – an anti-inflammatory drug that posted sales of US$6.5 million in 2010. In a market where the focus is on product pipelines, particularly blockbuster ones, the unnamed Abbott business has a relatively strong pipeline.

Whilst the spin-off is impressively detailed, there’s the nagging doubt that the company, like Johnson & Johnson, continues to find it hard to break up the relationship of medical devices and pharmaceuticals, a model long since ditched by the likes of Bristol-Myers Squibb, Allergan and Pfizer. The medical device business, which is particularly strong in cardiovascular devices and ophthalmic products, sits uneasily amongst the slightly larger divisions of generics, and nutritional products. Whilst Generics enjoys double-digit sales growth, such targets remain elusive in the medical device field for Abbott.

Still, Rome wasn’t built in a day and the spin-off plan is likely to keep investors happy for the moment at least. The company has shown in recent times that it isn’t afraid of ditching certain markets if it feels warranted. The company’s ruthless and swift exit from the spine market when the going got too tough being a classic case in mind.

Whilst this blog is not saying that Abbott’s commitment to medical devices is likely to wane in the short-term – the current spin-off alone will take at least a year to complete at least, but one wonders how long it will take before investors start questioning to rationale of keeping a medical device/pharma mix over the long term. Would an opportunistic offer from Medtronic or an attractive offer from a private equity group change things? One suspects that all the time the company keeps posting sales growth and delivers the financial numbers, Abbott’s investors won’t mind a bit either way.

Thanks to Lawrence Miller for providing this article, Lawrence is Espicom’s medical newsletter team leader and editor of Medical Industry Week




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Medical Futures & Cipher Pharmaceuticals in Tramadol Deal

The Medical Technology Blog

Medical Futures to gain a slice of Canadian tramadol market through deal with Cipher

Medical Futures, a Canada-based pharma company, has signed a pact for Cipher Pharmaceuticals to distribute Durela in Canada. Patent-protected Durela is a once-a-day formulation of tramadol for the treatment of moderate- to moderately-severe chronic pain in adults. It was approved by Health Canada in August and has immediate- and extended-release properties.

As for the particulars of the distribution deal, Cipher will receive an upfront payment from Medical Futures of C$300,000, and could also be eligible for future payments, dependant on net sales milestones. Also, Cipher will get its hands on a double-digit royalty on new sales. Cipher has further responsibily for product supply and manufacturing, which will be taken care of by its supplier, Galephar Pharmaceutical Research.

Medical Futures’ CEO, Colin Campbell, says he is excited to offer Durela in Canada, believing that the product “strengthens and demonstrates [Cipher’s] commitment to providing top tier solutions to the Canadian market”. It appears Cipher is equally delighted with the deal, as it provides valuable royalty revenue to the company. Cipher also recently shook hands on a US$5.5 million US distribution deal for Durela with Vertical Pharmaceuticals, with the former set to receive a payment of US$1 million on the first commercial sale of the product.

With sales of over US$60 million in 2010, the seemingly robust Canadian tramadol market looks like a sure thing for both parties. Medical Futures plans to launch Durela in the first quarter of 2012.

Thanks to Sophie Bracken for this article, Sophie edits Espicom’s business publication Drug Delivery Insight.



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NICE delivers its verdict on next-generation cardiac CT scanners

The Medical Technology Blog

cardiac catheterization: my own heart, visible...

Image via Wikipedia

Medical Industry Week News

It’s good news this week for some of the biggest medical imaging companies

GE Healthcare, Siemens Healthcare, Philips Healthcare and Toshiba Medical Systems – with all four receiving tentative backing for their respective next-generation cardiac CT scanners in draft guidance drawn up by the National Institute for Health and Clinical Excellence (NICE) in its latest draft guidance on the subject.

Now available for a period of public consultation, the draft guidance specifically applies to the use of the Somatom Definition Flash CT scanner (Siemens), Aquilion One (Toshiba), Brilliance iCT (Philips) and Discovery CT750 (GE) in the NHS in England for people with suspected or known coronary artery disease (CAD) in whom imaging is difficult with earlier generation CT scanners. A review team looked at 24 studies, with the vast majority (20) using Siemens’ Somatom Definition Flash (1) or an earlier model, Somatom Definition (19). Interestingly, despite its glowing endorsement only two of the studies referenced actually used the cutting edge CT scanner technology. In 2007, CAD was estimated to have claimed 91,000 deaths in the UK.

CT scans are performed to evaluate the arteries of the heart, and can also be used to assess the function of the heart, the anatomy of the heart, and the degree of coronary calcification in the heart. The technology survived a review of five recognised models for assessing the cost effectiveness of next-generation cardiac CT scanners, including the Europa model, for the prognosis of people with CAD, and the York Radiation Model, which estimates the impact of imaging in terms of radiation dose on cancer mobidity and mortality.

The recent NICE clinical guideline on chest pain recommends CT coronary angiography and invasive coronary angiography to assess the state of arteries and identify significant narrowing in people with an estimated probability of coronary artery disease of 10 to 29 per cent and a calcium score of <400 or less. People with a calcium score >400 are considered difficult to image using earlier generation CT technologies. Other reasons that make CT imaging difficult are obesity, arrhythmias (irregular heart beat), high heart rates (above 70 beats per minute) or previous coronary stents or bypass grafts.

The latest generation cardiac CT scanners have technical features that aim to overcome these difficulties, including the ability to acquire images much faster than earlier generation CT scanners, better image quality and reduced radiation doses. The NICE guidance recommends the use of these scanners for first line imaging of the coronary arteries in people with suspected stable coronary artery disease who are difficult to image with earlier generation CT scanners and whose estimated probability of having CAD is 10 to 29 per cent. In addition, the draft guidance recommends their use in people with known CAD for first line evaluation of disease progression to establish the need for revascularisation where imaging with earlier generation CT scanners is difficult.

Imaging companies will not quite be celebrating at the moment as final guidance on this topic is not expected until the new year, but they will be quietly confident that there is now a recognised need for the technology within the National Health Service in the UK.



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Zimmer’s cash-saving scheme begins with Statesville site closure

The Medical Technology Blog

 Orthopaedics Business News

Zimmer has put the wheels in motion regarding its plan to close its operations in Statesville, NC as part of a restructuring of its manufacturing facilities.

Warsaw, IN-based Zimmer has filed a notice with the North Carolina Department of Commerce of its impending plans, with the first redundancies widely expected to take place in October. The phase-out of the Statesville plant will be completed in March 2012. It is not clear how many Zimmer employees at the plant will lose their jobs, but the site currently employs around 125 people.

The Statesville facility was opened in 1980 and makes tourniquet cuffs, traction devices, slings and braces. The closure is part of Zimmer’s “global restructuring and transformation initiatives” that were unveiled in January this year. The Statesville site closure is part of this strategy that aims to save over US$100 million for the company, which looks set to lose its title of world’s largest orthopaedic company to DePuy by the end of the year. The company has also said it will be “reducing management layers and consolidating global sourcing to drive vendor cost reduction”. This could well mean that in the near future, Zimmer could be axing non-essential executive positions from its Warsaw headquarters, and perhaps even terminating deals it has with component suppliers and distributors, as it strives to save that US$100 million.

thank you to Sophie Bracken, editor of Orthopaedics Business News for providing this article.



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Will Axis-Shield give into rising pressure of takeover offer from Alere?

The Medical Technology Blog

Alere, a key player in the rapid point-of-care and laboratory diagnostics market with products that focus on infectious disease, cardiology, oncology, drug abuse and women’s health, has brushed aside negative feedback from Axis-Shield and pushed ahead with a cash offer for the UK-based company.

As part of the offer, Axis-Shield’s shareholders will be offered £4.60 (or approximately US$7.51) for each Axis-Shield share held by them, valuing the transaction at approximately £230 million (or approximately US$375 million). The offer will be conditional upon Alere receiving valid acceptances in respect of not less than 90 per cent of Axis-Shield shares to which the offer relates and not less than 90 per cent of the voting rights carried by those shares.

In June, Alere had made an indicative non-binding proposal to acquire Axis-Shield, however, the latter rejected the proposal and also turned down an offer to conduct further discussions with Alere. At the time, Alere revealed that it was keen to work towards a recommended takeover offer for Axis-Shield and that it would welcome the opportunity to discuss a possible transaction in a constructive manner. The company said its proposal was “a means to facilitate discussions” with Axis-Shield and its shareholders. Now, in a move that adds further pressure on its target, Alere has made an additional open market purchase of approximately 6.4 per cent of Axis-Shield’s share capital.

Axis-Shield is an international in vitro diagnostics company, headquartered in Dundee, UK, with R&D and manufacturing bases in Dundee and Oslo. The group specialises in the supply of instruments and tests for the rapidly growing physician’s office testing market and the development, manufacture and marketing of diagnostic kits in areas of clinical need, including cardiovascular and neurological diseases, rheumatoid arthritis, and diabetes. During 2010, the company made significant advances with the continued growth of its international in vitro diagnostics business and revenues exceeded £100 million for the first time.

Alere believes it’s all cash offer is highly attractive for Axis-Shield shareholders, representing a ‘compelling value proposition’ with a high degree of certainty at a substantial premium to the undisturbed share price. In addition, the company expects Axis-Shield will be complementary to its existing businesses and that it can help develop and grow the Axis-Shield product portfolio to be a clear leader worldwide in its core markets.

Over the forthcoming weeks, the question remains as to whether Axis-Shield will succumb to the pressure to reach an agreement Alere, and whether the latter, with revenues of over US$2.1 billion behind it for 2010, has done enough to win over the UK-based company.



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The Increasing Scope of Lawyers in Healthcare

The Medical Technology Blog

In the third instalment of her guest blog, Louise Campbell, an undergraduate law student with the University of Southampton, examines the increasing scope of lawyers in healthcare

Nowadays, law firms have become as important partners to the medical industry as the scientists, sales executives, marketing managers and CEOs that are driving the company forwards.  This blog looks at some of these areas in more detail and illustrates that lawyers are as important in the work environment as are in the courtroom.

Commercial Agreements

Lawyers are often employed to aid the creation of commercial agreements between companies. They will assist in negotiating the terms of the contract and, once agreed, will draft and facilitate the signing and exchange of the relevant documents and contracts. The nature of the terms and of the agreement will naturally vary, but some of the most common used in the healthcare industry include:

  • Patent Licence agreements: key terms may include: the scope of the licence, its exclusivity and the territory it covers the licence, which often includes or excludes all countries that have granted patent protection to the invention. Others encompass remuneration, royalties and how such payment(s) are made; and duration, how long the agreement is to last
  • R&D collaboration: where two or more enterprises agree to collaborate developing new products or processes. To commercialise the results of the collaboration, the agreement often extends to the exploitation of the results. Collaboration can also extend to higher education institutions
  • Confidentiality agreements
  • Contract manufacture and supply agreements:  As a guide, key terms may include: interpretation; orders for products; manufacturer obligations; inspection and testing; delivery; rejection of products; warranty and indemnity; prices and payment;  how to vary the terms of the contract in the future if necessary; intellectual property;  confidentiality and; termination
  • Distribution and agency agreements: An Agency Agreement involves appointing a third party to act on its behalf, marketing and selling its products and services – often in exchange for commission. The distribution agreement transfers the ownership of goods to the distributor prior to their ultimate sale. Flexibility in such agreements allows for sales targets and territories to be negotiated
  • Co-marketing and co-promotion agreements: Co-marketing is where two companies cooperate with separate distribution channels. This sometimes includes profit sharing. Co-promotion on the other hand, is where two or more companies use each other’s salesforces as well as their own, to promote the same brand or range of brands

Corporate Services

Corporate compliance, in other words, meeting statutory obligations surrounding how a company operate, reporting and particularly directors’ duties towards shareholders are covered by legislation. Companies are regarded as legal persons and failure to meet the various requirements may result in fines and other punishments for directors and officers.
In the UK, the most recent updating of legislation governance is The Companies Act 2006 which supersedes previous regulations. It is the longest Act of Parliament in British history, containing 1,300 schedules in 15 sections. Given the considerable size of the legislation, lawyers are useful in determining which sections are relevant to the company and advising as appropriate.

Lawyers may also provide useful guidance in raising funds and the most suitable process in which to do this. Some examples of common practices are raising money through debt financing or equity financing. Debt financing is when a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise that the principal and interest on the debt will be repaid. Equity financing is where shares are issued in a public offering. In return for the money paid, shareholders receive ownership interests in the corporation.  A recent example of this in action is Archimedes Pharma successfully raising £65 million round of new funding in 2010. That particular deal is believed to be Europe’s biggest single fund raising round for a bio-pharma company in 15 years.

Should a company wish to merge or acquire another company, a legal mergers and acquisitions team ensures that this is completed effectively. Lawyers are heavily involved in the due diligence side of this, analysing the target firm’s business history, its assets, its capital, and its organisational structure.  They will also negotiate, draft and facilitate the signing of contracts and help manage the integration process after the merger or acquisition is complete.

Intellectual Property and due diligence

Protecting and defending innovations in this sector is essential. Companies may call upon lawyers for help with applying for intellectual property rights, such as patents and trademarks, and perhaps identifying a particular strategy with regards to this.

Due diligence is a routine practice in the healthcare sector prior to investments and public offerings, mergers and acquisitions, private equity and venture capital transactions. These transactions involve providing capital to private businesses to speed up their development. The completion of a successful venture capital or private equity deal requires the deal to progress through a multistage process including due diligence. Due diligence is also a key element in licensing and collaboration agreements.

Dispute Resolution

For when it all goes wrong, lawyers are often the first port of call for resolving a dispute either through going to court or an out of court arbitration or mediation process.

In terms of IP disputes, often these centre on enforcement and/or infringement of IP rights and disputes over ownership. A recent example of this was the patent dispute between Ranbaxy (UK) Ltd and AstraZeneca AB in which Ranbaxy, the claimant, successfully achieved declaration of non-infringement and revocation of a European patent owned by AstraZeneca, the defendant pharmaceutical company.

For contract disputes, the most cost effective way of settling the disagreement is through out of court means as litigation costs can be huge.

Product liability is key area for disputes. Lawyers can be on hand to aid defence or settlement of product liability claims. Strategic advice and representation in multi-claimant litigation is also offered by many law firms as well as assistance with international coordination of product liability actions. They may also advise on what steps to take after realising any safety concerns or objections raised by regulatory authorities such as product recalls, additional safety instructions or temporary restrictions on use. The unmissable DePuy ASR hip replacement litigation is a prime example of this.

Regulatory and Competition compliance

The healthcare industry has been increasingly subject to regulatory and competition (antitrust) measures, including regulation of clinical trials, freedom of information and advertising.  Lawyers are often asked to take the hassle out of contacting the relevant regulatory authorities and advise on ensuring compliance with these regulations.

With regards to competition law, ultimately companies must not abuse their dominant market position should they be in such a position of strength. Co-marketing and promotion agreements, as an example, can be subject to intense scrutiny by the national and European competition authorities as can any mergers and acquisitions. Lawyers can help set up a compliance programme or advise on how to minimise and reduce any risk of violating competition laws. One example of this was when AstraZeneca lost a claim that false representations to the European Patent Office constituted an abuse of their dominant market position.

Infrastructure, Tax and Employment

Tax lawyers are useful in ensuring that the corporation is tax efficient and drafting documentation to allocate tax risks between parties in the agreed manner.

Lawyers are also involved in the transactions for the design, construction and maintenance of new and existing healthcare infrastructure.

Employment lawyers can aid in drafting employment contracts, tailored to the needs of the business, and consultancy agreements which strike the right balance between safeguarding your interests and commercial and economic flexibility. In some cases, healthcare corporations will need to place restrictive covenants on their employees to prevent them from exposing confidential information or intellectual property and lawyers can advise on the best ways to do this also.



Espicom Business Intelligence
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