Abbott played its part in the current wave of acquisitions sweeping through the drug sector with a $3.7 billion bid for Kos Pharmaceuticals that consolidates its position in the market for cholesterol-modulating drugs.
Kos is best known for its Niaspan (niacin) and Advicor (niacin plus lovastatin) products, both of which are recognised as being particularly potent at raising HDL or ‘good’ cholesterol.
As most drugs for dyslipidaemias on the market work primarily by reducing LDL or bad cholesterol, Kos has done well with its two products, which contributed three quarters of Kos’ revenues in the second quarter of this year, bringing in $166 million.
Adding them to its portfolio shores up Abbott’s cholesterol-lowering franchise, currently represented by its Tricor (fenofibrate) product which brought in US sales of $250 million in the second quarter but is facing a patent challenge from generic manufacturer Teva Pharmaceutical Industries.
Abbott licenses US rights to this product from Belgium’s Solvay and, although is not considered to be as effective as other drug classes such as statins in preventing heart attacks and strokes in patients with high cholesterol, does have the singular property of being able to lower triglycerides, another form of blood lipid linked to heart disease.
Abbott’s offer for Kos is valued at $78 per share, a premium of 56% to Kos' closing price of $50.09 the previous trading day, and the news caused the firm's shares to advance by more than 50% to $76.99 in morning trading.
But big premiums are becoming the norm for acquisitions in the drug sector of late, as big pharmaceutical companies are finding themselves competing to buy up new drug candidates, products and companies to make up for a shortfall in compounds coming through their own pipelines. Last week, Merck offered a more than 100% premium when it offered to acquire Sirna Therapeutics for $1.1 billion.
Abbott made another foray into the cardiovascular arena earlier this year when it bought Guidant’s cardiovascular stent business, including the drug-eluting Xience V product, for $4.1 billion. Its largest purchase in the drug sector was BASF’s Knoll Pharmaceuticals unit in 2001, which provided its current top-selling product Humira (adalimumab) for arthritis and other disorders.
A new Niaspan caplet formulation with a range of dosages is currently under Food and Drug Administration review, and is designed to overcome the facial flushing that limits the popularity of current formulations of the drug.
Kos also has a fixed-dose formulation combining niacin with simvastatin, Simcor, in late-stage development. This candidate is expected to be submitted for regulatory review in the USA in the first half of 2007.
For its part, Abbott is developing a next-generation fenofibrate called ABT-335 and a combination product based on TriCor and AstraZeneca’s Crestor (rosuvastatin), giving the company a range of lipid drugs that tackle LDL cholesterol, HDL cholesterol and triglycerides.
Also adds respiratory, diabetes projects
Kos is also developing a number of other products, including a combination asthma medication called Flutiform (formoterol and fluticasone), in-licensed from SkyePharma, which is currently in late-stage development for adult and adolescent asthma, and will provide an expanded presence for Abbott in the $10.0 billion asthma market.
Kos already sells asthma product Azmacort (triamcinolone acetonide) which brought in $27 million in second-quarter 2006 sales, but Flutiform could take the franchise into a different league as it will compete directly with blockbuster asthma drugs such as GlaxoSmithKline’s Advair/Seretide (salmeterol and fluticasone) and AstraZeneca’s Symbicort (budesonide and formoterol).
Kos is also developing an inhaled insulin product, which will complement Abbott's significant presence in the diabetes market - with its leading glucose monitoring and diabetes nutritionals businesses.