Saturday, October 31, 2009

Of Overly-Lobbied HPV Vaccines: Unintended Consequences Department


I'll say no more. Just go read it. It is but one perspective, on the issue -- but an important one.

Should The Merial-Intervet Call Option Be Exercised, Untouched. . . .


. . .Sanofi's CEO admits to the WSJ Health blog that:

. . . .The problem: Schering-Plough is bringing its own leading animal-health business to the Merck deal, and combining the two would create a juggernaut, with more than a quarter of the world market. . . .

While Sanofi's CEO now says it is "more likely than not" that he will exercise the call, it is far from clear that the ECC and FTC will allow one animal health company -- as a creation solely of merger and venture transactions (i.e., not natural, organic growth, over time) -- to effectively seize control of a quarter of the world's veterinary markets.

Friday, October 30, 2009

Peter Loftus Is Usually A Pretty Solid Reporter, But Today? He's A Simple Stenographer/Toady


The occasion? CEO Fred Hassan's glowing memoirs-to-himself (for only he -- and perhaps Hans Becherer -- could swallow such a load of self-serving puffery). The venue? Tonight's Wall Street Journal. The stenographer? Peter Loftus, thus:

. . . .Merck knew Schering well because the companies co-market cholesterol drugs. The venture has come under pressure because of clinical studies raising questions about the drugs' safety and efficacy, but Hassan doesn't regard his handling of the matter as a major blemish. . . .

Really? Mr. Hassan's word is considered definitive, on the matter? Doesn't that seem just a tad self-interested, as statements to the press go? I mean he is only facing about 150 state and federal lawsuits that swear, and document, the opposite. I guess you were out of column space, for that sort of factual material, huh?

Hassan says he is handing over Schering-Plough "in great shape". In fact, EPS is down 17 percent this quarter, and that "non-major-blemish" -- Vytorin and Zetia -- is off ANOTHER 18 percent in the U.S., this quarter -- despite Mr. Hassan's earlier assurances that the franchise was "generally stabilizing". He said it at least twice, in public securities gatherings.

Mr. Loftus takes some pain to note that CEO Hassan "engineered" a turnaround at Pharmacia, and sold it to Pfizer -- in much the same way that he is presently selling Schering-Plough to Merck (despite the "reverse merger" smoke and mirrors).

As just one momentary fact-check would have revealed, Mr. Hassan neglects to mention, in his telling of the Pharmacia turnaround fiction, and Mr. Loftus apparently neglected to ask after, Hassan's role in the largest criminal fine ever paid -- for off-label messaging (related to conduct while he was running Pharmacia, but for which Pfizer ultimately had to pay his tab) -- to the tune of a cool $1.2 billion.

There is much, much more -- but that is enough -- to suggest that Mr. Loftus didn't do any service to his readers, tonight. Next time you're going to write fictional memoirs, while a $47 billion deal is still pending, Mr. Loftus -- think about asking some actual questions, hmmmkay? [Don't even get me started on the ten-fold understatement of his golden parachute (see above right), that passes without so much as a nod, from Mr. Loftus.]

Namaste

PegIntron® Additional Indication Delayed By FDA's "Complete Response Letter", Today


Apparently, in an echo of the split (6-4) ODAC vote, on October 5, 2009 we earlier reported -- the FDA has declined to immediately approve this new indication for Merck/Schering-Plough's PegIntron®. Instead, FDA staff sent Schering-Plough a complete response letter -- essentially, a "regulatory punch-list" of open items, before approval may be granted. Per Reuters' reporting:

. . . .The company is seeking FDA permission to sell the injectable drug for melanoma. But the agency declined to approve the new use, at least right now, instead issuing a complete response letter about remaining issues.

"Schering-Plough will work closely with FDA to respond to outstanding concerns related to the PegIntron melanoma filing," the company said in a statement.

Schering did not say what the FDA's concerns were and company spokeswoman Mary-Francis Faraji said the drugmaker had no additional comment. . . .

Ouch.

Reading Public Document Tea Leaves -- When Will The Deal Close?


No one knows. But this sort of "using employee investment black-out periods", as a proxy for guessing the deal's likely closing -- came up almost exactly one month ago, over in Kenilworth. Tonight, it's the Whitehouse Station version of the guessing game.

In any event, despite its vagaries and limitations -- it is interesting, that Merck said, in an SEC "free writing" prospectus -- filed on the evening of October 28, 2009 -- that it expected the New Merck SIP shares to be SEC-registered by January 31, 2010:

. . . .The [Merck] SIP will be suspended effective upon the closing of the merger until New Merck registers with the Securities and Exchange Commission (SEC) the shares of New Merck common stock that may be issued to plan participants. Because of SEC requirements, New Merck will not be able to register its shares for approximately one to two months after closing. We currently anticipate registering the New Merck shares no later than January 31, 2010. . . .

That could mean that Merck expects closing will be around December 1, 2009. Or it could mean nothing -- as it could simply be a Whitehouse Station-generated guess. I will say that the longer Merck keeps employees out of the SIP, the more reason to be annoyed they'll have.

Truly, the employees need not be "locked out", until the "Old" Merck shares are no longer trading. And that won't happen until the reverse merger's closing day. So, Merck could very well limit the SIP participants' "pain", by not starting the blackout until the merger closes. Merck has opted to start early, apparently betting this will lead to a one month after close (rather than two) period of lock-out -- and that New Merck will be able to reopen the "New" SIP by January's end.

It is clear that the process need not be started, until the merger is completed. As ever, we shall see -- but if the reverse merger's closing is delayed into 2010, the New Merck employees could be locked out for as much as four or five months. And that would be sub-optimal.

Thursday, October 29, 2009

While We Wait For Mexico and China, Q3 2009 U.S. Vytorin/Zetia Sales Are Down 18%


That we learn from page 27 of tonight's SEC-filed Form 10-Q -- we also see a newly-amplified risk factor -- on reimbursement of branded pharmaceuticals in the United States, at page 47, thus:

. . . .Market forces continue to evolve and can impact Schering-Plough’s ability to sell products or the price Schering-Plough can charge for products.

A number of intermediaries are involved between drug manufacturers, such as Schering-Plough, and patients who use the drugs. These intermediaries impact the patient’s ability, and their prescribers’ ability, to choose and pay for a particular drug, which may adversely affect sales of a particular Schering-Plough drug. These intermediaries include health care providers, such as hospitals and clinics; payors and their representatives, such as employers, insurers, managed care organizations and governments; and others in the supply chain, such as pharmacists and wholesalers. Examples include: payors that require a patient to first fail on one or more generic, or less expensive branded drugs, before reimbursing for a more effective, branded product that is more expensive; payors that are increasing patient co-payment amounts; hospitals that stock and administer only a generic product to in-patients; managed care organizations that may penalize doctors who prescribe outside approved formularies which may not include branded products when a generic is available; and pharmacists who receive larger revenues when they dispense a generic drug over a branded drug. Further, the intermediaries are not required to routinely provide transparent data to patients comparing the effectiveness of generic and branded products or to disclose their own economic benefits that are tied to steering patients toward, or requiring patients to use, generic products rather than branded products. Reports on comparative effectiveness of alternative treatments, prepared as a result of the additional $1.1 billion in federal financing under the American Recovery and Reinvestment Act (ARRA) of 2009, could begin to appear for therapeutic categories in which Schering-Plough has significant medications and could alter intermediary and patient perceptions of the value of leading Schering-Plough products, affecting health plan coverage and reimbursment and overall market share for these products. In the U.S., possible enactment of health care reform could result in a significant restructuring of intermediaries between manufacturers and patients and their economic incentives, resulting in adverse effects on Schering-Plough’s results of operations, cash flows and financial condition. . . .

FTC Legal Analysis Spells Trouble for Next Step: Intervet to New Merial


While it is likely that the reverse merger will close in a few weeks (or perhaps, days') time, now, the 100 day call option in favor of Sanofi looks to face some tough sledding at the FTC. Recall that Merck gave Sanofi-Aventis a call option on all the Old Schering Intervet businesses.

Look at what appears in the US FTC Analysis Memo (PDF file), clearing the Merck-Schering deal, this evening:

. . . .In addition to these commonly used vaccines, there are a number of other vaccines that are used in poultry operations to a lesser degree that would be affected by the proposed transaction. These include vaccines for infectious bursal disease, reovirus, infectious laryngotracheitis, coccidiosis, fowl pox, avian encephalomyelitis, and infectious tenosynovitis.

Even though they are not used as universally as the core vaccines, these more minor vaccines play an important role in many poultry operations, as an outbreak of the disease can have equally disastrous economic consequences for poultry producers. Because of the unique characteristics of live and killed versions of poultry vaccines, they are not considered substitutes for each other.

The anticompetitive implications of eliminating one of the two leading suppliers of poultry vaccines in the United States are significant. Poultry producers have benefitted from direct competition between Merial and Schering-Plough, which has resulted in, among other things, steeper discounts and lower prices for customers. The remaining three market participants are smaller than either Merial or Schering-Plough, and do not have the capacity that either of these firms currently enjoys. As a result, these other firms would not be able to replace the competition that the proposed Acquisition would eliminate. In addition, because of research, development and regulatory barriers, entry sufficient to deter or counteract the competitive effects of the proposed transaction is unlikely to occur within two years.

The proposed transaction is also likely to result in anticompetitive harm in the market for cattle gonadotropins. These products are used to treat follicular cysts in cattle and to synchronize the reproductive cycles of cattle undergoing artificial insemination. Although there are other reproductive products on the market, these other products are used in combination with, and not as substitutes for, cattle gonadotropins in order to achieve reproductive synchronization. The combination of Merial and Schering-Plough would result in a duopoly in the market for cattle gonadotropins leaving only Wyeth to compete with the combined firm.

Thus, the proposed merger would eliminate a significant competitor in the U.S. market for cattle gonadotropins, and absent a remedy, customers would likely pay higher prices for these drugs. . . .

At the time the parties entered into an agreement to divest Merck’s shares in Merial to Sanofi-Aventis, they also entered into a call option agreement (“Call Option”) granting Sanofi-Aventis the right to combine the animal health businesses of Merial and Schering-Plough after the Acquisition is consummated and to recreate the 50/50 joint venture between Merck and Sanofi-Aventis. The effect of the Call Option, if exercised, would be to reverse the animal health remedy required by the Order. Consistent with Commission policy, the Order contains a prior approval provision to address the credible risk (here, the high likelihood) that the combined Merck/Schering-Plough and Sanofi-Aventis would combine their animal health businesses after the divestiture. The call option was entered into with the expectation that it is likely to be exercised, and the firms have publicly identified the advantages of such a combination. As a result, Merck is prohibited from acquiring any of Merial’s animal health assets, or in any way combining the animal health businesses of Merck and Sanofi-Aventis without the prior approval of the Commission. . . .

Schering-Plough To Sell Rolapitant Franchise To Opko Health; Draws FTC Clearance


Well -- the US FTC just cleared the bust-up to proceed, per Reuters:

. . . .Schering-Plough agreed to sell its rolapitant drug, a treatment for nausea and vomiting in chemotherapy patients, as part of a proposed consent order with the government. The rolapitant drug, which was in the process of being licensed, will be sold to Opko Health. . . .

Merck has agreed to sell its interest in Merial Ltd, an animal health business, to its French partner in the joint venture, Sanofi-Aventis (SASY.PA), in response to regulators' concerns, the FTC said. . . .

I'll post the consent decree shortly.

Time Warner Shareholders Better Hope Hassan Isn't Named The Compensation Committee Chair!


Let's hope he's not named to decide executive compensation at Time-Warner. Per Reuters:

. . . .Time Warner said on Thursday that Schering Plough Chief Executive Fred Hassan has been elected to its board.

Hassan, 63, is the latest addition since former U.S. Attorney General William Barr, 59, was elected in July.

Vacancies were created after former Chairman and CEO Richard Parsons and former director and Colgate-Palmolive Chairman Reuben Mark retired from the Time Warner board in May and former director Herbert Allison resigned to accept a senior position in the U.S. Treasury Department in June. . . .

Introducing. . . "Harry Reid and the Blenders"! -- Flawless Satire, NYT-Style


Despite the whimsical title, David Herszenhorn, for The New York Times "Prescriptions" blog offers us the "what's next?" -- while the ink is still drying on Speaker Pelosi's press releases, this morning, thus:

. . . .Mr. Reid will gather the group in his office on the second floor of the Capitol on Wednesday for its first official meeting. The group includes Senator Max Baucus, Democrat of Montana and the Finance Committee chairman; Senator Christopher J. Dodd, Democrat of Connecticut, who was acting chairman of the HELP committee when it passed its health care bill; and representatives of the White House.

Jim Manley, a spokesman for Mr. Reid, said that Senator Olympia J. Snowe of Maine, the lone Republican on the Finance Committee to vote in favor of the bill, would be invited to future sessions. And Mr. Manley said the Democratic leader was prepared to go to substantial lengths to keep Ms. Snowe’s support.

“He is prepared to do what he can to keep her on board while putting together a bill that can get the 60 votes necessary to overcome a Republican filibuster,” Mr. Manley said. . . .

[Ed. Note: Obviously, I mean no disrespect to Mr. Hanks' fine project, of a few years back -- it is a most-sincere homage (click to enlarge), at right -- with Senator Reid's actual law school class photo added as the Bass Player!]

The primary reason I mention this all -- is that all of big pharma is off this afternoon, on a generally bullish day on the NYSE (GDP showed good growth this morning, signaling that a recovery is underway) -- and that is likely due in large part to the fact that, if either version of these bills ultimately become law, United States drug prices will not rise as they have, in the past.

Even if the "public option" is a negotiated price option, rather than a "Medicare plus 5" plan, there will be much more pressure on the drug-cost component of overall health care spending in the United States.

And that will be a very good "Thing You Do", in my humble estimation (okay -- I know I reached a little too much, on that one. . . sorry):

Pre-Bust-Up "Talent Drain" Accelerates -- Away From Kenilworth


The latest: Vice President and Compliance Officer for the Schering-Plough Research Institute will "jump ship" -- joining Quintiles, per Reuters:

. . . .Michael Swiatocha joins Quintiles Consulting as Head of the R&D Compliance business unit, focusing on clinical and non-clinical research activities for device and pharmaceutical companies to ensure compliance with applicable regulations and guidelines. Michael joins Quintiles from Schering-Plough Corporation where he served as Vice President and Compliance Officer for the Schering-Plough Research Institute. . . .

Expect much more of this as the fourth quarter wears on.

Wednesday, October 28, 2009

Wall St. J. Sez Procter and Gamble Looking at Schering-Plough's Consumer Health Businesses


It seems that P&G CEO McDonald has accepted Merck CEO Clark's implicit (albeit open-ended) invitation of July 2009. A bust-up takes on some additional shape, here. . . .

And so, not immensely surprising, here -- the overnight (online) version of The Wall Street Journal is reporting that P&G, with some 23 brands each generating more than $1 billon per year, is on the prowl -- either to divest underperformers, or load up on brands that will lever up the growth in this behemoth. Consumer health care businesses are specifically mentioned, thus:

. . . .Meanwhile, P&G has looked at the consumer-products portfolio of Schering-Plough, which is merging with Merck & Co., as well as that of Wyeth, which was just acquired by Pfizer Inc. Another possibility: Beauty-products maker Alberto-Culver Co. It's unclear, however, whether those companies would choose to sell. . . .

Except, of course, that Merck CEO Clark signaled he would be willing to sell, or partner -- in his remarks, of a few months ago.

AASLD Is This Weekend; Vertex's Telaprevir Still Well Ahead of Schering-Plough's Candidate


The evidence continues to pile up, in advance of the AASLD confab this weekend, that Vertex's telaprevir is curing the vast majority of even the most difficult to treat Hep C cases -- those that failed prior course of therapy (often on Schering-Plough's current regimen of Hep C treatments). In addition, Schering-Plough's next generation of Hep C candidate, boceprevir -- while promising, is not showing nearly the efficacy profile that telaprevir is, in the "prior treatment failed" patient population.

Adam Feurstein, for The Street.com -- at the keyboard (do go read it all):

. . . .The new data released Wednesday, therefore, appear to bolster Vertex's claim that telaprevir can improve the cure rate for even the most difficult-to-treat patients -- those who don't respond to standard hepatitis C therapy of long-acting interferon and ribavirin.

That claim needs to be proven, of course, which is why Vertex is running telaprevir through an extensive phase III trial program. Results from studies in both treatment-naive and treatment-failure hepatitis C patients are expected in the middle of next year.

Vertex has competition in the race to develop the first new drug that acts directly against the virus causing hepatitis C. Schering-Plough(SGP Quote) also has a drug, boceprevir, in phase III studies which has shown promising results in earlier studies. However, boceprevir doesn't appear to work as well as telaprevir in treatment-resistant patients. . . .

Tuesday, October 27, 2009

The Narrow Question -- Before The SCOTUS -- In Merck's Vioxx Securities Case


I'll have much more on this tomorrow at some point, but for now. . . let me say that any attempt to paint the current Administration's position as "lawsuit-happy" is simply unwarranted.

This case, properly read, presents the question of when, or whether, and investor knows of problems with his or her investment -- viz, from the United States of America's actual Amicus brief (full-text PDF), tonight:

. . . .The error in petitioners’ [Merck's] approach is confirmed by 15 U.S.C. 77m, one of the limitations periods on which the Court in Lampf relied (see 501 U.S. at 360 & n.7), which establishes an express constructive-discovery rule. Section 77m states that “[n]o action shall be maintained to enforce any liability created under section 77k or 77l(a)(2) of this title unless brought within one year after the discovery of the untrue statement or the omission, or after such discovery should have been made by the exercise of reasonable diligence.” 15 U.S.C. 77m (emphasis added). Section 77m provides the best evidence of Congress’s understanding of how constructive discovery principles apply in the securities context. In a case in which the plaintiff fails to exercise “reasonable diligence,” Section 77m unambiguously provides that the limitations period begins to run at the time a diligent plaintiff would actually have discovered the defendant’s false statement, not at the time (i.e., inquiry notice) when the diligent plaintiff would have commenced an investigation. There is no warrant for construing Section 1658(b)(1), which simply refers to “discovery of the facts constituting the violation” and does not expressly provide that constructive discovery will suffice, to establish an earlier trigger for the limitations period.

c. In a case in which even a diligent investigation would take more than two years to complete, the approach that petitioners advocate—under which Section 1658(b)(1)’s limitations period would begin to run when the plaintiff is placed on “inquiry notice” and therefore should commence his investigation—would result in the limitations period expiring before a diligent plaintiff could acquire facts sufficient to survive a motion to dismiss.

That result is incompatible with this Court’s decision in Lampf, which held that the limitations period applicable to private securities actions is not subject to equitable tolling because the period “by its terms, begins after discovery of the facts constituting the violation, making tolling unnecessary.” 501 U.S. at 363. That analysis presumes that the two-year limitations period (unlike the five-year “period of repose” that “serve[s] as a cutoff ” for all claims, see ibid.) cannot bar claims before a reasonably diligent plaintiff could learn the facts necessary to assert them.

In addition to foreclosing the claims of some plaintiffs despite the plaintiffs’ exercise of reasonable diligence, petitioners’ reading of Section 1658(b)(1) would frustrate the purpose, common to the PSLRA and Section 1658(b), of discouraging so-called “strike suits.”

The Senate Report to the Sarbanes-Oxley Act recited that, under Lampf, plaintiffs were on a “one year ‘stop watch’” that ran “from the moment they know that they have been cheated.” S. Rep. No. 146, at 9. In extending the limitations period to two years, the Report explained that “even after the fraud is discovered,” plaintiffs need additional time to “find out more about exactly who participated in the fraudulent activity and how,” in order to “learn[] that an additional wrongdoer” should be “added to the case” that is otherwise ready to be filed. Ibid.

The report criticized the one-year period as too short, driving plaintiffs “to race into court, so as not to be barred by time,” and to “throw[] in every possible defendant and every claim” “almost immediately upon a change in the stock price.” Ibid. Petitioners’ [Merck's] reading of Section 1658(b)(1), under which the two-year limitations period may begin to run well before a reasonably diligent plaintiff learns sufficient facts to support a wellfounded complaint, would create renewed incentives to the sort of hasty filings that Congress sought to discourage. . . .

More tomorrow, but this is not the U.S. trying to encourage "strike suits" -- it is, in fact, the opposite of that. The U.S. here argues that a well-considered, well-researched, fair and balanced suit be filed -- but filed relatively promptly, after discovery of the facts that are alleged to have caused the damages.

Sen. Grassley Asks For NIH Briefing on Violative/Undisclosed Vytorin-Baylor Links


Pharmalot has a much wider story on all of this -- but I wanted to focus on this notion, that at least under the Bush-Cheney Administration, certain science institutions felt it was within their discretionary purview to wholly-ignore NIH rules, and thus, applicable law -- if the institution felt the regulation's aim was already being addressed by it.

Astonishing. H/T Ed -- and here is the Senator's full-text letter to NIH:


October 26, 2009


Via Electronic Transmission
Francis Collins, MD, PhD
Director
National Institutes of Health
9000 Rockville Pike
Bethesda, MD 20892

Dear Director Collins:

First, let me congratulate you on your new position as Director at the National Institutes of Health (NIH/Agency). Over the last several years, I have been examining conflicts of interest at your Agency, and I am sure that we will enjoy working together on this important issue.

As a senior member of the United States Senate and the Ranking Member of the Committee on Finance (Committee), I have a duty under the Constitution to conduct oversight into the actions of executive branch agencies, including the activities of the NIH. In this capacity, I must ensure that NIH properly fulfills its mission to advance the public’s welfare and makes responsible use of the public funding provided for, among other things, biomedical studies. This research often forms the basis for action taken by the Medicare and Medicaid programs.

I was troubled by a front page article in today’s The Chronicle of Higher Education discussing several NIH grantees with conflicts of interest regarding their research. I was drawn to one passage noting that Dr. Christie M. Ballantyne of Baylor College of Medicine received over $34,000 for consulting with Merck regarding the cardiovascular drug Vytorin. At the same time, Dr. Ballantyne is on several NIH grants that concern cardiovascular studies. According to current NIH regulations, Baylor should have reported to NIH that Dr. Ballantyne had received more than $10,000 from a company. However, the article states explicitly that Baylor was “confident that its rules guard against any financial conflict of interest, saw no need to tell the NIH of payments by Merck to [Dr. Ballantyne].”

Accordingly, I request that NIH brief my staff on this issue and explain how they plan on handling these allegations. I have attached a copy of the article to this letter, for ease of review. I thank you again for your continued cooperation. If you have any questions please contact my Committee staff, Paul Thacker at (202) 224-4515. All formal correspondence should be sent electronically in PDF searchable format to Brian_Downey@finance-rep.senate.gov by no later than November 16, 2009.

Sincerely,





United States Senator
Ranking Member,
Committee on Finance


[Emphasis supplied.]

Monday, October 26, 2009

Teva Wins Yasmin "Obviousness" Patent Battle With Bayer-Schering Pharma


[UPDATE: I am under the impression that Bayer-Schering Pharma sells this product -- like the Levitra® products -- through an arm of Schering Corporation, an affiliate of Schering-Plough -- in some jurisdictions around the world. I am confirming which countries, and whether it is sold under the same sort of an marketing agreement/license as Levitra® (from Bayer-Schering Pharma). Thanks go to a commenter, below for asking after the relationship. Do see the Levitra series of posts, as well.]

After an en banc rehearing petition filed by Schering/Bayer was denied this afternoon, the full panel of U.S. Court of Appeals for the Federal Circuit in Washington, D.C. has effectively let stand the decision of a three member Court of Appeals panel in that Circuit. The upshot of all of this is that Schering's Yasmin birth control pills may now reach the market in an authorized generic form, as marketed in the US and Europe by Teva Pharmaceuticals. Per Bloomberg wire reporting:

. . . .The full panel of U.S. Court of Appeals for the Federal Circuit in Washington declined to revisit an August judgment upholding a lower-court ruling that forced. . . an agreement to let Teva Pharmaceutical Industries Ltd.’s Barr unit begin selling Yasmin under its own label. . . .

The U.S. Court of Appeals for the Federal Circuit, in a 2-1 ruling, said in August that the trial judge was correct to rule that it would have been obvious for scientists to test a smaller particle size because it was well known that drospirenone was acid-sensitive. . . .

PharmaConduct Is Building A Poll -- And Needs Your Input


PharmaConduct has a draft opinion poll up for review, comment and edits, before it goes "live" -- if you would like to see information collected on additional Schering-Plough (or Merck) sites -- especially international sites -- please stop by and at least name the sites, thus:

. . . .If you are interested in the site closure prediction survey for Merck/Schering-Plough, take a look at this draft version of the survey and let me know if you have any suggestions before it goes live. Once I have three or more people who say it is ready to go, I will put it online. . . .

Thanks for your help, here -- and the anonymous commenter who tipped me to the poll-draft.

Wyeth Pfizer Claims Schering-Plough's Intervet "Willfully" Infringes Its Patents


On October 20, 2009, Wyeth (now Pfizer, as of last week!) was issued a fairly-broad patent -- one covering various aspects of the vaccination process, for a type of viral infection often seen in piglets.

That same day, it filed a rather ponderous suit against Schering's Intervet Animal Health businesses (and BIVI, the company that bought some Pfizer/Wyeth animal health assets at FTC suggestion last week, in order to clear the path for Pfizer to close the acquisition of Wyeth -- but that's another story!), alleging willful infringement in the manufacture and sale of the Intervet line of porcine Circumvent® and Porcilis® vaccines.

Declaring the infringing conduct "willful" means that Pfizer may potentially triple its recovery -- under the relevant patent statutes, should it prevail in showing that Intervet acted "willfully" in producing the porcine circovirus vaccines in the face of the pending Wyeth patent application. [Click the image at right to enlarge, and read the operative portion of the Wyeth-cum-Pfizer complaint.] Pfizer has also demanded that the case be tried before a jury, in the Delaware federal District court.

Hat tip to the Patent Docs.org blog for this:

. . . .Wyeth v. Intervet Inc., et al., (1:09-cv-00780; filed October 20, 2009 in the District Court of Delaware). . . .

Infringement of U.S. Patent No. 7,604,808 ("Circovirus Sequences Associated with Piglet Weight Loss Disease") based on defendant's manufacture and sale of their Circumvent® and Porcilis® vaccines (porcine circovirus vaccines). . . .

Sunday, October 25, 2009

Who Might Have Placed Inside Trades On March 6, 2009 -- In "Merck-ified" Profiteering?


You'll need to read all of this morning's longer Crain's New York Business piece (by Aaron Elstein) I've quoted briefly below, to get the full sense of this, but it concludes thus:

. . . .Merck, Schering-Plough

Closer to home, it appears insider trading took place in the days before a $47 billion merger was announced between two of the New York region’s pharmaceutical giants, Merck and Schering-Plough.

Last March 6, the Friday before the deal was announced, Schering-Plough shares rose 8%, and trading volume jumped to 34 million shares, more than double the average of the previous three weeks and the highest in nearly a year. Hordes of Wall Street advisers had a hand in this deal. No fewer than six law firms counseled acquirer Merck and its bankers at J.P. Morgan, while four law firms advised target Schering-Plough and its M&A crew at Morgan Stanley and Goldman.

Will the past few years’ spike in unusual trading activity lead to more Wall Streeters in jail? Time will tell. But it’s worth noting that on Oct. 20, when Mr. Ackman cheekily made his pitch for Corrections Corp. as a hedge against hedge fund prosecutions, the company’s shares rose 5%, hitting a new 52-week high. . . .

Now, to be clear -- and as I mentioned the first time this story came up, when the SEC first confirmed it was investigating the March 6, 2009 Schering-Plough pre-announcement trading, to The Wall Street Journal, on April 30, 2009 -- there is nothing to suggest that either company, itself, had a hand in leaking, down-stream tipping or the allegedly "inside" trading -- but it is clear that someone out there knew something was imminent. And 34 million shares changed hands at an artificially low price, that Friday.

Friday, October 23, 2009

Some More -- On Headcount Thoughts, US v. Europe


UPDATED -- 10.23.09 @ 10:00 PM EDT: Another anonymous commenter, below, offers this speculation:

. . . .There will be serious overlap, as well as an over staffed sales-force in the U.S. IMO.

New Merck could easily get twice the attrition they want by offering older employees decent packages, but then there would be no one left!

Why would they let the overseas coleagues go? That's where 70% of sales and most of the growth is coming from at SP.

Murphy's law, if you want a package it won't be offered. If you want to stay, then a package will be forced upon you. . . .

October 23, 2009 9:42 PM

I guess all I'd add, by way of observation (not even dissent, really) is that -- in Europe, at least, I think the Animal Health businesses will face some significant headcount pressure, post-close, at least if one takes Sanofi's CEO at his word -- that he is very likely to exercise the 100 day "call option" to acquire for "New" Merial, all of "Old" Schering-Plough's Intervet, from "New" Merck. The central feature of the slide describing this portion of the deal was "cost synergies", on July 30, 2009:



That's slang for down-sizing the employee population.

Brian Orelli Kinda' Sums Up What I See, Here


I've disagreed with his previously-bullish remarks on Merck/Schering-Plough (during the Arbiter 6 - HALTS shakeout), but I do think he's got it about right this afternoon, with his "Foolish" headline: "Merck/Schering Doesn't Look So Good" (do go read it all) -- as he notes that fully five of the top ten franchises showed sales declines in the Q3 2009 earnings releases, thus:

. . . .Diabetes drugs Januvia and Janumet are carrying the companies. They registered undeniably impressive growth, but I'm not sure how long Merck can keep that up. Bristol-Myers Squibb and AstraZeneca recently launched a similar drug, Onglyza, and Amylin Pharmaceuticals and Eli Lilly have a once-weekly diabetes drug under review with the FDA.

International growth in sales of Remicade is also making a major contribution, but it's not entirely clear whether the combined company will be able to hold onto its ex-U.S. marketing rights for the drug. Johnson & Johnson wants them back because of Schering's change in ownership. . . .

Ouch. Mr. Orelli took the time to run a mini-pro-forma, looking at the combined company, and what he sees hinges almost entirely on how much cost the coming "Merck-ification" drives out of the two companies.

Ominously, mergers born of cost-cutting don't show very impressive long-term returns, according to most empirical analyses.

Great Catch -- By "Anonymous", Here!


Did I miss statements made by CEO Clark yesterday, or perhaps CEO-for-the-moment Hassan, on their respective earnings calls -- to the effect that most job-losses will be outside the US?

Let me be clear -- I did not see any such statement, but the Rolfe Winkler-penned Reuters story I linked this morning, earlier (reporting ECC clearance), ends with just that statement, thus:

. . . .Condor:

The story link you posted for the [European Competition Commission's] "hall pass" notes at the bottom that most of the job losses will happen "out of the US". This is the first I have heard of this. As a SP employee, I've followed the news each day both internally and externally and have not seen any indication as to how the job losses would be allocated. Have you seen anything that would push a reporter to make that comment?

Thanks!

October 23, 2009 9:55 AM. . . .

I suppose it would be fair to assume that Merck's job cuts will be primarily outside the US, as Schering-Plough's international footprint is much larger than Merck's. That would require reading the comment as applying to Merck only, and there is nothing to suggest that was the author's intent.

Alternatively, I suppose one could count all the former Merck-Merial employees, now controlled by Sanofi, as "severed" -- for the purpose of reducing Merck's headcount. And along those lines, it is clear that Intervet people will be downsized, should the call option be exercised by Sanofi, post close. But beyond that, I don't recall seeing such a statement officially attributed to either company's media relations people.

Anyone else out there? Am I forgetting an earlier SEC filing?

Let us know, in the comments.

Thanks again to the anonymous commenter, for this pick-up!

~~~~~~~~~~~~~


UPDATED -- 10.23.09 @ 10:00 PM EDT: Another anonymous commenter, below, offers this speculation:
. . . .There will be serious overlap, as well as an over staffed sales-force in the U.S. IMO.

New Merck could easily get twice the attrition they want by offering older employees decent packages, but then there would be no one left!

Why would they let the overseas coleagues go? That's where 70% of sales and most of the growth is coming from at SP.

Murphy's law, if you want a package it won't be offered. If you want to stay, then a package will be forced upon you. . . .

October 23, 2009 9:42 PM

I guess all I'd add, by way of observation (not even dissent, really) is that -- in Europe, at least, I think the Animal Health businesses will face some significant headcount pressure, post-close, at least if one takes Sanofi's CEO at his word -- that he is very likely to exercise the 100 day "call option" to acquire for "New" Merial, all of "Old" Schering-Plough's Intervet, from "New" Merck. The central feature of the slide describing this portion of the deal was "cost synergies", on July 30, 2009:



That's slang for down-sizing the employee population.

Indeed, Schering/Merck Was Granted An ECC "Hall Pass" Today


UPDATED: 10.23.09 @ 7 AM EDT -- The "Hall Pass" was granted, this morning in Brussels. Now we await US FTC/DoJ clearance, and then -- as I indicated below, the Intervet Call Option fireworks. [The original posting of this item was 10.22.09 @ 2:26 PM EDT.]

~~~~~~~~~~~~~~~


If -- at around 4 a.m. EDT, tomorrow morning -- the right hand margin of this ECC Journal link contains an "en", with a live-link attached to it, you'll know that the European Competition Commission has officially granted the deal (the Merck/Schering-Plough reverse merger portion, anyway) a "hall pass".

This pass will be good until the Sanofi-Merial 100-day call option (on the Intervet businesses) is exercised -- then the "competition review fun" will begin in earnest:
. . . .18 September 2009

Prior publication in Official Journal

Provisional deadline: 23 October 2009. . . .


Of course -- even if the ECC is wholly-obliging tomorrow morning, our time -- that still leaves the US FTC/DoJ HSR process to contend with.

Thursday, October 22, 2009

Strong "Public Option" Shows Renewed Life -- Sen. Reid Inclined To Include It


The Gray Lady has it, thus:

. . . .At a meeting at the White House on Thursday, Mr. Reid informed President Obama of his inclination to add the public option to the bill, but did not specifically ask the president to endorse that approach, a Democratic aide said. Mr. Obama asked questions, but did not express a preference at the meeting, a White House official said.

Just six weeks ago the public option appeared to be dying, under fierce attack by the insurance industry. A clear majority of Democratic senators favor a government-run plan. But public statements by other senators indicate that the proposal lacks the 60 votes ordinarily needed to secure Senate approval for hotly contested legislation.

Democratic champions of the public plan, like Senator Charles E. Schumer of New York, have urged Mr. Reid to take an aggressive posture, by putting the public plan in the bill and forcing opponents to try to strip it out.

"There is a growing sense that we need to lead on this issue and not wait for it to be offered on the Senate floor," a senior Democratic aide said. "The idea is that it’s better to show some fight. . . ."

Even if the Senate Democrats ultimately lose Snowe's vote because of it, "Warblin' Joe" Lieberman could still make the needed 60, and then, the next bottleneck appears in the House chambers -- where the notion is gaining favor, but is by no means assured.

It largely just goes to show that -- between insurers, and big pharma -- if one goes beyond the edge of the envelope often enough, and brazenly so -- eventually the law catches up, to curb those practices one didn't self-police, in the very first place.

A Great BIG Thanks, Here -- Goes To An Anonymous Commenter




Apparently (per one of my anonymous commenters, below), an SP Alumni web-site not directly-affiliated with Schering-Plough, proper, has been launched -- and it proclaims that a series of self-organized parties are underway, this afternoon at or near Schering-Plough facilities, around the country -- for SP people, by SP people, to celebrate. . . SP people (with lots of great photos, too!):

. . . .This is a network of Schering Plough Alumni designed to keep over 60,000 Alumni and Colleagues in touch with one another. . . .

Kickin' logo, to boot (as slightly re-imagined, above from the below)!

Namasté, one and all! I salute you -- from afar.

Q3 Live-Blog: Profit DOWN 17 percent; Currencies Take ANOTHER 10 Percent Out of Schering-Plough's Sales Growth


This will go active at about 7 a.m. (EDT), this morning.

▲ On the NASDAQ Pre-Market electronic trading screens, Merck is trading into the $33 range, up almost a buck, on decent volume -- while Schering is off, marginally (likely being supported by Merck), in the same NASDAQ premarket trading system. . . .

▲ ". . . .Merck said it is reaffirming its guidance for full-year 2009 revenue (as reported by Merck & Co., Inc.) of $23.2 billion to $23.7 billion. . . ."

▲ ". . . .All of the 2009 guidance provided by the company excludes contributions from Schering-Plough that would result from the merger and any costs incurred upon closing of the merger, which is expected to occur in the fourth quarter. Therefore, Merck's standalone 2009 guidance will no longer be applicable once the merger closes. . . ."

▲ Merck indicates its year-end 2009 numbers will be available later than usual (week two of February, 2010 -- not January 2010), if the merger closes in Q4 2009, thus: ". . .Given the anticipated fourth quarter close of the merger with Schering-Plough, Merck expects to announce the combined company's fourth quarter and full-year 2009 sales and earnings during the second week of February, and to provide 2010 guidance around the time of its first quarter 2010 sales and earnings announcement. . . ."

▲ I'll only dip into the Merck call and release, as it seems mostly in-line.

Switching to Merck's release now: $2.8 billion gain on the sale of the Merck's interest in Merial. . . that's a nice deal -- a sweet amount of gain!

~~~~~~~~~~~~~


Look for Schering-Plough to fall significantly at NYSE opening bell.

▲ Reuters' Matthew Goldstein has it thus: "Schering-Plough, slated to be acquired this year by larger U.S. drugmaker Merck & Co, said on Thursday its third-quarter profit fell on waning demand for cholesterol drugs it sells with Merck. . . ."

CEO Hassan (is nothing, if not predictable, as he) repeatedly called Schering-Plough "the engine" that would power Merck's "growth" -- odd metaphor, given that Schering's EPS is down 17 percent this quarter; and Merck is meeting (or beating) its guidance this morning.

▲ Schering-Plough call is ending -- Fred saying good-byes -- is this the last time CEO Hassan will host such a call, for a public company? We shall see, but I'd bet it is.

Merck's Q3 release is now out. No huge surprises -- thus Merck's call will only be a half hour.

▲ Seamus Fernandez, of Leerink, Swann -- where are we on enrollment in TRA study; and IMPROVE-IT -- will there be a futility analysis? Tom Koestler says TRA should complete enrollment soon. And now, no answer on the futility analysis. Tom tells him to read the paper on IMPROVE-IT.

▲ 15,000 patients in IMPROVE-IT -- still no half-way analysis yet, maybe sometime next year (2010).

▲ Chris Schott, of JP Morgan -- what does currency look like for Q4 -- CEO Hassan says it should be "good for overseas business"(?) -- what is CEO Hassan looking at???

▲ Catherine Arnold at Credit Suisse with pipeline questions.

▲ Jami Rubin, Goldman Sachs -- Cholesterol Equity Income is now "below expectations" -- and looks like "continuing erosion". A dodge, as an answer -- but ultimately Bob Bertolini admitted that "top-line" declines are continuing, even as (controllable) spend for promotion has decreased significantly.

▲ Tim Anderson of Sanford, Bernstein -- What is timeline for FDA's cholesterol franchise pronouncement -- is it waiting for Arbiter 6 - HALTS outcome? Tom Koestler -- we don't know where FDA is on any of this -- we at Kenilworth are still waiting to hear, but we don't think Arbiter 6 is the driver.

▲ Q & A now underway. . . .

▲ Note that EPS -- on a GAAP basis, now, was only 29 cents; but after all these "adjustments" -- it is reported as 40 cents a share by Kenilworth, or a 38 percent variance in EPS in Q3 2009 -- driven solely by items within Schering-Plough's control.

▲ With all the moving parts in all of Schering-Plough's various ongoing "special" charges, and the fact that it will likely never have to reconcile these Q3 2009 figures as a stand-alone company, next year (as all of this -- all of Old Schering -- will be an "as acquired" adjustment line on the "New" Merck statements), it is anyone's guess as to whether any of the items below the sales line will be objectively-verifiable, by mid 2010.

▲ Conference call is now underway.

▲ Note that most Schering drug franchises with significant overseas sales posted 12 percent currency-driven declines (headwinds), which were only partially offset (4 percent or so) by increasing US sales. This is a tough currency environment -- especially as Merck will want to highlight the "diversification" Schering's international sales bering to the historically-US dominated Merck sales lines.

▲ In the US, Vytorin and Zetia sales have declined another 10 percent. That is the opposite of "generally stabilizing" -- as we are now seeing a steady, stable 10 percent DOWN-bubble, in the US sales.

▲ Together, these charges hold over $1.7 billion, for the two nine-months periods ending September 30, 2009, and 2008.

▲ There are at least three distinct "canopic jars" into which Schering-Plough could be pouring some otherwise "ordinary, recurring" expenses -- and treating them as "non-recurring, special" items, including: (1) an Organon assimilation charge (begun in November of 2007; still ongoing); (2) the so-called PTP restructuring charge (begun in April of 2008; still ongoing); and (3) now the Merck reverse merger charges (begun in March of 2009).

▲ Okay -- so the Schering-Plough Q3 earnings release is out; and it reports essentially flat worldwide sales. But there is no way to know much beyond that. Why? Because Schering-Plough has booked about $400 million in 2009, and over $1.3 billion in 2008, in "special, merger and related restructuring charges" for the nine months ended September 30, 2009. There are at least three distinct "canopic jars" -- more in next dot point.

▲ I'll go live, at about 7 a.m. (EDT), do stop back. . . .

▲ At approximately 7:15 a.m. (EDT), Schering-Plough will conduct a conference call to review results for the 2009 third quarter. . . .

▲ At approximately 9:00 a.m. (EDT), Merck will conduct a conference call to review results for the 2009 third quarter. . . .

Wednesday, October 21, 2009

CDC Panel Takes A "Pass" -- On Madatory Gardasil® Jabs -- For Boys


Reuters has the story -- this explains why both Schering and Merck were off today -- likely along with some jitters about Q3 2009 numbers, for each (which conference calls I will live blog, tomorrow, here). But for now, Felix Salmon (no relation) has the skinny:

. . . .Despite some impassioned pleas from patients and doctors alike, the Advisory Committee on Immunization Practices voted almost unanimously for "permissive" use of the vaccine for boys. It protects against the human papillomavirus, or HPV, which causes a variety of cancers and genital warts.

But the committee did recommend including Gardasil for eligible boys aged 9 to 18 in the Vaccines For Children program, a government-funded system that provides vaccines to children eligible for the state-federal Medicaid health insurance plan and other uninsured children.

Merck's shares were down 1.7 percent at $33.16 in afternoon trading on the New York Stock Exchange. . . .

Pretty much as I earlier predicted it all might go down. Now, let's see what "the morrow brings" us -- bright and early.

Dr. Obama Cut-Out. . . Is "IN" -- Today's Chicago Tribune


This graced the morning's Chicago Tribune editorial pages. . . and I felt compelled to make one, myself, for my desk. You'll need a full-color laser printer, some firm paper stock, some tape and scissors.

Ready? Now, go download this PDF file, and follow the directions, thus:

. . . .[By: Joe Fournier]

How to assemble your Dr. Obama:

1. Cut out body and arm. Remember, solid lines get cut, dotted lines folded.

2. Cut ears along white lines. Fold outward.

3. Fold body and tape back of tape flap to inside of body.

4. Roll barrel of syringe and tape, then fold arm, matching front to back. Fold flaps A inward and B outward.

5. Tape B tabs where indicated on body. Fold and pinch needle point (black triangle).

6. Your Dr. Obama is now ready to provide all Americans with a dose of reality! (Shot not covered under most health insurance plans.)

Warning: Side effects may include reason, logic and lucid, rational thought. . . .

When you're all done, it should look like the image at right -- click to enlarge. Yep -- I'm lovin' it!

Sch-Merck's Lobbying, Through September 30: $6.31 Million


The third quarter Federal Election Commission reports were due yesterday, in DC. Combined, the companies have spent $6.31 million, in their own names, this year so far. They have spent much, much more, if organizational spends, like PhRMA lobbying efforts, or through registered lobbyists, acting on their behalf, are included.

. . . .Q3 2009 : Merck -- $1,560,000 | Schering-Plough -- $570,000. . . .

Full Year to Date: Merck -- $4,590,000 | Schering-Plough -- $1,720,000. . . .

In a year of 20,000 to 30,000 people losing their jobs at the combined companies, I wonder whether this is an appropriate spend -- given that, by most accounts, big pharma had, by the end of Q1 2009, already protected most of its turf, in the reform debates.

Bracing For Tomorrow's Q3 Earnings Calls


Back to substance, then -- per Linda Johnson, for the AP, reporting:

. . . .Citigroup analyst John Boris said in a research note that. . . about 40 percent of [Merck's] global 2008 sales are from drugs losing patent protection in the next few years. . . .

He said keys will be whether sales of the cholesterol drugs Merck and Schering-Plough sell together decline further due to the controversy over their effectiveness, how much impact the weak allergy season and generic Zyrtec have on sales of Singulair, and whether sales of Gardisil go up or down. . . .

My earlier comments, quoting CS's Catherine Arnold, are here -- Barclays comments here. We shall see, but I expect currency headwinds to seriously dampen Schering-Plough's report -- by a little more than 10 percentage points.

Tuesday, October 20, 2009

Somebody. Stop. Me. Seriously.


Last one, I promise:


. . . .Reminds me of one of several summer jobs I once held. . . .

Nothing "Exceeds". . . Like "Excess"!


Yes -- it is an almost entirely-trivial story, but it has inspired an unnamed muse in me [click to enlarge!]:


. . . .Authentic Fred Hassan Pharma Detailing/Soda-Jerking Kit! Learn From the BEST! Now Available -- Limited Quantities; Limited Time Only! From Those Good People in Kenilworth, New Jersey (for at least a little while longer). . . .

From The Sublime -- To The Ridiculous -- "Ice Cream Wars" -- Schering-Style


I was going to leave this one well-enough alone, when I first saw it Sunday night, but it is a slow news day, and commenter asked after it. . . so, what the hey.

I'll let all the other fine bloggers tell the back story (do go read, to understand) -- but here are a couple quick (largely artless) renderings (offered as public domain, royalty free satires, for use, and rebroadcast, by the entire wired world!), to match a commenter's suggestions, below.

From this Pharma Marketing blog:

. . . .you don't have to take it lying down is how Schering-Plough views it. That company has denied Massachusetts, Vermont and Minnesota doctors a scoop of ice cream on a cool autumn afternoon in Boston! Dude, that's rad! Here's a sign seen at the ACEP Scientific Assembly in Boston. . . .

[That blog Hat-tipped Whitecoat -- who had the orginal picture -- of the sign, not my photoshoppings -- and story]:
. . . .The exhibit floor was busy. Everyone walks around looking for free pens and other trinkets. When I called home, my kids didn’t tell me how much they missed me, they asked me what I got them. . . .

My suitcase is going to be stuffed full of junk just to make them happy. Funky pens. Highlighters. Yo-yos. Bags. Thanks to all the vendors for giving me FOUR of everything to avoid fights when I get home. . . .

The legal picture of the day was at an ice cream stand. Sorry you docs in Minnesota, Vermont, or Massachusetts. Either your butts are too fat or there is some legal decision stating that ice cream cones may unduly influence your decision to prescribe medications. . . .

CEO Clark -- In Fortune Interview -- Only 40% of Schering-Plough Management To Be "Merck-ified"


[UPDATED: 10.21.09 @ 7 PM EDT -- The Phoenixed-Version® of Pharmalot, that king of this particular genre, has hat-tipped this story! Cool!]

That nugget is buried, at the end of the interview released this morning, to the web -- 60 percent of Schering-Plough's management will not be brought over to "New" Merck. [Click the image at right for the background on various AIDS advocates' efforts to reduce Merck's Isentress® (raltegravir) drug costs to patients.] Do go read the entire Fortune article, but CEO Clark is (as one of the headlines for the interview) sounding a very encouraging, and laudable, note on health care reform, here:

. . . .Q: How will health-care reform impact the pharma industry?

CEO Clark's Answer: We support President Obama and what he's attempting to do with health-care reform. It's unacceptable to have Americans who don't have coverage, and they don't get the care they need. I'm cautiously optimistic that we will have health-care reform this year.

Our hope is that the health-care reform continues to support innovation, that it continues to be a market-based approach, and that intellectual property is protected around the world.

The next step is to make sure from a preventive and a wellness standpoint that we get ahead of the game, so that we don't treat just chronic disease in this country. . . .

[Much later:] We're bringing in 40% of the Schering-Plough leadership into the company. . . .

Not that the 60-40 ratio is surprising, but it is sobering to see it in print -- as the reverse merger process begins to wind toward a closing date, perhaps in December or January.

Monday, October 19, 2009

Pfizer-Wyeth FTC Clearance Yields Significant Intervet (And Merial) Market Data


Mid-last week, when the US FTC cleared Pfizer and Wyeth to merge, it imposed conditions -- especially in the businesses of the two that serve the Animal Health marketplaces.

I just now got around to actually reading the FTC's complaint -- upon which the settlement order was entered -- causing Pfizer and Wyeth to agree to sell various Animal Health businesses to Boehringer Ingelheim Vetmedica, Inc. (hereafter "BIVI", for short). What a trained eye sees there should be cause for concern, for the Merck/Schering-Plough year-end timetable.

In the FTC's analysis memo (an eight page PDF), and its complaint (a nine-page PDF), we learn much more about where Intervet -- currently a Schering-Plough group of businesses, and Merial -- a newly-divested group of Merck businesses, compete, and in some cases, will allegedly dominate -- select Animal Health marketplaces (at least according to the FTC's Enforcement staff-lawyers). These documents, in turn, provide some insight as to what the FTC staffers are likely looking at, when they consider the call option New Merck has granted to New Merial's Sanofi-Aventis parent, to acquire substantially all the Old Schering-Plough Intervet busineses. Take a look -- as I have edited the FTC's document, to reflect the combinaiton of Intervet with Merial. So, this is something like what FTC sees, after the Pfizer-Wyeth closing, the FTC-required divestitures to BIVI, and assuming the exercise of the Intervet call option -- by Merial's Sanofi:

. . . .12. The markets for cattle pasteurella vaccines in the United States are highly concentrated. Currently, Pfizer [or BIVI], Fort Dodge and ISP/Merial are the only significant suppliers in these markets. The proposed acquisition would cut in half reduce the number of competitors in these markets, leaving [Pfizer and/or ISP/Merial] significantly larger than any of its remaining competitors Fort Dodge. . . .

15. Pfizer, Fort Dodge, and Merial are the only three branded players in the U.S. market for cattle macrocyclic lactone parasiticides. The proposed acquisition would significantly increase the concentration in this market, leaving Pfizer with approximately 42 percent of this $118 million market. Suppliers of generic macrocyclic lactone products do not provide a serious competitive constraint due to their poor reputation in this market.

Further, such suppliers sell generic versions of only Merial’s product; there are no generic versions of Pfizer’s or Fort Dodge’s products currently available. The proposed acquisition would increase the HHI in this market by 875 points to 2,381 points. . . .

16. Only [Pfizer or BIVI], Fort Dodge, and Invervet/Schering-Plough ("ISP") offer cattle benzimidazole parasiticides in the United States. ISP accounts for 67 percent of this $16 million market, with Pfizer [or BIVI] and Fort Dodge the only two other market participants. As a result of the proposed acquisition, the HHI in this market would increase by 271 points to a post-acquisition HHI of 5,613 points. . . .

17. Pfizer [or BIVI], Fort Dodge, and Merial/ISP are the only four three significant companies that supply canine combination vaccines in the United States. Total U.S. sales of canine combination vaccines are $126 million. The proposed acquisition would reduce the number of significant suppliers of canine combination vaccines from four to three. . . .

22. Pfizer [or BIVI], Fort Dodge and Merial/ISP are the only four three significant companies that supply feline combination vaccines in the United States. Total U.S. sales of feline combination vaccines are $28 million. The proposed acquisition would reduce the number of significant suppliers of feline combination vaccines from four three to two and produce a firm that is considerably larger than its two remaining competitors. . . .

23. Pfizer [or BIVI], Fort Dodge and Merial/ISP are the only four three companies that supply feline leukemia vaccines in the United States, sales of which total $38 million. The proposed acquisition would reduce the number of suppliers of feline leukemia vaccines from four to three to two. . . .

24. Pfizer [or BIVI], Fort Dodge and Merial/ISP are the only four three companies that offer companion animal rabies vaccines in the United States, sales of which amount to $60 million. The proposed acquisition would reduce the number of suppliers of companion animal rabies vaccines from four to three. . . .

26. The market for equine tapeworm parasiticides containing praziquantel in the United States is highly concentrated. Pfizer has a 33 percent share of this approximately $22 million market; Fort Dodge has a 31 percent market share; and Merial has a 36 percent market share. As a result of the proposed acquisition, Pfizer would have 64 percent of the market for equine tapeworm parasiticides, leaving only Merial as a competitor to Pfizer. The HHI in this market would increase by 2,027 points to a post-acquisition HHI of 5,375 points. . . .

[From the FTC's Analysis, now:]

Canine combination vaccines prevent common canine diseases, such as those caused by canine distemper, adenovirus (types 1 and 2), parainfluenza, parvovirus, coronavirus, and Leptospira. [Pfizer or BIVI], Fort Dodge, Merial/ISP are the four three significant companies that supply canine combination vaccines in the United States. Total U.S. sales of canine combination vaccines are $126 million. The proposed acquisition[s] would reduce the number of significant suppliers of canine combination vaccines from four to three.

While parvovirus, coronavirus, and leptospira vaccines are all available as part of canine combination vaccines, the monovalent forms are administered as booster shots for puppies that have a particularly high risk of exposure to the disease. [Pfizer or BIVI], Fort Dodge, Merial/ISP are the only four three companies that supply canine monovalent parvovirus vaccines in the United States, a $2.1 million market. . . .

The same four three players [Pfizer or BIVI], Fort Dodge, Merial/ISP are also the only four three companies that supply canine monovalent coronavirus vaccines in the United States. The proposed acquisition would further entrench [Pfizer or BIVI] as the dominant supplier with an 81 percent share of the $2.3 million market for canine monovalent coronavirus vaccines. . . .

Canine bordetella vaccines are used primarily to prevent infectious tracheobronchitis, which is the most prevalent upper respiratory infection contracted by dogs in the United States. There are five three suppliers of canine bordetella vaccines in the United States: [Pfizer or BIVI], Fort Dodge and ISP/Merial. Total U.S. sales of canine bordetella vaccines amount to $53.3 million. The proposed acquisition would reduce the number of suppliers of canine bordetella vaccines from five to three, leaving [Intervet/Merial] significantly larger than its three remaining competitors. . . .

I'll have much more, shortly, but other duties call. [Remember, however, as the above graphic indicates, Intervet/Merial faces many of the same market concentration-hurdles in the European Union -- and the ECC is presently looking into them -- in tandem with the US FTC's process.]

What I see here, preliminarily, is that Schering-Plough and Merck still have a lot of FTC regulatory "wood to chop". Back soon.