Alcon + Aerie, Novartis + Sandoz, Labcorp + RWJBH

Ophthalmology acquisitions, following the pharma trends, and a move in healthcare that is not technology related. 

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Story References
Alcon + Aerie
Novartis + Sandoz
Labcorp + RWJBH

About the Show
Life Science Today is your source for stories, insights, and trends across the life science industry. Expect weekly highlights about new technologies, pharmaceutical mergers and acquisitions, news about the moves of venture capital and private equity, and how the stock market responds to biotech IPOs. Life Science Today also explores trends around clinical research, including the evolving patterns that determine how drugs and therapies are developed and approved. It’s news, with a dash of perspective, focused on the life science industry. 

Transcript

Introduction

Welcome to Life Science Today, your source for stories, insights, and trends across the life science industry. I’m your host, Dr. Noah Goodson. This week, ophthalmology acquisitions, following the pharma trends, and a move in healthcare that is not technology related. 

Disclaimer

The views expressed on Life Science Today are those of the host and guests. They do not necessarily reflect the opinions of any organizations with which they are affiliated. 

Alcon Acquires Aerie for $770M

The Ophthalmology organization Alcon announced the $770M acquisition of Aerie Pharmaceuticals. Aerie’s pipeline is strictly focused on ophthalmological products, including two approved glaucoma eyedrop products Rocklatan and Rhopressa. In addition their pipeline includes a number of sustained release transplants and eye drops for conditions ranging from dry eye to serious retinal diseases. From approved products Aerie sold just over $63M in the front half of the year, but maintained a net 55M loss during the same period. For Alcon, the acquisition appears to be a sensible one. Aerie has sustainable products that Alcon can likely streamline sales for into their larger pipeline, cutting the sales costs and increasing exposure and profits. Additionally, Alcon’s experience in devices and products in the space mean’s they will have strong capabilities to roll out Aerie’s slow-release implants if they achieve regulatory success. However, where this deal does mark a unique move is that Aerie is far more of a pharmaceutical company are Alcon a consumer health company. This is not a hard and fast rule, for products but I do think it represents Alcon signaling an attempt to move out of medical devices and contact lenses into a pharmaceuticals and particularly drug-device combinations. Slow-release implants are a viable solution within many Ophthalmic conditions so it could be in line with targeted strategies in this direction. 

This move to combine consumer health lines like over-the-counter medications with pharmaceutical research is almost precisely the opposite of the strategic direction of most large pharmaceutical companies in the current climate.

Novartis to Spin Off Generics Division Sandoz

In a move, that is a picturesque contrast to the decision of Alcon to acquire Aerie, Novartis has announced plans to spin off their biosimilars and generics division, Sandoz, into an independent organization. This choice is so on trend with the choices of every major pharmaceutical company in that last two years that it is completely unsurprising. Remember, Merck, J&J, GSK, Pfizer, and Abbott have all moved away from over-the-counters and generics. These moves have  many forces but there are questions of focus and investment as well as corporate structuring and finance. Basically a biosimilars or generics business runs on totally different operational margins, risk, and expectations than a company attempting to bring new billion-dollar pharmaceuticals to market.

Within the deal itself, Sandoz is a recognized provider of biosimilars and generics with a rich pipeline of over 15 molecules. The clinical and commercial processes for generics and biosimilars are decidedly distinct from those of a traditional pharmaceutical company as are the signals of economic success making this a sensible decision. Sandoz itself generated $9.6B in sales in 2021 and was the leading generics provider in the EU making it no fledgling startup but a massive and successful organization. The separation from Novartis will free them to pursue more appropriate investment strategies, including I suspect acquisitions to expand revenue. 

In the same week, we have a smaller company bucking a trend while big-pharma stays absolutely on brand.

Labcorp Acquires Parts of RWJBarnabas Health

Moving slightly outside of our normal range of topics, but with a familiar organization - Labcorp has made what I consider a noteworthy move related to larger healthcare systems. They have made the choice to acquire the laboratory assets from New Jersey’s largest academic health system RWJBarnabas. What this means practically is not that LabCorp is getting into hospital systems, but instead they are acquiring access to an integrated healthcare system. Basically as I understand it, LabCorp will own and run all the laboratory services related to the healthcare system in integrated collaboration with RWJBH. For patients this theoretically means access to expanded testing through LabCorp’s capabilities as well as more sites of access because they can use any LabCorp collection points, including those in some Walgreens. But it’s also a heavily integrated business model with the functioning of RWJBH now becoming dependent on successful operational integration with LabCorp. With all the movement across consumer health from Amazon acquiring one medical startup while shutting down another, these kinds of integrations between private large care providers and massive service corporations highlight the ongoing “analog” business partnerships that are also shaping the way healthcare is received. Not every move in healthcare is about technology.

Closing Credits

Thanks for joining me for Life Science Today, your source for stories, insights, and trends across the life science industry. Learn more at LifeScienceTodayPodcast.com. If you like what you hear, please tell a friend. Once again, I’m Dr. Noah Goodson, I’ll see you next week.