[Ip-health] Swissinfo: Swiss pharma giants swallow up start-ups in push for next big gene therapy

Thiru Balasubramaniam thiru at keionline.org
Tue Feb 11 22:12:53 PST 2020

This article (and its accompanying charts) is best read here:



Swiss pharma giants swallow up start-ups in push for next big gene therapy

By Jessica Davis Plüss, Tybalt Félix (RTS) and Valentin Tombez (RTS)


Swiss drug makers are increasingly relying on buying science rather than
doing it themselves, with taxpayers footing some of the bill for big
discoveries. The investigation by Swiss public television comes as Novartis
announces it is reconsidering a lottery program to distribute
free-of-charge the most expensive treatment ever developed.

When the US Food and Drug Administration approved Zolgensma last year, the
one-time gene therapy treatment for spinal muscular atrophy (SMA), a
debilitating and often deadly genetic disease especially prevalent among
young children, it was the price tag that received much of the attention.
At $2.1 million (CHF2.1 million) the one-time infusion was billed as the
most expensive treatment ever.

It is unlikely to remain so: over 200 cell and gene therapies are currently
in development, raising concerns about how over-stretched health systems
are going to afford to pay for these “miracle” cures.

In a marked shift from how companies used to defend high prices by pointing
to the cost of R&D, Novartis has justified the price based on the value it
brings in terms of additional years of life, quality of life and cost
savings to health systems.

Between five and ten children are born each year in Switzerland with spinal
muscular atrophy. Generally, one in 10,000 newborns is affected.

But this has left lingering questions about how much money Novartis and
other big pharma companies are making from such treatments and who is
ultimately footing the bill for their discovery.

An investigation by Swiss public television RTS published on Sunday found
that big pharmaceutical companies are relying more heavily on buying
smaller companies with drugs in advanced stages of development rather than
investing in their own science.

Of the 16 big pharmaceutical companies RTS investigated, Roche and Novartis
relied the most on acquisitions with 49 and 45 companies swallowed up by
the Basel-based health giants respectively since 2000.

Zolgensma’s history is illustrative of a larger trend in the industry
whereby treatments pass through the hands of different researchers, many
financed by universities, charities or taxpayers, before they are purchased
in late stages and end up in a multinational’s pipeline.

In 2007, a team of French researchers at the non-profit research institute
Généthon, financed by the Téléthon charity, found a way to transmit healthy
genes to patients through a virus vector. When it was time to turn their
discovery into a drug, they were overtaken by the US start-up AveXis, which
invested CHF530 million, bought the patent and passed several stages,
including clinical trials on humans.

In 2018, Novartis swooped up AveXis and the rights to market Zolgensma for
CHF8.7 billion, a year before the treatment was approved for use in the US.
With the purchase, Novartis also added critical gene therapy capabilities,
particularly in neuroscience.

However, the difference between the CHF530 million and the purchase of
AveXis at a 72% premium of its average stock price, and then the ultimate
$2.1 billion price tag for Zolgensma has raised eyebrows. While Novartis
says that it and AveXis have invested over $1 billion in the development of
Zolgensma including costs for extending clinical trials and manufacturing
facilities, the company didn’t bear the big risks inherit in the early
stages of drug discovery.

Moreover, not only was Généthon financed by non-profit patient association
but the founder of AveXis received $6.3 million in public funding for his
research in the US over his career. Another patent it acquired also
received nearly $120 million in US public funding.

Zolgensma is not an outlier, according to the RTS investigation. Of the 39
new active ingredients validated since 2018 in Switzerland by major pharma
companies, at least 27 have been bought at an advanced stage of development
(phase 3 clinical trial). Only 30% of these drugs were therefore discovered
in the laboratories of the major companies.

For Novartis, none of the six preparations recently approved in Switzerland
were developed in the Novartis laboratories. In its pipeline, RTS found
that 27 were the result of acquisitions while only 22 could be considered
‘in-house’ products.

A Novartis spokesperson told swissinfo.ch that “like any large
pharmaceutical company, our portfolio contains programs that have been
in-licensed, but we believe that it is correctly balanced with innovative
medicines emanating from our labs.” Treatments discovered and developed
internally in recent years include arthritis pain-reliever Consentyx as
well as Mayzent to treat multiple sclerosis.

Novartis added that it invests roughly CHF9 billion in R&D annually, which
is among the largest R&D budgets in the industry. Over one third of this
amount is spent in Switzerland.

Acquisitions by Novartis. For the other sixteen companies see here.

While Novartis and Roche top the list in terms of number of acquisitions,
buying promising drugs from outside to boost sales is a strategy being
pursued by several others, which is driving up prices.

In 20 years, the 16 groups analysed by RTS have acquired 315 companies
exceeding a sum of CHF1.2 trillion. This includes US company AbbVie’s
purchase of Pharmacyclics for over CHF20 billion in 2015 and Gilead’s
acquisition of Kite Pharma for CHF11 billion to secure access to Yescarta,
a gene therapy treatment against a type of lymphoma.

According to Bertrand Kiefer, a physician and editor-in-chief of the Swiss
Medical Journal, “companies are competing with each other, which drives up
prices.” He adds, “It is necessary to get out of this unhealthy and
unethical climate in the health sector. This isn't about an iphone with an
improved screen. This is about children’s lives.”

See the full RTS story (
information about the methodology.

Controversial lottery

In December, Novartis announced that it was launching a Managed Access
Program for Zolgensma to enable access to the treatment in countries
outside the US where it had not yet been approved for use by local health
authorities. As part of the program, the company would allocate up to 100
doses a year for free by randomly selecting medically eligible patients.

In a statement to swissinfo.ch, Novartis explained that the program was
anchored in principles of fairness, clinical need and global accessibility
to best determine the equitable global distribution of a finite number of
doses that doesn’t favour one child or country over another.

However, the lottery style program drew significant criticism from some
patient advocacy groups and health authorities, who argued that it could
have devastating emotional effects on families and that there were still
questions about the safety of the treatment.

In an interview in the NZZ am Sonntag, medical ethicist Tanja Krones from
the University Hospital Zurich argued that governments should be the ones
that negotiate distribution and not the company directly with individual
doctors and patients in any country.

In a letter dated February 5, Novartis announced that it is reconsidering
the design of the program in collaboration with patient advocates and

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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