Wednesday, January 19, 2011

Private Boehringer Can Wear Two Hats

Yesterday's news that Boehringer is buying Amgen's Fremont, CA manufacturing facility is a reminder that Boehringer isn't just an R&D-based drugs giant, it's a contract manufacturer, too. It has been making Amgen's (and others') biologics for years. Expansion of its manufacturing to the West coast of the US has been underway for a couple of years, with CMO Avid Biosciences added in September 2009.

No, Boehringer doesn't have marketed biologics of its own, not yet. But they're in the works, and if/when they do appear, Boehringer will be well-placed (we, and others like Genmab, know how wobbly the manufacturing supply/demand balance can get...).

So sure, maybe Boehringer missed a trick by not making and selling its own biologics, sooner. But it doesn't really matter: that's what being private does for you. You can wear one hat, two hats, or seventeen. And they don't even have to be in fashion.

Indeed, never have the virtues of being private been quite so compelling. Economic crisis? Dismal public markets? Quarterly earnings pressures? Who cares if you have rich family backers (or equivalent) with a very long-term perspective and better things to do than churn out stock-market-requirement-meeting documentation every twelve weeks.

Germany's Boehringer is among the largest of Europe's privately-owned drug firms (Grunenthal, Servier, Pierre Fabre, Sigma Tau and Norgine are a few of the others...). Unlike most other Big Pharma (for indeed, it classifies as one; it's about Lilly-sized, or Schering-Plough pre-merger), Boehringer isn't bothering to put on the 'let's-take-R&D-through-iterative-disruptive-re-organization' hat; it's sticking with the continuity and stability headwear, which, it claims, is protecting it from the elements just fine.

Take diabetes: not many of us thought Boehringer, of Spiriva and now Pradaxa fame, was even interested. Turns out, as they revealed in October 2008, they have quite a nice full, varied pipeline, thanks. Nice enough to team up with Eli Lilly's struggling franchise to create an "innovative balanced portfolio" and double its commercial firepower (not to mention pocketing $388 million up-front).

Ok, let's not get carried away. This deal aside and despite new noises that suggest it's gearing up on the business development front, Boehringer hasn't exactly been a dealmaking pioneer; it hasn't had to be. Even the Lilly tie-up patently isn't a sign of more to come, as Boehringer's chief Andreas Barner made very clear on the call announcing the deal.

image by flickrer andyi used under a creative commons licence

No comments: