Medicines

Case Details
- Prepared by Professor John T. Gourville
- Harvard Business School case, for class discussion only.
- Nonpublic data disguised and details simplified for discussion.

Founder: Clive Meanwell, CEO
Year Established: 1996
Business Model: Acquire, develop, and commercialize pharmaceuticals late in development
- Focus on drugs abandoned by other companies after clinical testing.
- Premise: Identify value in seemingly unsuccessful drugs that could be profitable for different applications.

Initial Acquisition: Rights to Angiomax, a blood-thinning drug, acquired after Biogen abandoned it.
- Biogen spent $150 million and 7 years developing Angiomax before halting.
- FDA approval received on December 17, 2000, for use in angioplasty post-clinical trials.

Pricing Comparison: Heparin costs approximately $2 per dose.
- Key Question: How much more than heparin should Angiomax be priced?

Issues with developing a product pipeline after the second acquisition for a migraine drug was halted.

Post-FDA approval, the stock price of The Medicines Company fell over 25%.
- Investor sentiment questioned the long-term core business strategy.

Prescription Drug Sales (2000): Approached $220 billion globally.
- Growth projected at 10% annually through 2010.
- U.S. Market: Represents 50% of global sales, dominated by the largest companies like Pfizer/Warner-Lambert.

Aging Population:
- 15% of the population aged 65+ accounted for 33% of prescription drug sales.
- 35 million projected to increase to 55 million by 2020.
Price Pressure: Prescription drugs accounted for 9% of medical expenses.
Growth of Generics: Expected growth from $10 billion to $60 billion as patents expire from 2000 to 2010.

Preclinical/Animal Testing: Identify drug's properties and initial safety.
- Majority of drugs eliminated at this stage.
Phase I Clinical Trials: Test safety in a small number of healthy volunteers; focus on dosage safety.
Phase II Clinical Trials: Assess efficacy in patients with the condition targeted by the drug.
Phase III Clinical Trials: Largest and most rigorous tests to confirm effectiveness and monitor adverse reactions.
FDA Submission: New Drug Application (NDA) seeks approval from FDA; approximately 50% of NDAs are approved.

Company Strategy: Acquire late-stage development drugs considered undervalued.
- Potential acquisition criteria include:
- Less than four years to market
- Costs less than $60 million to market
- At least 65% chance of market entry
- Potential to generate $100 million annually.

FDA Approved Use: To prevent blood clots during high-risk angioplasty.
Angioplasty Procedure: Involves blood flow restoration within clogged coronary arteries using a balloon.
Risks Involved: Potential for blood clot formation, leading to heart attacks.

Leading cause of death in the U.S., accounting for 1 in 5 deaths.
Sufferers include 14 million Americans, with 7 million experiencing stable angina.

Widely used anticoagulant since 1916, costing around $2/vial.
Common applications include unstable angina and surgery; approximately 3.5 million patients annually.
Heparin Limitations:
- Unpredictable anticlotting effects.
- High bleeding risk; potential for heparin-induced thrombocytopenia (HIT).

Developed based on leech saliva anticoagulation mechanism; initially shelved due to mixed results.
Acquired by Medicines Company for $2 million, followed by $28 million in development commitments.
Focused on lowering production costs via contracting with UCB Bioproducts, achieving cost reduction from $100 to $40 per dose.

Communication of Angiomax’s benefits to hospitals and cardiologists through Dr. Stephanie Plent.
- Average treatment costs and potential savings highlighted.

Target 700 of the most active angioplasty centers; emphasized experienced sales representatives with established relationships.

Addressing heparin's challenges through medical publications before Angiomax's approval.
Academic articles and presentations at trade shows to emphasize efficacy and bring credibility to Angiomax.