WASHINGTON (AP) – The diabetes pill Avandia has been used by millions of patients and racked up billions in sales in more than a decade on the market. This week the Food and Drug Administration is trying to answer a seemingly simple question: Does it cause heart attacks?

It’s the type of crucial safety question that the agency was established to answer. But the task of evaluating rare side effects of the drug that emerged after the agency approved it has dragged on for years without clear answers.

As the FDA began a two-day meeting Tuesday to discuss Avandia’s future, it became clear that the agency’s own scientists are deeply divided.

On Wednesday the FDA will ask a panel of outside advisers to untangle the mess of data that has stumped its own scientists for more than three years.

The group will vote on a range of recommendations, including possible withdrawal of the drug. The FDA will make a final decision in coming months.

The FDA has been down this road before. In 2007 a similar group of experts voted to keep Avandia on the market despite an analysis of dozens of studies suggesting it increased the risk of heart attack.

The agency is not required to follow the group’s advice, though it often does.

New data on Avandia’s risks, and pressure from public safety advocates, have prompted the agency to re-examine the drug’s safety.

FDA Commissioner Margaret Hamburg opened the meeting by advising panelists to “follow the science wherever it leads and the rest will fall into place.”

But it quickly became clear that the FDA’s own staff have reached vastly different conclusions from the same science.

The FDA’s first two presenters delivered conflicting opinions of a key study of Avandia which GlaxoSmithKline has touted as proof of the drug’s safety.

The so-called RECORD study is crucial to the debate because it is the only study designed specifically to look at heart safety of Avandia versus other diabetes treatments.

FDA drug reviewer Thomas Marciniak gave a stinging review of the study, which was sponsored by GlaxoSmithKline. Marciniak complained that an unusually high number of patients dropped out of the study and that several heart attack reports were excluded from the final results.

Part of the problem with the study was that doctors tracking patients — who were paid by GlaxoSmithKline — were aware of which patients were receiving Avandia versus other diabetes drugs. Often such trials are designed so doctors don’t know who receives which pill.

Without the “blinded” structure, Marciniak said there may have been an incentive for doctors to underreport problems with the Glaxo’s drug.

“I would have rejected this study design as completely biased,” Marciniak told panelists.

Another FDA drug reviewer described the trial in even harsher terms.

“Everything we’ve seen up to this point shows you can’t trust it,” said David Graham. “And if you do trust it, you’re engaging in the willful suspension of disbelief.”

But following the criticism of RECORD, a senior level FDA official attempted to bolster support for the trial.

Ellis Unger, FDA’s deputy director for drug evaluation, said that he found the RECORD results “largely free of bias, and very reassuring.”

While some heart attacks were left out of the study, he pointed out that overall survival statistics were accurately reported and showed no disadvantage for Avandia.

Still, Unger acknowledged the difficult questions facing the FDA’s advisers.

“There is no clear picture here, otherwise you’d be back at home,” Unger told the panel. “That’s why you guys are here: to read 1,000 pages and sort out what it all means.”

Despite the reams of data presented at the meeting, the FDA’s problem remains one of too little data.

While the original studies of Avandia showed the drug helped control blood sugar levels — the key measure for diabetes drugs — they were not large enough to detect all the potential side effects, such as heart attacks.

Since diabetics are already predisposed to heart risks it is extremely difficult to tell which heart attacks are drug-related and which are simply a result of the underlying disease.

Some scientists have tried to get an accurate picture of those risks by pooling hundreds of thousands of data points from various sources.

The most recent analysis — presented Tuesday by FDA’s Graham, who wants the pill banned — estimated that as many as 100,000 heart-related problems may have been caused by Avandia.

Avandia was Glaxo’s third best-selling drug in 2006 with U.S. revenue of $2.2 billion, according to health care statistics firm IMS Health. Safety concerns swirling around the drug have pummeled sales, which have fallen 75 percent to $520 million last year.

While there are more than a dozen diabetes medications on the market, only Actos from Japan-based Takeda Pharmaceuticals works the same way as Avandia.

Critics of Avandia say there is no reason to leave the drug on the market when Actos provides the same benefits without the potential heart risks.

Both drugs work by increasing diabetics’ sensitivity to insulin, a key protein needed for digestion.

Merck & Co. (MRK) said Thursday that it would close eight research sites and eight manufacturing plants to hit cost-saving targets promised as a result of last year’s takeover of Schering-Plough.

The site closings are part of Merck’s ongoing efforts to integrate Schering’s operations following the $49.6 billion deal closing in November. They also illustrate attempts by major pharmaceutical companies to control costs as they grapple with drug patent expirations and low research productivity. Pfizer Inc. (PFE) announced layoffs and site closures as a result of its $68 billion acquisition of Wyeth last year.

Merck, of Whitehouse Station, N.J., had pledged to generate annual cost savings of $3.5 billion by 2012 as a result of the Schering deal. Merck said it would take an unspecified charge in the second quarter to cover the costs of the restructuring.

In the first phase, announced in February, Merck said it would reduce its global work force by 15% by the end of 2012–or about 15,000 employees based on Merck’s head count of 100,000 as of Dec. 31. This was expected to account for about $2.6 billion to $3 billion of the targeted cost savings.

With the next stage, announced Thursday, Merck has said it will phase out operations at eight research sites over the next two years. The sites are located in Montreal; the Netherlands; Denmark; Germany; Scotland; and Cambridge, Mass.

Merck’s current best-selling drug, the Singulair asthma treatment, was discovered by scientists in Merck’s Montreal laboratories.

Merck said in a separate announcement Thursday that the Montreal-area research site employs 180 people. Some will be offered new positions elsewhere in Merck’s research network, while others will receive severance and support services.

Merck said it would invest C$100 million in research-and-development collaborations with Quebec-based companies and academic institutions over the next five years. Manufacturing and packaging operations at another Canadian facility will continue to support the North America region.

In the future, Merck’s research-and-development operations will be in seven countries: the U.S., Belgium, England, France, Switzerland, Singapore and Japan.

In addition, Merck will phase out operations at eight manufacturing plants, which are located in Italy, Portugal, Mexico, Brazil, Argentina and Miami Lakes, Fla. Merck will also close a site in Singapore but retain other manufacturing operations there.

Merck spokesman Ron Rogers declined to specify how many total jobs would be affected by the site closures but said they were part of the previously disclosed 15% reduction target.

Merck shares rose 0.9% to $35.74 in recent trading Thursday.

“These changes are crucial to drive future growth and realize the promise of being a global health care leader for the long term,” Chairman and Chief Executive Richard T. Clark said in a press release.

Together with prior site closures, Merck’s global manufacturing network will shrink to 77 facilities from 91 at the close of the Schering merger. This includes 29 animal-health plants slated to become part of a planned joint venture with Sanofi-Aventis SA’s (SNY) Merial unit.

Merck now expects the initial phases of the merger-related restructuring to generate savings of about $2.7 billion to $3.1 billion in 2012 toward the targeted $3.5 billion overall savings. The remainder of the targeted savings are expected to come from procurement savings and other items.

Merck also boosted its estimate of pretax costs to implement the initial phases of the restructuring program, to a range of $3.5 billion to $4.3 billion. In February, Merck had estimated the first phase of the restructuring would cost $2.6 billion to $3.3 billion. The costs stem from cash severance payments to terminated employees and other items.

The company said it will explore local partnerships and site sales for the research and manufacturing locations targeted for closures.

-Peter Loftus, Dow Jones Newswires; +1-215-656-8289; peter.loftus@dowjones.com

WASHINGTON (AP) — The first stage of President Barack Obama’s health care overhaul is expected to provide coverage to about 1 million uninsured Americans by next year, according to government estimates.

That’s a small share of the uninsured, but in a shaky economy, experts say it’s notable.

Many others — more than 100 million people — are getting new benefits that improve their existing coverage.

Overall costs appear modest at this point, split among taxpayers, employers and individuals who directly benefit, although the biggest part of the health care expansion is still four years away.

For weeks, the White House has been touting the new law’s initial benefit changes, even as Obama dares Republicans to make good on their threat to repeal his signature social policy achievement. Now, a clearer picture is starting to emerge from the patchwork of press releases.

In 2014, government tax credits will help uninsured workers and their families pay premiums, and Medicaid will take in many more low-income people. Eventually, more than 30 million will gain coverage, sharply reducing the number of uninsured and putting the nation on a path to coverage for all citizens and legal immigrants.

Political salesmanship and an attempt to address some glaring health insurance problems are key elements of the strategy to explain the initial changes resulting from the law. After battling for a year to pass the legislation, Democrats desperately wanted to have tangible accomplishments to point to in high-stakes congressional elections this fall. But they also have to deflect lingering questions, often stirred up by opposition candidates, and doubts about the effectiveness of the overhaul and its costs.

“We’ve seen increasing numbers of people losing their health insurance, particularly in this recession,” said Sara Collins, vice president of the Commonwealth Fund, a New York-based health research clearinghouse. “Providing this early relief will help people who are particularly affected by the downturn.” Collins reviewed coverage estimates in federal regulations for The Associated Press.

Among the beneficiaries will be many people locked out of insurance because of medical problems.

The Raether family of suburban Milwaukee will gain from two of the changes: Elimination of lifetime coverage limits and a ban on insurers turning away children in poor health.

Four-year-old daughter Mira, who was born prematurely and has kidney problems, exhausted the lifetime limit on her parents’ policy earlier this year. Mira now has temporary Medicare coverage because of a kidney transplant, but her parents were worried about what would happen when they have to get her back on private insurance.

“A huge weight has been lifted,” said Sheryl Raether, the mother. “She has ongoing health care needs, and I was afraid she’d hit another lifetime limit.” Medicare not only covers seniors, but people of any age with permanent kidney failure.

The major early coverage benefits include:

– Allowing young adults to stay on their parents’ coverage until they turn 26. In 2011, an estimated 650,000 young people who would otherwise have been uninsured will gain coverage. Another 600,000 will benefit by switching from individually purchased policies to less costly, more comprehensive employer plans. The number with coverage will grow in 2012 and 2013.

–A health plan for uninsured people with pre-existing health conditions. From 200,000 to 400,000 could benefit in 2011, according to the Congressional Budget Office. The government may limit enrollment if $5 billion allocated through 2013 starts to run out, as projected. Beginning in 2014, insurers will be required to accept all applicants, regardless of medical history.

–Ending lifetime limits on coverage, and restricting annual limits. As many as 20,400 people a year hit lifetime limits, as did Mira Raether. Many more — an estimated 102 million — are in plans that impose such limits and will no longer be able to do so.

– Requiring insurers to cover children with medical problems. An estimated 51,000 uninsured children are expected to gain coverage. Another 90,000 children who have been excluded for coverage for a particular condition — asthma, for example — will also benefit.

Many Americans covered through employers won’t see the changes until Jan. 1, the start of their next health plan year. That means 2011 will be the first year that the early benefits are fully in place.

What that entails for costs is a matter of intense speculation. A recent survey of employers by Mercer, a major benefits consultant, found that 42 percent expect an increase of 2 percent or less, while one-fourth expect an increase of 3 percent or more. Government estimates are generally lower.

Beth Umland, research director for Mercer, said employers were expecting health cost increases averaging about 6 percent a year before the law. “Now they are looking at an additional 2 or 3 points, so that 6 percent can become a 9 percent, and that seems to be above their comfort level,” she said.

Dave Osterndorf, chief health actuary for the Towers Watson consulting firm, said large employers will respond by passing on costs to their workers. “These first few changes, in and of themselves, will not dramatically change the way employers look at the provision of health benefits,” he said. “Employers will feel part of the impact, and employees will feel part.”

Some coverage gains may take a while to add up. For example, Blue Cross Blue Shield Kansas City reports brisk sales to small businesses by advertising Obama’s new tax credit for those who offer coverage. CEO Tom Bowser said more than 60 of the 227 small firms signed up so far did not previously offer health benefits.

“Small groups are one of the toughest markets we have,” said Bowser. “Because of the economy, more and more were dropping coverage entirely, and we’ve able to reverse that.”

(Bloomberg) — Covidien Plc, the medical-equipment company spun off from Tyco International Ltd., agreed to buy ev3 Inc. for $2.6 billion to add products for heart disease.
Covidien will pay $22.50 a share in cash for Plymouth, Minnesota-based ev3, the companies said in a statement today. Dublin-based Covidien is paying 19 percent more than the May 28 closing price for ev3’s stock.
The acquisition will add ev3’s stents, angioplasty balloons, plaque removal systems, and catheters to treat disease of the arteries to Covidien’s product range, which specializes in staples, suture needles, wound care, scalpels and products used in surgery. The deal will give Covidien a bigger stake in the vascular surgery market, said Covidien Chief Executive Officer Richard Meelia in a conference call.
“Ev3 significantly expands our presence in the $3 billion peripheral vascular market and gives us a strong entry point into the $1 billion neurovascular market,” said Meelia. “As there is virtually no product overlap we foresee a very straight forward integration plan.”
Covidien fell 72 cents, or 1.7 percent, to $41.67 at 11:01 a.m. in New York Stock Exchange composite trading. Ev3 rose $3.31, or 17 percent, to $22.23. Ev3’s shares had risen 42 percent this year before today.
Meelia has been making acquisitions and divestitures since Covidien separated from Tyco in 2007 as he tries to reshape the company. In May, Covidien said it would sell its specialty chemicals business for $280 million after paying $485 million last year for Vnus Medical Technologies.
Acquisition Talks
Covidien had been following ev3 for more than a year and acquisition talks began several months ago, Meelia said. The bidding was competitive, he said.
“We will continue to look at deals in other areas that have the right kind of returns for us and add value,” Meelia said in a conference call.
The transaction is expected to be completed by July 31, the companies said. Ev3’s directors and officers plan to tender their shares, according to the statement. Warburg Pincus Equity Partners LP, which owns 24 percent of ev3, supports the deal, the companies said.
The purchase will reduce Covidien’s earnings per share this year and next, according to the statement.
Covidien said it has no plans to move any of ev3’s operations out of Minnesota. Ev3 had 1,350 employees at the end of 2009.
–With assistance from Phil Serafino in Paris. Editors: Bruce Rule, Lisa Rapaport
To contact the reporter on this story: Shannon Pettypiece in New York at spettypiece@bloomberg.net.
To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net.

Andrew Clark in New York – largest drugs company, Pfizer, is to dispose of eight factories and cut 6,000 jobs, including hundreds of positions in Britain and Ireland, as it streamlines its manufacturing operations following a $68bn (£47bn) merger last year with rival pharmaceuticals firm Wyeth.

Pfizer, which makes the erectile disfunction treatment Viagra and the cholesterol-lowering drug Lipitor, said it needed to increase its manufacturing efficiency and eliminate excess capacity to adjust to tough competition in the prescription medicines industry.

The plants include three in the US, two in Puerto Rico and three Irish sites – in Dublin, Loughbeg and Shanbally. Pfizer said it hoped it could sell some of the facilities, rather than shut them.

Furthermore, six factories are to be reduced in size, including a plant in Havant, Hampshire, which packages and distributes biotechnology products. A Pfizer spokesman said 785 jobs were likely to be lost in Ireland, and 90 jobs were set to go in Havant.

Pfizer’s president of global manufacturing, Nat Ricciardi, described the decision as “very difficult”, but said: “The restructuring of our global plant network is critical to our efforts to remain competitive so that we can continue to meet patient needs and expand the access and affordability of our medicines.”

Pfizer’s tie-up with Wyeth last year was part of a long-term effort by chief executive Jeffrey Kindler to shift the New York-based multinational away from its reliance on Lipitor, a treatment for high cholesterol that is one of the highest selling medicines in the world. Lipitor accounted for a quarter of Pfizer’s $48bn revenue prior to the Wyeth deal but the drug is due to lose its patent protection next year, allowing cheaper copycat products into pharmacies.

The deal with Wyeth brought expertise in several therapeutic areas, including research into Alzheimer’s disease and a speciality in the development of vaccines. But in total, some 20,000 jobs are expected to be lost as part of the integration of the two companies.

In the search for broader profit margins, the global drugs industry has seen a spate of mergers over the past few years. Merck and Schering-Plough came together last year in a deal valued at $41bn.

Pfizer’s decision to cut back in Ireland is likely to be greeted with gloom. Ciaran Lynch, a Labour member of parliament for the Cork area where two of the plants are located, said: “Cork harbour has often been represented as a pharmaceutical centre of excellence, and rightly so. However, when one of the world’s leading producers and a flagship company in the area seeks to reduce its operations so dramatically, it is ominous indeed.”

WellPoint (NYSE:WLP) is one of today’s worst performing stocks, down 2.2% to $50.19. The S&P is currently trading 1% lower to 1,116 and the Dow Jones Industrial Average is trading 0.9% lower to 10,429.
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CINCINNATI (AP) — Consumer products giant Procter & Gamble Co. reported Thursday that its profit fell 1 percent in its third quarter, hurt by charges including from the U.S. health care overhaul. But sales jumped 7 percent as households around the globe responded to new products, price cuts and stepped-up advertising.

The maker of Tide detergent and Pampers diapers reported net income of $2.59 billion, or 83 cents per share, for the quarter. That compares with $2.61 billion, or 84 cents a year ago, while sales rose to $19.2 billion.

While that was better than Wall Street projections of 82 cents per share, analysts surveyed by Thomson Reuters had expected higher revenue of $19.5 billion — promotions and sales of lower-priced products contributed to keeping P&G revenue below that expectation.

P&G shares fell $1.85, or nearly 3 percent, to $61.32 in morning trading. They have traded in a 52-week range of $48.25 to $64.58.

P&G said its core earnings per share, excluding tax, legal and restructuring charges, were 89 cents, up 10 percent. The company took a 5-cents-a-share charge for the recently passed U.S. health care reform.

P&G’s chief executive said the results topped the company’s core earnings goals, as P&G stepped up marketing, cut some prices, and rolled out new products across price tiers. P&G said U.S. sales were strong for the “basic” versions of Charmin toilet paper and Bounty paper towels and in western Europe for a lower-tier Pampers called Simply Dry.

P&G is trying to combine brand strength with lower-priced alternatives to draw shoppers back from store brands, while also grabbing their attention with upgraded products.

“We are doing what we have to do price-wise to stay price-competitive,” Bob McDonald, chairman and CEO, told investors on a conference call. But he said stepped-up innovation has not only produced a low-priced version of Tide in India that’s off to a strong start but also the Gillette ProGlide shaver, hitting U.S. store shelves in June, that will cost about 10 percent more than than the top-selling Gillette Fusion.

“So we are just doing what we have to do to continue to win the consumer value equation, and we are attempting to do that through the strongest innovation program that we’ve had in my 30-year career,” McDonald said.

P&G, which introduced new versions of Pampers, Crest toothpaste and Olay skin cream during the quarter, said broad-based growth included double-digit sales volume increases in emerging markets.

Edward Jones analyst Jack Russo pointed to the sales upswing in calling it a good quarter for P&G.

“I’m a little bit old-fashioned; I like it when companies are focused on growing sales,” Russo said. “It’s hard to move the needle when you’re this size.”

The sales were a turnaround from last year’s third quarter, when they slid 8 percent, to $18.42 billion, from the 2008 quarter as recession-pressured households tightened spending.

The company also lifted the low end of its guidance range for diluted net earnings per share for the full year by 4 cents, to a range of $4.06 to $4.12. Analysts expect $4.14.

P&G says it expects sales to rise 6 percent to 7 percent in the current fourth quarter, with earnings per share in a range of 68 cents to 74 cents. Analysts are expecting 76 cents.

By DUFF WILSON – AstraZeneca has completed a deal to pay $520 million to settle federal investigations into marketing practices for its blockbuster schizophrenia drug, Seroquel, the Attorney General, Eric Holder, said at a news conference Tuesday afternoon.
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“AstraZeneca paid kickbacks to doctors as part of an illegal scheme to market drugs for unapproved uses,” Kathleen Sebelius, secretary of health and human services, said at the event in Washington. She said the company promoted drugs for unapproved uses by children, the elderly, veterans and prisoners.

Glenn Engelmann, AstraZeneca’s U.S. general counsel, released a statement saying the company denies the allegations but settled the investigation with the payment.

“It is in the best interest of AstraZeneca to resolve these matters and to move forward with our business of discovering and developing important, life-changing medicines — while avoiding the delay, uncertainty, and expense of protracted litigation,” Mr. Engelmann said.

AstraZeneca becomes the fourth pharmaceutical giant in the last three years to pay to settle federal investigations into illegal marketing of antipsychotic drugs, a lucrative category of medications that have quickly risen to the top of United States sales charts.

AstraZeneca agreed to sign a corporate integrity agreement with the federal government over its marketing of Seroquel for unapproved uses, but will not face criminal charges, company and federal officials said.

The company, based in London, has been accused of misleading doctors and patients by playing up favorable research and not adequately disclosing studies that show Seroquel increases the risk of diabetes.

AstraZeneca still faces more than 25,000 civil lawsuits filed on behalf of patients contending that the company did not disclose the drug’s risks.

The deal would make formal an agreement in principle the company reached last October with the United States attorney in Philadelphia. At that time, AstraZeneca said in a filing with the Securities and Exchange Commission that it had set aside $520 million in respect to the investigation.

The company was facing two federal investigations and two whistle-blower lawsuits involving Seroquel sales and marketing practices. One of the investigations related to physicians who had participated in clinical trials. The other inquiry involved sales staff.

As a result of aggressive marketing, Seroquel has been increasingly used for children and elderly people for indications not approved by the Food and Drug Administration. The drugs have caused rapid weight gain in children, and side effects including deaths have prompted warnings against giving the drugs to elderly patients for dementia.

Although doctors are permitted to prescribe any approved drug for off-label uses, it is illegal for drug makers to promote medications for any purpose not specifically approved by the F.D.A.

AstraZeneca, which reported $4.9 billion in Seroquel sales in 2009, plans to report its first-quarter financial results on Thursday.

The company will join a series of American pharmaceutical companies that have paid to settle federal investigations into illegal marketing.

In the largest such case, Pfizer paid $2.3 billion last September, including $1.3 billion in the biggest criminal fine of any type in United States history, for off-label marketing of the painkiller Bextra and other drugs. Bextra was withdrawn from the market in 2005. The Pfizer fine included $301 million for off-label marketing of its antipsychotic drug Geodon.

Eli Lilly paid $1.4 billion in January 2009 to settle investigations into illegal marketing of its antipsychotic drug Zyprexa. Lilly’s settlement included a $515 million criminal fine, which until the Pfizer case was the largest such fine ever imposed on a corporation.

In 2007, Bristol-Myers Squibb and a subsidiary paid $515 million to settle federal and state investigations into marketing of its antipsychotic drug Abilify.

The newer generation of antipsychotics has surpassed cholesterol-lowering drugs to become the nation’s top-selling category of medications, accounting for $14.6 billion of the nation’s $300 billion in drug spending last year, according to the research firm IMS Health.

Seroquel, a pill usually taken once or twice a day that sells for more than $4 each, was the fifth-best-selling drug in the United States last year, IMS said. As with other antipsychotics, much of that spending is by the federal government, through the Medicaid and Medicare programs.

AstraZeneca, with American headquarters in Wilmington, Del., has previously denied wrongdoing in the Seroquel investigations. It has paid $656 million to defend itself in court against more than 25,000 civil lawsuits, the company said in an S.E.C. filing in January. Those cases are only recently beginning to reach trial.

The company has argued that people who were found to have diabetes after taking Seroquel already had diabetes or had existing conditions that made them at high risk of the disease.

According to company e-mail messages unsealed in civil lawsuits, AstraZeneca “buried” — a manager’s term — a 1997 study that showed Seroquel users gained 11 pounds a year, while publicizing a study that asserted users lost weight. Company e-mail messages also refer to doing a “great smoke-and-mirrors job” on unfavorable studies.

Gardiner Harris contributed reporting.

HONG KONG – Charles River Laboratories plans to buy Shanghai-based pharmaceutical outsourcing provider WuXi PharmaTech in a $1.6 billion cash-and-stock deal, the companies announced Monday.

Once complete, the deal could mark one of the largest inbound M&A transactions in China.

Charles River will be able to offer services from research at the molecular level to testing products on humans, according to a statement. Major drugmakers turn to Charles River, headquartered in Massachusetts, to develop and test new products, often using animals. Outsourcing tasks to a Chinese contractor is one way to cut costs. (For more on outsourcing research to China, see “Farmed-Out Pharma.”)

“The combination of WuXi and Charles River brings together two companies with a shared mission: to support and accelerate our clients’ drug development efforts,” Charles River CEO James Foster said in the statement.

Under the terms of the agreement, which the companies expect shareholders will approve by the fourth quarter, Charles River will pay a total of $21.25 for each American depositary share of WuXi, of which $10 will be in Charles River common stock and $11.25 will be in cash. The statement says Charles River is drawing from balance sheet cash it has on hand, and that it has received financing commitments for a $1.25 billion credit facility from JPMorgan Chase ( JPM – news – people ) and Bank of America ( BAC – news – people ) Merrill Lynch.

Foster will be CEO of the new company, while WuXi chief Ge Li will become corporate executive vice president and president of a newly formed arm of the company called gobal discovery and China services. Li and two other WuXi executives will also join Charles River’s board.

Charles River has completed 30 acquisitions in the last decade. Foster told Forbes in a 2008 interview, as the company was completing a 50,000-square-foot research facility in Shanghai, that the company’s takeovers are carefully planned.

“We’ve been very aggressive, but very targeted, very focused, very strategic in our acquisitions,” he said. ” We’ve never bought a company just to be bigger. We’ve bought a company to make us a better provider to our clients and to enhance our portfolio.” (See the complete interview.)

JP Morgan advised Charles River, and Credit Suisse ( CS – news – people ) advised WuXi.

NY Times – A federal judge on Monday struck down patents on two genes linked to breast and ovarian cancer. The decision, if upheld, could throw into doubt the patents covering thousands of human genes and reshape the law of intellectual property
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Ben Sklar for The New York Times
Genae Girard, one plaintiff, applauded the decision as “a big turning point for all women in the country that may have breast cancer that runs in their family.”
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Times Topic: DNA
United States District Court Judge Robert W. Sweet issued the 152-page decision, which invalidated seven patents related to the genes BRCA1 and BRCA2, whose mutations have been associated with cancer.

The American Civil Liberties Union and the Public Patent Foundation at the Benjamin N. Cardozo School of Law in New York joined with individual patients and medical organizations to challenge the patents last May: they argued that genes, products of nature, fall outside of the realm of things that can be patented. The patents, they argued, stifle research and innovation and limit testing options.

Myriad Genetics, the company that holds the patents with the University of Utah Research Foundation, asked the court to dismiss the case, claiming that the work of isolating the DNA from the body transforms it and makes it patentable. Such patents, it said, have been granted for decades; the Supreme Court upheld patents on living organisms in 1980. In fact, many in the patent field had predicted the courts would throw out the suit.

Judge Sweet, however, ruled that the patents were “improperly granted” because they involved a “law of nature.” He said that many critics of gene patents considered the idea that isolating a gene made it patentable “a ‘lawyer’s trick’ that circumvents the prohibition on the direct patenting of the DNA in our bodies but which, in practice, reaches the same result.”

The case could have far-reaching implications. About 20 percent of human genes have been patented, and multibillion-dollar industries have been built atop the intellectual property rights that the patents grant.

“If a decision like this were upheld, it would have a pretty significant impact on the future of medicine,” said Kenneth Chahine, a visiting law professor at the University of Utah who filed an amicus brief on the side of Myriad. He said that medicine was becoming more personalized, with genetic tests used not only to diagnose diseases but to determine which medicine was best for which patient.

Mr. Chahine, who once ran a biotechnology company, said the decision could also make it harder for young companies to raise money from investors. “The industry is going to have to get more creative about how to retain exclusivity and attract capital in the face of potentially weaker patent protection,” he said.

Edward Reines, a patent lawyer who represents biotechnology firms but was not involved in the case, said loss of patent protection could diminish the incentives for genetic research.

“The genetic tools to solve the major health problems of our time have not been found yet,” said Mr. Reines, who is with the Silicon Valley office of the firm Weil, Gotshal & Manges. “These are the discoveries we want to motivate by providing incentives to all the researchers out there.”

The lawsuit also challenged the patents on First Amendment grounds, but Judge Sweet ruled that because the issues in the case could be decided within patent law, the constitutional question need not be decided.

The decision is likely to be appealed. Representatives of Myriad did not return calls seeking comment. But this month, the company’s chief executive, Peter Meldrum, told investors that “regardless of the outcome of this particular lawsuit, it will not have a material adverse effect on the company,” or its future revenues, according to the Pharmacogenomics Reporter, “or on the future revenues of our products.”

Myriad sells a test costing more than $3,000 that looks for mutations in the two genes to determine if a woman is at a high risk of getting breast cancer and ovarian cancer. Plaintiffs in the case had said Myriad’s monopoly on the test, conferred by the gene patents, kept prices high and prevented women from getting a confirmatory test from another laboratory.

Janice Oh, a spokeswoman for the United States attorney’s office in Manhattan, which represented the Patent and Trademark Office in the case, had no comment.

One of the individual plaintiffs in the suit, Genae Girard, who has breast cancer and has been tested for ovarian cancer, applauded the decision as “a big turning point for all women in the country that may have breast cancer that runs in their family.” Chris Hansen, an A.C.L.U. staff lawyer, said: “The human genome, like the structure of blood, air or water, was discovered, not created. There is an endless amount of information on genes that begs for further discovery, and gene patents put up unacceptable barriers to the free exchange of ideas.”

Bryan Roberts, a prominent Silicon Valley venture capitalist, said the decision could push more work aimed at discovering genes and diagnostic tests to universities. “The government is going to become the funder for content discovery because it’s going to be very hard to justify it outside of academia.”

John Ball, executive vice president of the American Society for Clinical Pathology, one of the plaintiffs in the case, called the decision “a big deal.”

“It’s good for patients and patient care, it’s good for science and scientists,” he said. “It really opens up things.”