Still lots of talk but not much action so far...
Lilly chief sees lack of new drugs boosting M&A
PARIS, June 6 (Reuters) - A lack of new experimental drugs and patent expiries will further drive merger and acquisitions in the pharmaceuticals sector, the chief executive of U.S. drugmaker Eli Lilly & Co. (LLY.N: Quote, Profile, Research) said on Tuesday.
But he was cautious on the benefits of big M&A deals.
"Consolidation will probably continue for the same bad reasons as before," Sidney Taurel said, citing weak pipelines and drugs losing their patent protection, either because patents expire or because they are challenged by generic drugmakers.
"We do not think that big M&A creates value," he told reporters during a Paris visit.
Big takeovers, Taurel said, offered short-term solutions in joining drug pipelines and yielding cost savings, but failed to tackle a more fundamental problem in the industry -- its struggle to discover new drugs.
The sector's lower research and development productivity has limited its average sales growth to about 5 to 6 percent, compared with double-digit growth in earlier years. Drugmakers take 10 to 15 years to develop a new treatment, spending $800 million to $1 billion on a single drug.
"Clearly the pharmaceutical industry faces a tough environment, it's the most challenging period since the start of my career," said Taurel, who is also Lilly's chairman.
Eli Lilly, best known for its anti-depressant Prozac, is the world's 11th largest drugmaker and third largest biotech company and will see its next patent expire in 2011. It has about 140 partnerships to develop new drugs.
Taurel saw "very large market potential" for osteoporosis drug Evista as a possible breast cancer treatment, but was not yet sure if the company would submit it for European marketing approval due to an earlier patent expiry there.
"It will most likely be limited to the U.S.," he told Reuters after the presentation.
Clinical trial results in April showed that Evista, like generic tamoxifen, about halved the risk of breast cancer in high-risk women past menopause, but that it caused fewer dangerous side effects than tamoxifen.
Indianapolis-based Eli Lilly stuck to its forecast of 7 to 9 percent sales growth this year from $14.65 billion in 2005 and earnings per share growth of 8 to 11 percent from $1.81.
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