Bayer leans on partnering for new growth
Unlike many of its big pharma brethren, Bayer is a “pure play life sciences company,” said Bayer’s Head of Innovation Kemal Malik. “We develop molecules that affect molecular processes in humans, animals and plants. We are the only company that covers all of those areas.”
Bayer has divisions in plenty of areas outside pharmaceuticals, including consumer health, animal health and crop science. Yet, it relies on partnerships in all areas of its business to drive growth.
"We are totally agnostic about where we source innovation from," he said. "Our focus is on where the science is and where there is an unmet medical need."
Partner of choice
Partnering is often less messy and complicated than outright acquisition. The reality for large companies like Bayer is that it's simply too costly to not be involved in strategic partnerships and research alliances.
In March, Bayer set up a life sciences center in Cambridge, MA, aiming to deepen the German company’s relationships with the biotech-heavy region. The new East Coast Innovation Center is Bayer’s sixth such hub, with others strung across the globe in Berlin, Beijing, Osaka, Singapore and San Francisco.
"We want to be a partner of choice in the industry—one that collaborates with not only scientists from the great research hubs in the U.S., but also clinicians, patient advocates and other key players essential to bringing novel medicines to market," said Habib Dable, the newly minted head of Bayer’s U.S. pharmaceutical division, when the center opened.
The hubs provide infrastructure for scientists and biotechs at the early discovery and start-up phases—a point where many projects stall due to lack of financing and insufficient space for expansion. The industry has long had trouble bridging the gap between academia and development, resulting in what many refer to as the ‘Valley of Death’ for biotech research.
Bayer’s new hub in Cambridge should help it further build out existing relationships the company has in place with The Broad Institute of MIT and Harvard, as well as CRISPR Therapeutics.
Many other big pharmas are also trying to find ways to better connect with its academic counterparts, Johnson & Johnson, Pfizer and AstraZeneca all have strong programs in place. Like its contemporaries, Bayer emphasizes its open-door attitude to biotechs and researchers looking for early-stage support.
"We don’t charge them, nor do we require that they license the IP to us, though the door is open," Malik said, emphasizing the freedom researchers are given when joining the centers.
"Our U.S. centers are important, because the U.S. is the single biggest pharma market in the world. Our goal is to expand our presence there, through innovation hubs and partnering," he added.
But Bayer isn’t focused on partnering with just nascent companies and emerging science.
"We have partnerships with biotech companies, universities and even with the largest diversified pharmaceutical company in the world—J&J," Malik said.
Bayer’s cardiovascular heritage
Bayer, long known for its cardiovascular drugs, has partnered with Johnson & Johnson to market its top-earning Xarelto (rivaroxaban), for example. Increasing revenues from the blood thinner have been a major growth driver for Bayer in recent years.
Xarelto was the first approved Factor Xa inhibitor and is one of the top oral anticoagulants on the market, despite looming threats from generic drugmakers and competition from Boehringer Ingelheim’s direct thrombin inhibitor Pradaxa (dabigatran).
Sales of Xarelto have been steadily increasing since it was launched in 2011, and Bayer recorded 28% growth in year-over-year sales last quarter. Through the first six months of 2016, Xarelto sales are on track to significantly outpace 2015. J&J’s subsidiary Janssen markets the blood thinner in the U.S., but most of the revenues are generated outside the U.S.
Bayer has invested heavily in what Malik calls a "very expensive life-cycle management program." Six Phase 3 studies are currently underway studying Xarelto for expanded indications, including for reduction of cardiovascular risk.
EP Vantage predicts this investment will pay off, forecasting Xarelto to become the highest-grossing drug in Europe by 2022.
A number of generic drugmakers have filed abbreviated new drug applications with the Food and Drug Administration to market generic copies of Xarelto. Janssen and Bayer have filed suit against the companies, which include Aurobindo Pharma, Micro Labs and Mylan Pharma.
Playing catch-up in cancer therapy development
Bayer’s strength (for now) in cardiovascular disease has helped fuel its efforts to become a player in oncology after years of watching from the sidelines.
"We are focused on areas of high unmet medical need where there is an innovation opportunity, including cancer. We have developed our oncology portfolio aggressively in the last decade," Malik said.
Bayer has rapidly beefed up its oncology pipeline through in-house R&D, as well as partnerships with biotechs, including CA-based Oncomed and Compugen in Israel. On the academic side, Bayer has partnered with the American Association for Cancer Research, the German Cancer Institute and the Broad Institute of MIT and Harvard.
As a result of its efforts, Bayer which had only one cancer drug in 2006, now has 17 cancer therapies in its pipeline, including two late-stage candidates for prostate cancer drug and an antibody/drug conjugate for mesothelioma.
Bayer currently markets the aging cancer drug Nexavar, which generated €892 million in sales last year. It also has the more recently approved bowel cancer med Stivarga (regorafenib) and Xofigo (Radium Ra 223 dichloride), a treatment for prostate cancer which Bayer acquired when it bought Algeta ASA.