When Bristol-Myers Squibb, the company, closed on its $2.5 billion bid to purchase Inhibitex, a small developer of what seemed to be a promising hepatitis C drug, the Bristol-Myers Squibb Foundation made nearly $1.7 million in grants toward hepatitis B and C prevention and care in China and India. A short time later, all clinical trials of Inhibitex were scrapped. Will this affect the Bristol-Myers Squibb Foundation's commitment to hepatitis B and C?
I take no issue with Big Pharma attempting to put good karma out into the universe, and the Bristol-Myers Squibb Foundation is no exception. The foundation has earned some positive karmic cred, awarding nearly $7 million in total grants toward hepatitis B and C prevention and treatment efforts in China and India — where hepatitis B and C cases are among the highest in the world. But — and this is a big but — there is something about the $2.5 billion Inhibitex purchase and the failed clinical trials, combined with hepatitis drugs being a $20 billion a year market, that just doesn't sit right.
Paying a couple of billion dollars for control of a $20 billion market seems like small beans to a company that normally rakes in more than $20 billion in revenues. The trials failed, nine participants were sent to the hospital, and one died — though Bristol-Myers claims that an underlying heart condition was the main cause of that participant's death. But I digress. I don't have a problem with Big Pharma getting into the non-profit game. I do have a problem if they do so because they have something to gain — like profits.
The Bristol-Myers Squibb Company manufactures a hepatitis B drug that costs around $1,000 for 30 half-milligram pills. As for hepatitis C treatments, Bristol-Myers couldn't compete with Gilead/Pharmasset and likely wanted a bigger piece of the $20 billion pie, so it purchased Inhibitex to develop the hep C drug and get it to market — hence the 126% premium over Inhibitex's trading price at the time, leading to the $2.5 billion purchase. Brean Murray Carret & Company analyst Brian Skorney put it this way: "This drug is the best chance anyone has of competing with Gilead/Pharmasset."
The colossal clinical trial failure caused Bristol-Myers to take a $1.8 billion hit. Its pie-in-the-sky dreams of even bigger profits and knocking Gilead/Pharmasset off its podium are all but gone. Does this clinical trial catastrophe mean a cut in current hepatitis funding? If in the end there is no profit to be made and no market share to take over…possibly. Until that proves to be true, we'll just hope for the best.