Sanofi Aventis

Black Box warnings are the most severe type of warning that the FDA can require for a pharmaceutical. They can indicate a wide range of potential risks, with varying degrees of probability, but one thing is for sure. The the term Black Box is downright scary and it frequently highlights a serious, though perhaps very improbable, health risk such as, well, death.

Still, to be fair, it could be simply telling me about a suicide risk that has 1/100th the probability of me similarly dying when I get behind the wheel of a car. And given the dark name, I'm far less inclined to risk the Black Box warning than to drive to the corner store. So perhaps this is a problem, that the term Black Box is too scary even if it does warn of some pretty unfortunate risks.

It appears the FDA has recognized this since they are beginning to phase-out the term with some better word choice. Is it fair if we call this a re-branding of the Black Box?

On the FDA conference call with reporters this afternoon to discuss the new warnings, two agency officials told the news media to use the phrase "Boxed warning" instead of "Black box warning." Why? As one of them put it, "Black box carries the implication, 'Don't you dare use this'." The other official added, "We don't want to scare people off (from trying to quit smoking). We just want them to be carefully monitored."

The WSJ deal blog has discussed circulating rumors in regards to Sanofi Aventis (SA) making potential acquisitions, and including Bristol Meyes (BMY), Allergan (AGN), and Amgen (AMGN) in the mix of contenders. In regards to Allergan and Amgen in particular, now might be one of the cheaper times to pick them up, as per BNET Pharma, given their current near-term difficulties. Allergan is facing reduced demand for its vanity-based products such as Botox while Amgen is awaiting a hopeful approval for cancer Denosumab (October 19th, 2009) as a lone near-term savior for its maturing drug portfolio. For Sanofi it is a bit tricky, if indeed AMGN is on the radar, since if they wait for the Denosumab results, they could see AMGN shares become much more expensive. But of course if they buy ahead, then the results could be negative. This is the dilemma facing all AMGN investors right now.

But even if Denosumab doesn't pan out, I actually believe fears regarding AMGN's maturing portfolio are overdone. For biologics (biotech drugs), the generics threat will be no where near what it is for standard pharmaceuticals. It's just too hard to replicate biologics, thus requires sizeable up-front investment and manufacturing know-how, as was the result of the FTC's excellent report on the biotech industry. Highlights of this report below. (FOB's are the generic producers, pioneers are the originals like AMGN)