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P&G enters R&D collaboration with Hebrew University of Jerusalem

BY Allison Cerra

JERUSALEM — Procter & Gamble has inked a master collaboration agreement with the Hebrew University of Jerusalem.

The research and development deal, which was signed through Yissum, the university’s technology transfer office, "allows P&G scientists and research leaders to partner on a new level with Hebrew University faculty and researchers in areas, such as biology, chemistry, colloid and surface science to drive cutting-edge innovations that have the potential to impact a wide range of P&G’s global product categories," according to P&G’s VP corporate research and development Jeff Hamner.

P&G has operated a local office in Israel since 2001 and established its open innovation center, P&G Israel House of Innovation, in 2007.

"The collaboration agreement between P&G and the Hebrew University is a great proof of Israel’s leadership in science and technology," P&G Israel general manager Sophie Blum said. "Over the last few years, P&G has chosen to source innovation from Israel as one of the world’s leading innovation ecosystems and has created its open innovation center in Israel — IHI. The agreement will enable P&G to enjoy the breadth of research done at the Hebrew University and collaborate on creating innovative products that improve the lives of people around the world."

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ESI, Medco circle the wagons

BY Rob Eder

WHAT IT MEANS AND WHY IT’S IMPORTANT — This is starting to look a little like Custer’s Last Stand — and we all know that didn’t end well.

(THE NEWS: Pharmacy, consumer groups put full-court press on Washington to block ‘pernicious effects’ of ESI-Medco merger. For the full story, click here)

Express Scripts and Medco executives have circled the wagons and taken a defensive position, but the arrows seem to be flying from every direction. Other than the Pharmaceutical Care Management Association, it doesn’t appear that any other group wants to line up on the side of ESI-Medco on this.

ESI’s and Medco’s top executives made their case before members of Congress. According to published reports, ESI CEO George Paz swore the PBM market is much bigger than just the big three, and that there are 20 other PBMs out there that serve Fortune 500 companies. So, so what if his company would control more than 40% of the prescription drug volume in this country, 60% of the mail-order business and more than half of the specialty pharmacy business? Once you carve out Caremark’s share of the business (about 28%) and the next biggest PBM, OptumRx (about 14%), and that leaves 18 other companies out there that are fighting over the 15% or so that’s still on the table. And oh yeah, two other companies, Prime and Catalyst each have about 5% apiece. So, that leaves 16 companies to carve up the remaining 5% or so.

Medco CEO David Snow says 85% of the scripts hid company filled last year were dispensed in retail pharmacies, and that “there is nothing we plan to do to change this,” the Wall Street Journal reported.

And while NACDS’ ad played on radios throughout the Capitol, ESI and Medco ran print ads last week that appeared in important Beltway papers like The Hill and Politico. The ESI-Medco ads promised that the proposed merger would drive out wasteful costs and save money for consumers. “We protect consumers from the rising cost of prescription drugs,” the ad stated.

Yet, for all of that “protection,” you can say that five of the biggest consumer interest groups in America just aren’t feeling it — Consumers Union, Consumer Federation of America, the National Consumers League, U.S. PIRG and the National Legislative Association on Prescription Drug Prices are also against this deal. These groups are afraid of exactly what retail pharmacy groups are worried about — that the deal would force pharmacies out of business and limit patient choice by creating highly restrictive provider networks and creating other incentives to force patients to go through mail order. They are also particularly worried about the combined company’s grip on the specialty pharmacy market.

Just about every corner of retail pharmacy has come out against the deal; specialty pharmacy groups, too, and meanwhile, Walgreens continues to pound away at ESI’s mid-section with its direct appeals to benefit consultants and big payers to either drop ESI or force it to set up a special network that includes Walgreens.

The longer this goes on, the more public sentiment seems to favor a balky FTC on this one. As of Friday, 60% of DrugStoreNews.com users believed that the FTC would block the deal with more than 1,200 readers voting in an online poll.

So, ESI and Medco are going to have to circle the wagons. It certainly doesn’t appear that other than PCMA — the voice of the PBM industry — that any one else really wants to line up on the side of ESI-Medco on this. And for those two companies that may not be the end of the world. They only really need to win over FTC at this point. But the longer this goes on, the more it seems like that won’t happen.

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Retail CFOs expect 3% increase in total 2011 sales

BY DSN STAFF

CHICAGO — Amid economic uncertainty and low consumer confidence levels, retail CFOs are expecting a 3% increase in total 2011 sales, according to a recent survey by BDO USA.

While the number reflects the study’s most optimistic sales forecast since 2007, it is down from the 4.7% sales increase reported by the Commerce Department in 2010.

The vast majority of CFOs surveyed in the fifth annual BDO Retail Compass Survey of CFOs expect to see a continuation of stagnant economic conditions. Just 11% expect to see an economic turnaround in the next year, up slightly from 2010 (9%). Thirty-eight percent of CFOs said improved consumer confidence will be most important factor for economic recovery, and another 36% cited lower unemployment as the linchpin.

“Retailers may not anticipate a full recovery in the near future, but we’re not seeing gloom and doom in sales expectations,” said Doug Hart, partner in the retail and consumer product practice at BDO USA. “Despite low confidence levels, macroeconomic conditions are not weighing on the consumer’s wallet as much as expected, and CFOs anticipate moderate spending levels to continue through the holiday season.”

In other survey findings:

  • Retailers are moderately optimistic for sales in the second half of 2011. A majority (51%) expect sales to increase during this period, up from 44% in 2010. Overall, retailers project a 3.5% increase in comparable-store sales for the second half of 2011. For all of 2011, retail CFOs forecast a 2.3% increase in comparable-store sales;

  • The appetite for M&A deals is on the rise. Nearly all (96%) of retail CFOs expect such activity to increase or remain steady in the next year. Most CFOs (66%) expect M&A activity to take place primarily in the United States, followed by the Asia-Pacific region (18%) and Europe (16%). However, the CFOs in the Top 100 largest retailers who were included in the sample have greater expectations for the international market. Seventy-five percent of CFOs in the Top 100 expect Europe to see the majority of M&A activity; and

  • Although private equity deals have dominated acquisition activity, CFOs are predicting an increase in strategic buyouts this year. The CFOs are split on whether upcoming M&A activity will be primarily driven by strategic buyers (52%) or financial buyers (48%). On average, CFOs said they would expect to see an EBITDA (earnings before income and tax, depreciation and amortization) multiple of 6.5 for an acquisition in the retail and consumer product space.

The BDO survey examined the opinions of 100 CFOs at leading retailers located throughout the country. The retailers were among the largest in the country, including 10% of the top 100 based on annual sales revenue. The survey was conducted in August and September 2011.

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