Peltz’s Trian reportedly builds a stake in Unilever

 Trian Partners, Nelson Peltz’s activist hedge fund, has built a stake in Unilever, ratcheting up the pressure on the consumer goods maker, the Financial Times reported on Sunday, citing people with direct knowledge of the matter.

The $8.5 billion New York-based hedge fund has taken a position in the British group’s shares, the FT report said, adding that the people with knowledge of the stake building had not provided provide details on its size.

Trian and Unilever both declined to comment.

The strategy of Unilever — maker of brands such as Dove soap and Hellmann’s mayonnaise — has come under the investor microscope after the group this month effectively abandoned its 50 billion pound ($68 billion) pursuit of GlaxoSmithKline’s consumer health-care business.

Some analysts have said the proposed mega-deal, which would have been one of the largest ever on the London market, had been unexpected and raised questions about Unilever’s plan under Chief Executive Alan Jope for a more gradual shift away from lower-margin goods to health, beauty and hygiene products.

https://www.cnbc.com/2022/01/23/nelson-peltzs-trian-reportedly-builds-a-stake-in-unilever.html

China’s success taming virus could make exit strategy harder

 The sweeping “zero-tolerance” strategy that China has used to keep COVID-19 case numbers low and its economy functioning may, paradoxically, make it harder for the country to exit the pandemic.

Most experts say the coronavirus around the world isn’t going away and believe it could eventually become, like the flu, a persistent but generally manageable threat if enough people gain immunity through infections and vaccines.

In countries like Britain and the U.S., which have had comparatively light restrictions against the omicron wave, there is a glimmer of hope that the process might be underway. Cases skyrocketed in recent weeks but have since dropped in Britain and may have leveled off in the U.S., perhaps because the extremely contagious variant is running out of people to infect. Some places already are talking about easing COVID-19 precautions.

China, which will be in the international spotlight when the Beijing Winter Olympics begin in two weeks, is not seeing the same dynamic.

A woman wearing a mask to protect from the coronavirus walks past a globe shaped wire sculpture in Beijing. (AP Photo/Ng Han Guan)

The communist government’s practice throughout the pandemic of trying to find and isolate every infected person has largely protected hospitals from becoming overwhelmed and staved off the deaths that have engulfed most of the world.

But the uncompromising approach also means most people in China have never been exposed to the virus. At the same time, the effectiveness of China’s most widely used vaccines has been called into question. New studies suggest they offer significantly less protection against infection from omicron, even after three doses, than people get after booster shots of the leading Western vaccines.

Together, those factors could complicate China’s effort to get past the pandemic. Experts say if the country of 1.4 billion people were to relax restrictions, it could face a surge similar to what Singapore or Australia experienced, despite a highly vaccinated population.

“China’s susceptibility to outbreaks is likely to be more because most people have not been exposed to the virus due to the stringent measures that were put in place, thus lacking hybrid immunity, which is supposed to prove better protection than vaccination alone,” said Dr. Vineeta Bal, an immunologist at the Indian Institute of Science Education and Research.

A sweeper wearing a mask to protect from the coronavirus walks past displays promoting winter sports in Beijing. (AP Photo/Ng Han Guan)

“It is risky for China to reopen right now because omicron is spreading globally, and even if the variant doesn’t cause major illness, it’ll spread like wildfire,” she added.

Dali Yang, a professor who studies Chinese politics at the University of Chicago, said, “It’s a big challenge, for leaders, especially their rhetoric on saving lives. How do you justify opening up and then having tens of thousands of people dying in the process?”

Chinese President Xi Jinping has cited China’s approach as a “major strategic success” and evidence of the “significant advantages” of its political system over Western liberal democracies.

The world’s most populous nation was the only major economy to grow in 2020, and it accounted for a fraction of global deaths and infections.

As part of the country’s tough-minded strategy for keeping the virus at bay, residents in Chinese cities must display their infection status on a government-monitored app to enter supermarkets, offices or even the capital.

But weeks ahead of the Olympics, omicron is testing this approach with outbreaks in the southern province of Guangdong, as well as Beijing.

Organizers of the Olympics announced they will not sell tickets locally and will allow only select spectators in. Foreign fans are not allowed.

Authorities have also asked people to not visit their hometowns around the Lunar New Year at the start of February, a move that will dampen spending during China’s most important family holiday. And the major city of Xi’an in the west and parts of Ningbo, a busy port south of Shanghai, are under lockdown.

With the Communist Party gearing up for a major meeting this fall, at which Xi is expected to be appointed to a third term as party leader, China is unlikely to relax its policies in a major way any time soon.

“If the numbers from COVID start to skyrocket to big levels, then this will reflect badly on his leadership,” said Willy Lam, an expert on Chinese political leadership at the Chinese University of Hong Kong.

Residents wearing masks to protect from the coronavirus walks near decorative lights on a tree in Beijing. (AP Photo/Ng Han Guan)

China relies heavily on its own Sinovac and Sinopharm vaccines, along with several others made domestically. It has not approved the Pfizer shot, even though a Chinese company bought distribution rights in 2020.

Instead, the focus is on developing China’s own mRNA vaccines, like the Pfizer and Moderna formulas. One such vaccine is in late trials.

Another option for China may be to track how the virus is evolving and put off opening its borders until it becomes even milder. But it’s anyone guess when or if that might happen.

“What will the next variant be? How serious will it be? You can’t tell,” Bal said.

https://apnews.com/article/winter-olympics-coronavirus-pandemic-science-sports-health-261ffc8ba574dbf1cf0e456606985143

With Roe in doubt, states act on abortion limits, expansions

 It didn’t take long for abortion to re-emerge as a flashpoint in state legislatures.

Less than a month into the 2022 legislative sessions, battles over the future of abortion already are setting up around the U.S. Republican lawmakers are proposing new restrictions modeled after laws in Texas and Mississippi that present a direct challenge to the landmark Roe v. Wade decision, while some Democratic-led states are working to preserve or expand access.

The activity in state legislatures was anticipated after the U.S. Supreme Court, with its conservative majority, signaled it was ready to make seismic changes to the nationwide right to abortion that has stood for nearly half a century. If the court overturns Roe v. Wade entirely, the decision on whether to keep abortion legal would fall to the states.

More than 20 states already have laws on the books to ban or dramatically restrict abortion if Roe v. Wade is overturned. As legislative sessions begin, several are considering new bans.

“This could be a really, really dramatic year in terms of people’s ability to access abortion care and to decide if, when and how they become a parent,” said Kristin Ford, vice-president of communications and outreach at NARAL Pro-Choice America, a pro-abortion rights group. “At this time next year, we could be looking at a scenario in which more than half of the country has lost access to abortion ... It will have consequences for everyone.”

Against that backdrop, California lawmakers will consider plans this year to become a “sanctuary” for those seeking reproductive care. That could include paying for travel, lodging and procedures for people coming from other states.

“We are confronting an all-out assault on reproductive freedom in America. There are powerful forces working tirelessly to drag us backwards. But here in California, we are not going back,” said Assemblywoman Cottie Petrie-Norris, as state lawmakers proposed eight bills on Thursday. “We will continue to fight for reproductive freedom.”

Susan Arnall, director of outreach for the anti-abortion Right to Life League, said other Democratic-led states are likely to follow California’s lead. Her organization is fighting the legislation introduced in the nation’s most populous state.

Even so, she said abortion opponents have gained the upper hand throughout the U.S.

“Life is winning ... and the abortion industry is losing,” Arnall said.

Other Democratic-leaning states are not yet copying California, though New Jersey recently became the 15th state to protect the right to abortion in state law, according to the Guttmacher Institute, an abortion rights think tank. Vermont could move toward enshrining “reproductive autonomy” in its constitution this year. In Michigan, abortion-rights groups are seeking an amendment enshrining the right to abortion in the state constitution.

Meanwhile, at least seven states could follow Texas, which has already effectively banned abortions after six weeks with a law strategically written to avoid a federal court challenge. The Supreme Court has allowed the law to remain in effect, even though it appears to contradict the Roe decision.

Similar proposals have been introduced in Ohio, Alabama, Oklahoma, Missouri, Florida and Arizona. South Dakota Gov. Kristi Noem, a possible 2024 presidential contender, released a proposal on Friday modeled after the Texas law. She said it would “ensure that both unborn children and their mothers are protected in South Dakota.”

Other states that already have six-week bans on the books also could amend those measures to look more like the Texas law so they can take effect, said Katie Glenn, government affairs counsel at Americans United for Life, an anti-abortion group.

The Texas law is unusual because it allows private citizens to file civil lawsuits against anyone who helps someone else get an abortion after six weeks. It has made legal challenges difficult because the government is not involved in enforcement.

More than a dozen states have passed abortion bans after six weeks but have seen those efforts blocked by the courts. That has made the Texas model more attractive to conservative lawmakers.

“Our message to lawmakers is, ‘Full steam ahead.’ If you have felt like maybe something’s not worth doing because it might be enjoined or you’re worried about it, this is a great opportunity for state lawmakers to let the Supreme Court know, ‘We’ve got this,’” Glenn said.

Meanwhile, at least three Republican-led states — Arizona, Florida and West Virginia — are weighing bans on the procedure after 15 weeks, similar to the Mississippi law that the Supreme Court appeared to view favorably during arguments in December. Under Roe, abortions are legal until the point a fetus can survive outside the womb, which is usually around 24 weeks.

In Florida, which currently allows abortions up to that point, GOP legislative leaders are optimistic about a proposal to ban it after 15 weeks, with some health-related exceptions but none for rape and incest.

“There’s a lot of pro-life legislation. We’re going to be welcoming it,” Republican Gov. Ron DeSantis told reporters earlier this month. He is up for reelection this year and is considered a top Republican presidential hopeful for 2024.

In another major shift last year, the Food and Drug Administration made a regulatory change that allows people access to abortion medication by mail after obtaining a prescription online. That promises to be another front in the legal debate over abortion. Some states could allow pharmacists to opt out of dispensing the drugs if they oppose abortion.

Last year, eight states passed measures restricting abortion medication sent through the mail in anticipation of the FDA decision. A handful of states, including Republican-led Iowa, will debate bills on the topic this year, said Elizabeth Nash, a state policy analyst at the Guttmacher Institute.

Last year was the “worst year for abortion rights” since the Roe decision in 1973, Nash said, with over 100 restrictions enacted in the states.

“It just feels like the state sessions in 2022 are also going to be very active on abortion restrictions,” she said. “It feels like we’re at the beginning of another wave.”

https://apnews.com/article/us-supreme-court-health-texas-legislature-state-legislature-c8c8386304b7188a1b9712a52f0535e4

UHS details omicron's hit at JPM

 

• The latest COVID-19 surge is pushing back Universal Health Services' ability to meet earnings projections and expectations it had set heading into 2022, CFO Steve Filton said during J.P. Morgan's annual healthcare conference Tuesday. Shares fell after Filton's remarks.
• The fourth quarter did not play out the way the King of Prussia, Pennsylvania-based health system expected. Executives were hoping the fourth quarter would mark a turnaround in the pandemic, similar to the second quarter, ushering in more manageable COVID-19 volumes, a rebound in patient demand and a more stable labor market.
• That is not what happened. Instead, UHS experienced a dramatic rise in COVID-19 cases and more intense labor shortages.

Filton's detailed remarks about UHS' challenging experience over the last month comes as COVID-19 hospitalizations in the U.S. reach a record high, surpassing last January's peak as the highly contagious omicron variant spreads rapidly. The nation's top infectious disease doctor Anthony Fauci provided a bleak outlook Tuesday and said the variant "will find just about everybody." Though vaccinated people are likely to fare better and avoid hospitalization, Fauci said.

Filton said Tuesday during JPM's virtual healthcare conference, "The timeline has been elongated in the recovery that we thought was going to occur throughout the fourth quarter." 

"We are three, four, five, six months, kind of delayed from what our projections were, and our expectations were back at the end of October," he added.

The latest surge is pushing hospitals to the brink as many don't have enough staff for the level of demand.

Filton laid out the many operating challenges facing his health system from the sudden onset of the omicron surge. As volumes rise, so does the need for more staff. Once again, the problem is finding enough nurses to respond to the latest surge.

"We certainly have more employees on the sidelines, currently, than we've ever had before in the pandemic and that is creating all sorts of challenges," Filton said.

At its 27 acute care hospitals, UHS has enough beds, ventilators and ICU rooms, but the biggest constraint is on the labor side, he added.

Health systems like UHS have had to pay "wildly expensive premium rates," to temporary and traveling nurses to appropriately staff facilities, Filton said. Labor issues are a top concern for many health leaders across the sector, not just UHS.

It's also difficult to discharge these patients, Filton said, as long-term care and skilled-nursing facilities are all struggling with the same labor shortages. And some patients are "staying longer than really is clinically justified."

Like its acute-care business, the pandemic has also created challenges for its behavioral health unit, with 333 facilities.

The system has lost nurses to attractive COVID-19 pay elsewhere, and although UHS is willing to pay higher rates, Filton said, they sometimes can't find enough nurses. The impact has muted volumes and patient days in some instances at behavioral health facilities, he said.

But when COVID-19 cases and hospitalizations eventually subside, UHS expects these operating challenges to stabilize, similar to its experience in the second quarter of 2021.

https://www.healthcaredive.com/news/uhs-cfo-omicron-surge-hit-shares-dip/617053/

Medical cost growth trailed that of other industries in 2021

 

• Medical cost growth trailed that of other industries in 2021, though rising pressure from the omicron variant could fuel future increases in healthcare costs.
• Prices for goods and services skyrocketed at the fastest pace in four decades, rising 7% between December 2020 and December 2021, according to new data released from the Bureau of Labor Statistics.
• By comparison, prices for healthcare services rose roughly 2.5% last year, while the cost of medical care goods rose just 0.4%. However, that slow rate of growth could accelerate as COVID-19 cases persist in 2022 and beyond.

Inflation fell slightly at the beginning of the pandemic two years ago, though healthcare prices rose slightly as regulators and lawmakers bolstered the nation's medical system, girding it against COVID-19 through measures like increasing the government's match rate for Medicaid.

But 2021 was the worst year for inflation since 1982, BLS found. Prices rose sharply for cars, gas and food as high consumer demand met overtaxed supply chains.

In an attempt to tamp down on concerns about the nation's economic health, President Joe Biden pointed to the fact that Americans paid 0.5% more for goods and services in December, down from 0.8% growth in November. That month-to-month slowing in price growth shows progress in slowing the rate of inflation, Biden said.

"We are making progress in slowing the rate of price increases. At the same time, this report underscores that we still have more work to do," Biden said in a Wednesday statement on the BLS numbers. White House economic adviser Brian Deese said in a Wednesday press briefing most forecasters expect overall prices to moderate over the course of this year.

Yet even as prices in other industries climbed, cost growth for medical services was relatively modest in 2021, even as the coronavirus grew in intensity.

That was reflected on a month-to-month basis as well — the medical care index rose just 0.3% in December compared to November, driven by a small bump in prices for hospital services and prescription drugs. The index for physician services was unchanged, BLS said.

Healthcare prices traditionally see less fluctuation than those of other industries because health insurers and other payer organizations generally lock in prices for the year in advance. Network contracts from private payers can only be renegotiated on a periodic basis, while government programs like Medicare fix reimbursements for the plan year.

But the highly infectious omicron variant is adding more stress onto the system, which could contribute to higher medical prices in 2022 and in the long term, even if consumer price index growth slows.

Those pressures include higher labor costs as hospitals and other providers compete for workers in a tight labor market, and supply chain problems that continue driving up prices for needed supplies.

Those costs will likely trickle down to consumers in the form of higher out-of-pocket spending.

https://www.healthcaredive.com/news/medical-cost-growth-bls-biden-omicron/617125/

Antitrust regulators aim to revamp merger guidelines, signaling threat to health sector deals

 

• Antitrust regulators said Tuesday they are looking to modernize merger guidelines in an effort to crack down on tie-ups amid a flood of merger filings that has more than doubled in the past year.
• Leaders of the Federal Trade Commission and Department of Justice are launching a review of the current guidelines that are used to detect and analyze potentially unlawful mergers. Those policing guidelines have not been updated in 12 years, potentially excluding realities of a modern economy, leaders said.
• To bring the guidelines up to date, the FTC and DOJ are calling on the public to submit information and new evidence, about the potential effects of mergers so the agencies can ultimately beef up tools to block anticompetitive deals.

The news sparked reaction and headlines about an attempt by regulators to target big tech, but it could have serious implications for the healthcare sector for years to come.

The announcement tees up the start of a process that could ultimately change how mergers are policed for years to come, Jim Burns, an antitrust attorney and member with law firm Dykema, said.

"What this announcement categorically demonstrates is that interest in changing merger analysis is real. Change is coming. Mergers in healthcare, and in every industry, are going to be getting a much more careful and much more thorough review than they might have in the past," Burns said.

Regulators are specifically interested in obtaining feedback on a handful of areas, and not just from research experts. The agencies are calling on unions, employees, farmers, franchisees and consumers to submit feedback.

The areas of interest, and one in particular, may signal a potential shift away from the arguments around healthcare prices that enforcers have used to challenge hospital deals in the past.

The FTC has long leaned on the argument that in certain healthcare mergers, patients will face steeper prices. In its RFI, regulators are asking for more information about mergers' effects on labor markets, a line of inquiry that has gained greater traction at the agency.

The FTC previously signaled nurses' wages in particular will become an important measure in antitrust enforcement when it sent a letter to Texas regulators in 2020, warning them that allowing a hospital to acquire its only competitor in West Texas would result in muted wage growth for nurses. The agency did not mention nurses' wages in a similar letter sent to Tennessee regulators a few years before. (The Texas deal was shielded from federal antitrust enforcement due to Certificates of Public Advantage legislation.)

In Tuesday's press conference, agency representatives acknowledged they have become increasingly focused on labor market issues, and believe the merger guidelines should reflect that.

The guidelines are an important policing tool as the courts look to them for direction on whether a tie-up is unlawful.

Furthering underscoring the importance, second requests by the agency of merging parties have increasingly included issues around labor markets, adding to the time and complexity of the review and posing challenges for the merging entities, Burns said.

It's just the latest step in the Biden administration's attempt to get tough on anticompetitive deals.

Biden issued an executive order last summer calling on regulators "to enforce the antitrust laws vigorously," and he called out healthcare, specifically, as an area lacking competition which can result in harmful effects for patients.

https://www.healthcaredive.com/news/antitrust-regulators-revamp-merger-guidelines-healthcare-ftc/617352/

Zymeworks to lay off more than 100 staff in restructuring

 

• Kenneth Galbraith, the freshly minted CEO of Canadian biotech company Zymeworks, on Wednesday announced plans to lay off at least 25% of his staff as part of an overhaul that will see half the senior management team leave.
• The workforce reduction will affect more than 100 people, based on the company’s tally of 455 full-time employees at the end of September. In a statement, Galbraith said the expected savings will help Zymeworks become more financially stable as it focuses on developing experimental cancer drugs and seeking new collaborations and partnerships.
• Over the first nine months of 2021, Zymeworks recorded just shy of $7 million in revenue, which came from research and development collaborations. The company ultimately ended the period with a $175 million operating loss.

Zymeworks says it has enough cash to operate at least through the end of the year and will look for further ways to shore up finances, including new partnerships and additional financing. As of Dec. 31, the company had about $250 million in cash, cash equivalents and short-term investments.

In the meantime, all eyes are on upcoming clinical milestones. Zymeworks expects to report new data for its lead drug, zanidatamab, throughout the year, according to the statement Wednesday.

The company expects to finish enrolling a pivotal study of zanidatamab in biliary tract cancer by mid-2022. And, by the end of 2023, another key trial testing the drug's use in gastroesophageal adenocarcinoma should be fully recruited.

Zymeworks is also testing the drug in combination with other therapies in breast cancer.

Less advanced is the company’s experimental medicine ZW49. Zymeworks said it plans to analyze a Phase 1 trial this year and make a decision on the drug’s development path. The company pledged to move two new product candidates into initial testing as well, with the goal of submitting by the end of 2024 applications to begin human studies.

Notably, these advances will be overseen by an executive team that's recently experienced considerable change. Galbraith became CEO on Jan. 15, replacing Zymeworks co-founder Ali Tehrani. The company also recently promoted Neil Josephson to chief medical officer and added the title of chief operating officer for Neil Klompas, who already served as chief financial officer.

https://www.biopharmadive.com/news/zymeworks-restructuring-layoffs-biotech-cancer-drugs/617443/