TAKE AN INDUSTRY UNDER constant assault from Congress, the press, and the public. Add one incredibly complex government program
that will change the economics of the business in ways that no one yet understands. Subtract $23 billion in revenues from
products that go off patent. Stir in regulatory uncertainties, less-than-exciting late-stage pipelines, and a new mood on
the part of payers. What do you have? Let's call it 2006 for the pharmaceutical industry.
On the positive side, sales continue to grow, though at a slowing pace. IMS Health projects the global market will grow to
between $640 and $650 billion in 2006, an increase of 6 to 7 percent (compared to 7 to 8 percent in 2005). The US market will
account for $276 to $279 billion, an increase of 8 to 9 percent.
That growth rate includes two one-time events: the uptake of patients covered by the Medicare prescription drug benefit and
recovery of sales lost after the withdrawal of Vioxx (rofecoxib), says Murray Aitkin, senior vice president for corporate
strategy at IMS Health. But the top driver of sales will be the uptake of new and recently released drugs—especially the cancer
drugs Avastin (bevacizumab), Erbitux (cetuximab), Alimta (pemetrexed), and Tarceva (erlotinib).
Lou Morris on risk/benefit, The whole societal perspective on the benefits of drugs has been lost. It will come back, but
when and how fast is an important question. The new first-in-class drug is going to be harder to get through, which is going
to make it even more like drilling for oil. Either you hit a gusher or you hit a dry well, and it's one or the other. There
are going to be fewer me-too drugs developed. It just doesn't pay.
"The big one is going to be Avastin, which is expected to get new indications for breast cancer and non-small cell lung cancer,"
says Jason McKinnie, pharmaceutical research analyst for Frost & Sullivan. "That's going to be one of the biggest drugs in
2006. It's really proven that targeted therapy plus chemotherapy is the wave of the future."
About 39 new products are expected to launch, 26 of them targeted at specialists. Among the list: Sanofi-Aventis' Acomplia
(rimonabant); Pfizer's inhaled insulin product, Exubera; the insomnia drug indiplon from Neurocrine Biosciences; and Pfizer's
cancer drug Sutent (sunitinib). (For more on emerging products, see Pharm Exec's annual Pipeline Report.)
The biggest negative: pharma's worst patent-expiration year ever, with $23 billion worth of products losing protection. The
list includes six blockbusters: Zocor (simvastatin), Zoloft (sertraline), Lamisil (terbinafine), Ambien (zolpidem), Pravachol
(prevastatin), and Zofran (ondansetron). Generics are already the fastest growing segment of the industry, with an anticipated
increase of 18 to 19 percent in 2006. The next few years should fuel their growth.
ELizabeth Browning on the boomers, We see an enormous and growing interest in consumer health education—you can't pick up
a magazine that doesn't talk about health. There's a lot of information out there but not much guidance. I think you'll see
an increased willingness to pay for health and wellness information. Boomers grew up on brands, they expect quality and service,
and they don't hesitate to buy what they consider good.
As IMS sees it, growth this year will be less in primary care and more in specialty, less in traditional pharma and more in
biotech, less in branded and more in generics. "Companies need to look strategically at where growth is coming from and how
to balance their portfolios to take advantage of it," says Aitkin.
Geographically, China should be the fastest-growing market on a percentage basis, with growth in the 17 to 18 percent range.
"All the signs point to the critical need for companies to invest in this country now," says Aitkin. Non-Japan Asia, Latin
America and Eastern Europe continue to grow rapidly. And as for Europe, "The only way it starts to look good is that it's
looked so bad for the last couple of years," says Todd Clark, president of VOI Consulting. Trends to watch in Europe: The
European Agency for the Evaluation of Medicinal Products (EMEA) is ahead of FDA on biogenerics, and some products could reach
market by fall. And traditional generics are finally catching on in a big way, especially in southern Europe.