The Big Reset - Pharmaceutical Executive


The Big Reset

Pharmaceutical Executive

Cliffs, Launches, and China

—Murray Aitken, IMS Health
CEOs may be looking past patent cliffs, but Wall Street is still fixed on quarterly results. Close to $16 billion in brand-name drugs will be exposed in 2010 as blockbusters including Pfizer's Aricept, Sanofi-Aventis' Taxotere, Merck's Cozaar, and AstraZeneca's Arimidex go generic. While every top pharma has its own cliff to leap—with a 40 percent drop in prescription drug sales not uncommon—AstraZeneca, Lilly, and Bristol-Myers are facing even steeper falls, according to Bernstein analyst Tim Anderson.

For Lilly, in particular, 2010 could be a make-or-break year. With patents on Zyprexa and Cymbalta expiring by 2014, and the firm's future riding almost entirely on its mid-stage pipeline, analysts will be eyeballing its recently launched antiplatelet drug, Effient, as it hastens to grab market share. But Effient's window of opportunity may close in 2011, when knockoffs from Plavix flood the market.

With FDA under new management, drugmakers can expect to see faster, more decisive action on the drug-review front. "The new leadership is positive for the industry," says Don Hannaford, senior vice president of Levick Strategic Communications. "[FDA Commissioner Margaret] Hamburg has taken on a broader mandate around a holistic view of health. FDA scientists should feel they're not going to get in trouble for making decisions."

But energy may not translate into approvals, as safety remains the priority issue and the new REMS framework is pressed into service. IMS Health projects 25 to 30 new launches in 2010, which is in line with recent years.

Here are a few of the new drugs to watch for:

In CNS: Novartis' first-in-class melatonin receptor agonist, agomelatine (for depression), as well as two next-generation atypical antipsychotics, Lundbeck's sertindole and Schering-Plough's asenapine, all look promising. Novartis also boasts the new front-runner in the race for the first oral Multiple Sclerosis drug, following the "refuse to file" setback at FDA for Merck KGga's candidate. In Alzheimer's, Phase III data will be released for what could be two huge entries: Medivation/Pfizer's Dimebon and Elan/Pfizer/J&J's bapineuzumab. The pileup of codevelopment deals shows how cozy companies have grown.

In diabetes: Two first-in-class drugs—Merck's DPP-IV inhibitor, Januvia, and Lilly/Amylin's GLP analog, Byetta—may finally face some competition, as FDA rules on BMS/AstraZeneca's Onglyza and Novo Nordisk's liraglutide.

In cardiovascular: The market will likely embrace its first new oral anticoagulant in 40 years if FDA gives a thumbs-up to factor Xa inhibitors Bayer/J&J's Xarelto, Pfizer/BMS's apixaban, and Daiichi Sankyo's edoxaban. Other blood thinner news: AstraZeneca's just-approved Brilinta proved superior to Plavix and Effient, while Boehringer Ingelheim's Pradaxa for atrial fibrillation bested veteran work horse warfarin. Taken together, these medical advances indicate that the blockbuster model is not entirely dead.

Meanwhile, 2010 could be decisive for Amgen as it desperately seeks approval for denosumab, a novel monoclonal antibody for osteoporosis and bone cancer, which is the biotech stalwart's sole hope for much-needed sales.

Cancer will remain the hottest therapeutic category, claiming fully half of the industry's pipeline. Likely stars of 2010 include Cougar/J&J's albiraterone, for prostate cancer; Medarex/BMS's ipilimumab, for malignant melanoma; and two non-Hodgkin's lymphoma treatments—Lilly's Enzastaurin, a first-in-class inhibitor of the wildly popular PI3K pathway; and Cell Therapeutics' Pixantrone, a novel major groove binder.

—Billy Tauzin, PhRMA
Sales of monoclonal antibodies are set to hit $20 billion in 2010, according to Thomson Reuters analyst Alexandra Kibble. Yet the growth rate of the oncology market has already started to fall, from 15 percent in 2008 to 10 percent in 2009. And with a 12-week course of treatment averaging about $20,000 —and survival benefits often measured in mere months—Big Pharma's rush to cancer may turn into a rush off a cliff as payers begin to push back. "Given the level of R&D investments in oncology and the assumptions on which they are founded, one wonders if oncology is a bubble waiting to burst," says BCG's Peter Tollman.

According to IMS, the total value of the global pharmaceutical market will grow 4 to 6 percent, to more than $825 billion, in 2010. China, at 21 percent, again tops the list of fastest growing markets. By contrast, the US market will expand only 3 to 5 percent. The usual suspects in the emerging world, such as India and Brazil, clock in at 12 to 14 percent. But the economic recession will continue to erode share in markets such as Russia, Mexico, and South Korea, where out-of-pocket spending is high. "China is increasingly in a class of its own," says IMS's Aitken. But China's new policy of favoring domestic innovators over foreign companies for government contracts is already raising protests among US firms.

The European pharmas will maintain their lead in 2010 in the race for world domination. Says Aitken: "They are broadening their portfolios to meet the specific needs of each market, not only through the acquisition of products but also by developing drugs to treat prevalent diseases." This R&D increasingly takes place in situ; Sanofi and Pfizer launched major labs in China last year, while Novartis will be breaking ground in 2010 for what it bills as China's biggest pharma research plant (which is also CEO Daniel Vasella's $1 billion snub of India for rejecting the Glivec patent).

Branded generics will continue to gobble up market share, especially in generics-packed markets where consumers hunt for quality. In 2010, Takeda and other Japanese pharmas look poised to make a big push into India's generics industry, following the Daiichi Sankyo/Ranbaxy deal.

Yet as its commitment to emerging markets deepens, pharma is already dealing with partners' control issues. In Turkey, for example, a budgetary shortfall led the government to reset the benchmark for all brand-name drugs at the lowest price in Europe, cutting private-payer costs by a third. If this trend goes global—what's to stop it?—emerging markets could fast morph into mature ones.


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