BUSINESS
PHARMA BETS BIG ON NEW PRODUCTS With EARNINGS DOWN again in the first half of 2015, big pharma hopes for a comeback ANN M. THAYER, C&EN HOUSTON
FOR THREE-AND-A-HALF YEARS, the big
keep them at the center of a debate around drug costs and value. Even so, the company anticipates that insurer reimbursement will continue to grow, especially if the trend toward shorter treatment durations continues. Gilead commands 90% of a hepatitis C market that it says is still in the early days, with many patients yet to be treated. Also trying to tap in are Bristol-Myers Squibb (BMS), which just launched Daklinza, and AbbVie, with its antiviral combination Viekira Pak, which was approved at the end of 2014. With Viekira sold in 47 countries, the buy-in of pharmacy benefit managers, and $616 million in first-half sales, AbbVie is starting to establish a position in the market.
sales and earnings on par with their more pharmaceutical firms tracked by C&EN established brethren. Combined first-half have struggled to show sales and earnings earnings for five leading biotech compagains. Their difficulties are perhaps not surnies were up nearly 38% on sales that rose prising since, in that time, they have faced about 22%. With an overall profit margin the steepest part of the patent cliff plus preof 47%, the biotechs are significantly dictions that the days of blockbuster drugs more profitable than their big pharma are over. counterparts. IN THE FIRST HALF, Viekira ranked as However, eight of the top 10 new drugs Gilead Sciences continued to stand out. AbbVie’s second-biggest-selling product approved in 2014 should achieve annual Sales were up 37% to $15.8 billion, and earnafter the anti-inflammatory Humira. When sales of well over $1 billion—so-called ings climbed 47% to $9.4 billion. Approved spun off from Abbott in January 2013, blockbuster status—within five years of in late 2014, its new hepatitis C combination AbbVie relied almost entirely on Humira, their launch, according to EvaluatePharma, drug Harvoni had sales of $7.2 billion in the but it has since entered the oncology field a London-based market research firm. And first half of 2015. Sales of Sovaldi, the prodwith its May acquisition of Pharmacyclics, several drugs approved so far in 2015 are uct Harvoni supersedes, dropped more than which markets the expected blockbuster predicted to join those ranks as well. As sales 60% to $2.3 billion, but on balance Gilead Imbruvica. of these products ramp up, pharma is excame out well ahead. Meanwhile, despite emerging generics pected to enter a new period of growth. Gilead’s therapies, although highly competition, Humira sales grew 12% in “Continued confidence in the sector is effective, come with high price tags that the first half to more than $6.6 billion and being driven by a number placed AbbVie among of positive fundamentals, only three big pharma including the recent incompanies posting PHARMACEUTICAL RESULTS crease in R&D productivboth sales and earnings Biotech rose in the first half of 2015, while big pharma sales and ity, which has resulted in a growth in C&EN’s survey. earnings fell big hike in drug approvals, Through 2020, Humira, and the emergence of one of a class of older SALES EARNINGSa CHANGE FROM 2014 PROFIT MARGINb ($ MILLIONS) SALES EARNINGS 2015 2014 breakout drugs,” said a redrugs targeting tumor neAbbVie $10,515 $3,300 10.8% 33.1% 31.4% 26.1% cent EvaluatePharma outcrosis factor, will remain AstraZeneca 12,364 2,888 -6.5 -7.2 23.4 23.5 look report. Companies the top-selling product in Bristol-Myers Squibb 8,204 2,083 6.5 33.2 25.4 20.3 are tying their fortunes to the world, according to Eli Lilly & Co. 9,623 1,879 0.0 17.7 19.5 16.6 new treatments against EvaluatePharma. GlaxoSmithKline 18,107 2,629 3.0 -13.3 14.5 17.3 cancers, infections, and In addition to generics, Johnson & Johnson 35,161 9,230 -6.5 -6.1 26.3 26.1 Merck & Co. 19,210 4,866 -9.4 -4.5 25.3 24.0 rare diseases. Humira’s competition Novartis 24,629 6,273 -5.7 -5.9 25.5 25.5 For now, big pharma will come from Celgene’s Pfizer 22,717 6,721 -5.8 -9.6 29.6 30.8 companies are doing a bit psoriasis drug Otezla, Roche 25,423 6,826 2.5 -4.8 26.8 28.9 better than in recent years a phosphodiesterase 4 Sanofi 20,412 4,002 14.3 15.6 19.6 19.4 but still remain largely in inhibitor approved in late TOTAL BIG PHARMA $206,365 $50,697 -1.4% -1.4% 24.6% 24.6% the financial doldrums. In 2014. And after approval the first half of 2015, comin January, Cosentyx, the Amgen $10,403 $3,888 7.2% 19.2% 37.4% 33.6% Biogen 5,147 1,895 13.1 33.8 36.8 31.1 bined sales of 11 leading first of a much-anticipatCelgene 4,359 1,910 21.0 31.5 43.8 40.3 drug companies declined ed class of interleukin-17A Gilead Sciences 15,838 9,449 37.3 47.2 59.7 55.6 1.4%. Earnings were down antibodies is starting to Vertex Pharmaceuticals 305 -279 18.7 nm def def by a similar amount. rack up sales for Novartis. TOTAL BIOTECH $36,052 $16,863 21.6% 37.6% 46.8% 41.3% At the same time, “Anchored by early NOTE: European company results are converted at June 30 exchange rates, except for AstraZeneca growth has accelerOtezla success, we exand Novartis, which report in U.S. dollars. a After-tax earnings from continuing operations, excluding ated for the once much pect to see a series of significant extraordinary and nonrecurring items. b After-tax earnings as a percentage of sales. nm = not meaningful. def = deficit. smaller biotech firms, blockbuster launches with a few now posting beginning in 2018,” said CEN.ACS.ORG
21
AUGUST 24, 2015
BUSINESS
Scott Smith, president of with approvals in other Celgene’s inflammation cancer types, is predicted FUTURE BETS and immunology business. to bring in $5 billion in sales Recently approved products are forecast to become These include the multiple by 2020. For now, first-half big sellers sclerosis and ulcerative sales of $192 million were 2020 SALES colitis drug ozanimod, part nowhere near enough to DRUG INDICATION COMPANY ($ BILLIONS) of Celgene’s pending acturn around Merck’s sales, Opdivo Melanoma Bristol-Myers Squibb 8.2 Harvoni Hepatitis C Gilead Sciences 5.8 quisition of Receptos. Celwhich fell more than 9%. Orkambi Cystic fibrosis Vertex Pharmaceuticals 5.1 gene also has extended its Other breakthrough Keytruda Melanoma Merck & Co. 5.0 immuno-oncology program drugs positioned for sucEntresto Heart failure Novartis 4.2 through collaborations cess include Vertex PharRepatha High cholesterol Amgen 2.6 with AstraZeneca and Juno maceuticals’ cystic fibrosis Otezla Psoriasis Celgene 2.1 Therapeutics. treatment Orkambi. The SOURCE: EvaluatePharma A hot development area, firm’s first cystic fibrosis immuno-oncology is prodrug, Kalydeco, accounted jected to eventually rank among the largest of 2014 and for lung cancer in 2015. The for the bulk of its first-half revenues. Apdrug classes. Yet despite substantial gains PD-1 inhibitor, being studied in a variety proved in July, Orkambi is a follow-on in survival and quality of life from new canof other cancers, costs about $150,000 per combination that can be used by a larger cer drugs, patients, insurers, and doctors’ year. In the first half of 2015, sales were portion of the 30,000 people with the disgroups are questioning the cost of using just $162 million, but they are predicted ease. Priced at $259,000 per year, Orkambi them. Global spending on cancer drugs to exceed $8 billion by 2020, a figure that is predicted to achieve peak annual sales topped $100 billion in 2014, and the cost would make it the third-best-selling drug near $5 billion. of individual therapies can total more than worldwide. $100,000 per year. Opdivo competes against Keytruda, ANOTHER NEW CLASS of pricey drugs, BMS’s Opdivo got accelerated U.S. Merck & Co.’s similarly priced PD-1 inthe cholesterol agents called PCSK9 inhibiapproval as a breakthrough immunohibitor. Keytruda got accelerated approval tors, is entering the market to the chagrin oncology therapy for melanoma at the end about three months before Opdivo and, of pharmacy benefits managers.
ACSPublications Most Trusted. Most Cited. Most Read.
CEN.ACS.ORG
22
AUGUST 24, 2015
contrast to cancer drugs, Entresto will be priced at a mere $5,000 per year. But because the drug addresses a very large number of patients, it too is expected to become a multi-billion-dollar blockbuster. The spate of new products comes amid a growing reluctance on the part of government and private health care providers to pay for very expensive, albeit effective, drugs, according to EvaluatePharma. “With many predicting that, for the first time, the industry could produce a series of real ‘cures’ for previously intractable diseases, it is clear that these innovative drugs will come at a price.” “Standing at the midpoint of 2015, the pharma and biotech industry looks as if it is in very good shape. Things are at least moving in the right direction,” the research firm added. “The only clouds currently on what looks to be a sunny horizon for pharma and biotech are global pricing and market access.” ◾
LATEST ENTRY
Targeting hepatitis C, Gilead Sciences’ Harvoni combines sofosbuvir and ledipasvir.
oncology business, acquired this year. But the biggest event for Novartis was its July launch of Entresto, a combination therapy for chronic heart failure. In
AAPS eLEARNING AAPS Good Oral Candidates 101 Selecting Candidates with Optimal Oral Exposure eLearning Series ●
Lectures by Leading Experts from FDA, Academia, and Industry
●
Convenience of Self-Paced Learning
●
Focus on Challenges Encountered with the Oral Delivery of Drug Candidates
Go to www.aaps.org/acs15 for additional information CEN.ACS.ORG
23
AUGUST 24, 2015
GILEAD SCIENCES
Amgen’s Repatha was approved in Europe and will likely soon be approved in the U.S. Repatha will compete against Sanofi’s Praluent, which received U.S. approval in July and has been recommended for approval in Europe. In the U.S., Sanofi has priced Praluent around $15,000 per year. Sanofi, which posted double-digit sales and earnings growth for the first half, sees Praluent becoming a significant growth driver. The company has tried to strike “the right balance between the medical benefits to individual patients as well as the overall total value to the health care system,” Chief Executive Officer Olivier Brandicourt told analysts. He pointed out that cardiovascular disease costs the U.S. health care system about $315 billion annually and acute care patients between $50,000 and $119,000. Meanwhile, to reverse a nearly 6% decline in first-half sales and earnings, Novartis is advancing a handful of new cancer drugs. These include Zykadia for lung cancer, Farydak for multiple myeloma, and Odomzo for basal cell carcinoma. At the same time, it is integrating GlaxoSmithKline’s
