[Ip-health] FT: Drugmakers premiere summer blockbusters

Thiru Balasubramaniam thiru at keionline.org
Mon Jul 13 05:00:28 PDT 2015


<SNIP>

Downward pricing pressure hitherto associated with the cash-strapped public
health systems of Europe has been spreading across the Atlantic, as the US
gets serious about cutting waste from its private health market. A backlash
by insurers and health providers against Gilead’s $1,000-a-pill hepatitis C
drugs last year was seen by many as a harbinger of tougher times in the
world’s biggest pharma market.

Alert to these pressures, Novartis has indicated that it will experiment
with outcome-based pricing for Entresto in an effort to encourage wide
uptake. This would involve a link between price and performance to ensure
the company is only rewarded if the medicine works.

Sanofi and Amgen are also braced for difficult negotiations over the price
of their PCSK9 drugs. Mr Zerhouni acknowledges that, while levels of
innovation have risen, so too have commercial hurdles. “If you are not
first in class, best in class or a very fast second you will not see a
return [on investment].”

These pressures are also prompting a rethink of the way drugs are
developed. Secretive in-house R&D operations are being broken up in favour
of collaboration with academia and biotech. Sanofi’s Praluent, for example,
was developed in partnership with a smaller US partner called Regeneron.
Meanwhile, regulators on both sides of the Atlantic have launched
fast-track approval processes to speed the path of breakthrough medicines.

--

http://www.ft.com/cms/s/0/551baeb0-26dc-11e5-9c4e-a775d2b173ca.html#ixzz3fluDbRvm

July 12, 2015 1:32 pm

Drugmakers premiere summer blockbusters

Andrew Ward, Pharmaceuticals Correspondent

New multibillion-dollar drugs offset patent expiries

Blockbuster drugs are back. A wave of new multibillion-dollar medicines for
heart disease and high cholesterol, added to recent breakthroughs in cancer
and hepatitis C, is reviving optimism that the pharmaceuticals industry has
moved beyond the heavy patent losses of the past few years.

Last week, Entresto — a heart disease treatment from Novartis, which cut
death rates by 20 per cent in clinical trials — was approved by US
regulators. Analysts are now tipping it to reach $6bn in annual sales.

Similar expectations surround anti-cholesterol drugs from Sanofi of France
and Amgen of the US, both of which look set for approval from the US Food
and Drug Administration in coming weeks. They were recommended by the
regulator’s advisory panel last month.

These three weapons against heart failure — the world’s biggest killer —
come on the heels of a new category of cancer drugs that harnesses the
human immune system to destroy tumours. The first of these so-called
immunotherapies was launched by Merck andBristol-Myers Squibb last year and
analysts expect them to generate $35bn of annual sales within a decade.

Meanwhile, Gilead Sciences has sold about $20bn-worth of its Sovaldi
hepatitis C medicine and a follow-on product called Harvoni since the
former was approved 19 months ago — making it the most successful drug
launch in history.

All of the successes reflect a broader pharmaceuticals resurgence. A record
61 drugs were introduced around the world last year, according to Citeline,
the research firm, compared with an annual average of 34 in the previous
decade.

Elias Zerhouni, president of research and development for Sanofi, says the
industry is finally feeling the benefits of scientific advances triggered
by the sequencing of the human genome 15 years ago. This has led to more
targeted treatments and a deeper understanding of the biological processes
behind disease.

“People are using human genetics in ways that have never been possible
before,” he says, citing the way that Sanofi’s new Praluent drug targets a
particular protein, called PCSK9, associated with high levels of the “bad”
cholesterol linked with heart disease.

Praluent and Repatha, the rival Amgen product, are aimed at people who do
not respond to statins, the mass-market cholesterol-busters that emerged
from pharma’s last golden age of innovation in the 1990s. It was the
expiration of patents on blockbusters from this era — such as Pfizer’s
Lipitor statin — that sent the industry into a slump from which it is only
now recovering.

Sales lost to cut-price generic competition reached a peak of $37bn in
2012, according to Evaluate, the research group. But that figure is now
falling and forecast to reach $12bn by 2020 — because the paucity of
innovation over the past decade has meant fewer drugs patents are ending.

A combination of declining patent expiries and rising drug launches ought
to create fertile conditions for growth. With an ageing world population,
increasing incidence of chronic disease and widening access to healthcare,
there is certainly no shortage of demand. Investors appear confident: S&P’s
pharmaceuticals index has risen by almost a quarter in the past year.

Amid all this optimism, however, there is little sense of triumph among
pharma executives. Instead, the mood has been unsettled as a wave of
mergers and acquisitions have swept the sector. Big drugmakers have been
scrambling to buy promising young biotech companies and trading businesses
with each other as they jostle to build the strongest product portfolios.

Rather than a sign of confidence from a resurgent industry, some explain
this M&A boom as preparation for challenges ahead.

Downward pricing pressure hitherto associated with the cash-strapped public
health systems of Europe has been spreading across the Atlantic, as the US
gets serious about cutting waste from its private health market. A backlash
by insurers and health providers against Gilead’s $1,000-a-pill hepatitis C
drugs last year was seen by many as a harbinger of tougher times in the
world’s biggest pharma market.

Alert to these pressures, Novartis has indicated that it will experiment
with outcome-based pricing for Entresto in an effort to encourage wide
uptake. This would involve a link between price and performance to ensure
the company is only rewarded if the medicine works.

Sanofi and Amgen are also braced for difficult negotiations over the price
of their PCSK9 drugs. Mr Zerhouni acknowledges that, while levels of
innovation have risen, so too have commercial hurdles. “If you are not
first in class, best in class or a very fast second you will not see a
return [on investment].”

These pressures are also prompting a rethink of the way drugs are
developed. Secretive in-house R&D operations are being broken up in favour
of collaboration with academia and biotech. Sanofi’s Praluent, for example,
was developed in partnership with a smaller US partner called Regeneron.
Meanwhile, regulators on both sides of the Atlantic have launched
fast-track approval processes to speed the path of breakthrough medicines.

All these factors have played a role in the R&D renaissance. But Julian
Remnant, life science partner at Deloitte, warns that productivity is still
depressed by high costs. According to the Tuft Center for the Study of Drug
Development in Boston, the average bill for a new drug has risen to $2.6bn,
from $802m the last time an estimate was made in 2003.

Return on R&D investment edged up to 5.5 per cent in 2014, from 5.1 per
cent the year before, according to Deloitte, but Mr Remnant says it is too
soon to declare an improving trend. “The industry has got wind in its sails
again but it needs to use this momentum to drive change.”

Blockbuster pipeline

Big pharma was supposed to have moved beyond the blockbuster era. Instead
of medicines for the masses, many of today’s drug breakthroughs are
targeted at specific genetic mutations in smaller numbers of patients.

However, there are still plenty of opportunities where the potential market
size and price are high enough to achieve blockbuster drug status: annual
sales in excess of $1bn. Eleven blockbusters are expected to launch this
year, up from three in 2014, according to Thomson Reuters. These include:

Praluent (Sanofi/Regeneron): A clinical trial last week showed it reduced
“bad cholesterol” by an average 64 per cent among patients with an
inherited form of high cholesterol or pre-existing heart disease.Forecast
2019 sales: $4.4bn

Entresto (Novartis): A twice daily tablet that reduces strain on a failing
heart. Reduced hospitalisation and deaths by one-fifth in trials compared
with an existing drug. Forecast 2019 sales: $3.7bn

Ibrance (Pfizer): Granted conditional approval by US regulators in February
for women with ER-positive, HER2-negative breast cancer — the most common
form of the disease. In combination with AstraZeneca’s Faslodex, the drug
slowed cancer progression by 9.2 months, compared with 3.8 months for
Faslodex alone. Forecast 2019 sales: $2.8bn

Repatha (Amgen): A rival to Sanofi’s Praluent targeting the PCSK9 protein
associated with high cholesterol. Both were recommended by an expert panel
of the US Food and Drug Administration last month but questions remain over
how widely they should be used. Forecast 2019 sales: $1.9bn



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