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The Pulse of the Pharmaceutical Industry

2017 Annual Report: Top 50 Companies – The Corner Turned

Written by: | | Dated: Wednesday, October 11th, 2017


For the pharmaceutical industry, 2016 brought new blockbusters onto the market to ease the pain of patent expirations.


2016 may not have been a banner year for the pharmaceutical industry, but it was a very good one. Many of the companies featured in this report posted modest gains in revenue and net income, and some did even better than that. The waves of patent expirations that have been battering the industry have slowed down, and while the new products approved are not immediate replacements for the lost blockbusters, they have the potential to grow tremendously.

Take, for example, AbbVie. AbbVie’s Humira remained the No. 1 prescription product by sales in the world for the fifth consecutive year, with sales clearing $16 billion for the first time. Although biosimilar competition for Humira may be waiting in the wings, a new blockbuster, the oncology drug Imbruvica, added more than a billion dollars to its sales in 2016, with two more FDA approvals for the product arriving in 2017 so far. In the first half of 2017, Imbruvica sales were up another 43.5 percent to $1.18 billion.

For Company of the Year Roche, the impact of biosimilars will be a decisive factor for the future of the company and its trio of mega-blockbuster anti-cancer brands that account for three of the world’s top eight prescription drug sellers. However, at present, Roche remains atop the oncology field and is expected to challenge all pharma/biotech companies for the global sales throne in 2022. Roche leads the biologics market, holds the top spot of the “pipeline value creation” ranking proving its leadership ambitions beyond oncology, and is forecast to be the largest spender on pharma R&D in 2022.

AstraZeneca continued to be hit with patent expirations for its blockbuster drugs such as Crestor and Seroquel. But the company has puts its faith into its pipeline and is focused on specialty products such as the diabetes drug Farxiga, which grew almost 70 percent in sales in 2016; the heart drug Brilinta/Brilique, which grew 36 percent in sales; and the cancer drugs Faslodex and Tagrisso. In fact, AstraZeneca is aiming to deliver six new cancer medicines to patients by 2020. The platform includes the PARP inhibitor Lynparza; Iressa in the United States; and Tagrisso.

J&J’s Janssen Pharmaceutical Companies announced plans in May to launch or submit for regulatory approval more than 10 new products with blockbuster potential between 2017 and 2021, as well as 50-plus line extensions of existing and new drugs. Since the May announcement, J&J achieved FDA approval for one of the anticipated blockbuster NMEs: Tremfya (guselkumab) for psoriasis.

Late-stage products with annual sales potential of at least $1 billion that are projected to be submitted for regulatory approvals by Janssen between 2017 and 2021 include apalutamide (ARN-509) for pre-metastatic prostate cancer; esketamine for treatment-resistant depression; talacotuzumab (CSL362) for acute myeloid leukemia; the FGFR inhibitor erdafitinib for solid tumors; niraparib for prostate cancer; imetelstat for myelofibrosis; pimodivir (JNJ-3872) for influenza A; lumicitabine (JNJ-1575) for respiratory syncytial virus infection; and the orexin-2 antagonist JNJ-7922 for adjunctive treatment for major depressive disorder.

For GlaxoSmithKline, although sales of its leading product Advair/Seretide declined in 2016, new products such as the HIV drugs Triumeq and Tivicay are stepping to the fore. Triumeq, GSK’s No. 2 product, generated 2016 sales of $2.35 billion compared with $990 million the previous year. Tivicay, the company’s No. 3 product, grew to $1.29 billion from $797 million during 2015.

One of the company’s key near-term focus is to maximize value from new products and three other new launch opportunities: Shingrix, a potential new vaccine for shingles; Trelegy Ellipta, a recently approved 3-in-1 respiratory medicine; and new two-drug regimens in HIV.

Gilead’s hepatitis C products Harvoni and Sovaldi were transformative products when they were launched, with Sovaldi generating more than $10 billion in sales in 2014, its first full year on the market (see Gilead profile on page 39). Harvoni reached almost $14 billion in its own first full year, 2015. With the extraordinary speed of innovation in the hep C space, though, not to mention their own extraordinary effectiveness, sales of the two have slowed significantly in the past year and a half. Combined sales of Harvoni and Sovaldi were still more than $13 billion in 2016, and Gilead’s next generation of antivirals are already established blockbusters. The hepatitis C drug Epclusa earned $1.75 billion in sales in just half the year after being approved by FDA in June, and added another $2.06 billion in the first half of 2017. The second, the HIV product Genvoya, rolled up $1.48 billion in sales during 2016 after being launched in late 2015, and already beat that number in the 2017 first half with $1.63 billion in sales.

Lilly seems well along in the process of digging itself out of the rut it landed in after the loss of exclusivity for Cymbalta and Zyprexa. Top-line revenue in 2016 passed $20 billion for the first time since 2013, the last year of Cymbalta’s exclusivity. And two of the sales portfolio’s newer entrants, Trulicity and

Cyramza, are both showing signs of future success, with Trulicity looking to pass the $1 billion sales mark easily this year. While November’s Cialis patent expiration will likely put a dent in Lilly’s top line, newly launched products are expected to ease some of the sting.

In 2009 when Bristol-Myers Squibb Acquired Medarex for $2.1 billion, there were doubts about the wiseness of the investment. But the company’s big bet is paying off with the success of Opdivo, as sales of the immuno-oncologic were up by more than four times in 2016, bringing nearly $4 billion into the company’s coffers And the Opdivo story is still only beginning; clinical research on the drug is continuing across a long list of potential indications. But Opdivo is not the only grower in the BMS stable.

Not far behind is the cardiovascular drug Eliquis, which nearly doubled its sales in 2016. The two products together are tracking to produce about $9 billion in combined sales in 2017 for Bristol-Myers Squibb – not bad for a company that has not seen numbers like that since the peak days of Plavix.


Shifting Focus

Several companies are also heading into the realm of biosimilars. Merck announced the U.S. launch of Renflexis, a biosimilar of Remicade. Renflexis was approved by FDA on April 21 for all eligible indications and is the first medicine available in the United States under a global biosimilars development and commercialization agreement between Merck and Samsung Bioepis.

That same month, FDA granted tentative approval for Lusduna Nexvue (insulin glargine injection) 100 units/mL, a follow-on biologic basal insulin in a pre-filled dosing device. Lusduna Nexvue is being developed by Merck with funding from Samsung Bioepis.

Amgen has a portfolio of 10 biosimilars in development. During September the U.S. FDA approved one of those biosimilars, MVASI (bevacizumab-awwb), for all eligible indications of the reference product Avastin.

MVASI is the first anti-cancer biosimilar, as well as the first bevacizumab biosimilar, to gain FDA marketing clearance. MVASI won approval for treating five types of cancer: in combination with chemotherapy for non-squamous non-small cell lung cancer (NSCLC), in combination with chemotherapy for mCRC, glioblastoma, metastatic renal cell carcinoma in combination with interferon alfa and in combination with chemotherapy for persistent, recurrent, or metastatic carcinoma of the cervix.

MVASI is the first product from Amgen’s collaboration with Allergan to gain U.S. marketing approval. Amgen and Allergan’s bevacizumab biosimilar is also undergoing review by the European Medicines Agency, following a Marketing Authorization Application filed in December 2016.

Several of the companies profiled in this issue have been shifting and enhancing where they focus their time and energy, either in R&D or other aspects of their business.

Roche has undertaken a broad, ongoing effort to advance the personalization of cancer immunotherapy by delivering treatment options tailored to the specific immune biology associated with a person’s tumor. In pursuit of this goal, Roche is developing 20 cancer immunotherapy medicines across nine types of cancer and in more than 50 combinations with other medicines. Roche is dedicated to advancing the science of cancer immunotherapy and exploring multiple biomarker approaches including PD-L1 immunohistochemistry, tumor gene expression, RNA sequencing and tumor mutational burden (TMB).

GlaxoSmithKline announced that it is terminating development programs that are unlikely to generate sufficient returns. The company has so far made decisions to terminate, partner, or divest more than 30 preclinical and clinical programs. The Group has additionally undertaken a strategic review of its Rare Diseases unit and is considering options for future ownership of these assets.

In January 2017, AstraZeneca reduced its number of growth platforms to five with the creation of CVDM, which combines the Diabetes franchise, Brilinta/Brilique, and any new launches.

In October 2016, Novo Nordisk updated its R&D strategy and priorities to reflect the increasingly challenging payer environment, particularly in the U.S. market, by applying an even higher innovation threshold for progressing R&D projects. Executives say Novo Nordisk will further intensify exploration of current assets in adjacent disease areas of high unmet need as well as identify new assets using our existing technology platform. In addition to the other areas, new areas to pursue in R&D are NASH (non-alcoholic steatohepatitis), diabetic kidney disease, and cardiovascular disease.

According to executives, as a result of the updated R&D strategy and priorities, Novo Nordisk in 2016 decided not to progress its current development projects within oral insulin and combinations involving oral insulin. In addition, a number of changes to the portfolio of early-stage projects were also implemented.

During mid-June 2017, J&J announced the completed acquisition of Actelion for a total purchase price of $30 billion in cash. Having acquired all publicly held shares of the leading biopharma company for $280 per share, Actelion is now a member of the Janssen family.

“Through this transaction, Janssen will establish a sixth therapeutic area that will be a growth engine for us as our combined team builds on the market-leading position of Actelion’s therapies,” says Joaquin Duato, executive VP and worldwide chairman of Pharmaceuticals for Johnson & Johnson. “Actelion’s PAH franchise, including differentiated, innovative medicines Opsumit, Uptravi and Tracleer expands our Janssen business and provides a leading commercial position in an established area of transformational medical innovation for patients with serious illnesses and significant unmet medical needs.”

In 2016, Pfizer concluded an extensive assessment of its commercial businesses – Pfizer Essential Health and Pfizer Innovative Health. “We concluded that shareholders would benefit best from our continuing to operate these two businesses within Pfizer, taking advantage of our operational strength and financial flexibility,” says Pfizer CEO Ian Read.

Company executives say Pfizer Innovative Health achieved strong revenue growth in 2016 due to the performance of a differentiated and diverse group of new and older products, including the breast cancer drug Ibrance, the vaccine Prevnar 13, the rheumatoid arthritis drug Xeljanz, the neuropathic pain drug Lyrica, and the anti-smoking drug Chantix.

Pfizer Essential Health established market-leading positions in sterile injectables with more than 250 products, biosimilars with three marketed products and the industry’s largest anti-infectives portfolio with 80 assets globally. The anti-infectives portfolio was further bolstered through the acquisition of AstraZeneca’s small molecule anti-infectives portfolio primarily outside of the United States. The Essential Health business also includes many of Pfizer’s long-established products such as Lipitor and Celebrex.


Acquisitions & Collaborations

Acquisitions again played an important role in 2016 as well as thus far in 2017 with the companies profiled in this issue.
In August 2017, Gilead and Kite Pharma announced that the companies had entered into a definitive agreement pursuant to which Gilead would acquire Kite for $180.00 per share in cash. The transaction, which values Kite at about $11.9 billion, was unanimously approved by both the Gilead and Kite Boards of Directors and is anticipated to close in the fourth quarter of 2017.

Pfizer in 2016 acquired Bamboo Therapeutics, a privately held biotechnology company based in Chapel Hill, N.C., focused on developing gene therapies for the potential treatment of patients with certain rare diseases including Duchenne muscular dystrophy (DMD) and Friedreich’s ataxia (FA). Through this acquisition, Pfizer acquired a number of novel assets, key technology and manufacturing capabilities that executives say position the company to be a leader in this promising area of research that has the potential to be game-changing.

For Bayer, a particular highlight of 2016 was the acquisition of Monsanto, which is intended to further strengthen Bayer as a life science company and create substantial additional value in the long-term value via more innovation, stronger growth and greater efficiency.

“The two businesses are highly complementary, both in terms of their geographical fit and their product portfolios,” says CEO Werner Baumann. “It is a good step for Bayer as a whole since the two companies’ combined expertise will improve our ability to help address one of the most urgent issues of our time: how to feed the some 10 billion people who are expected to be living on our planet by 2050.”

Baumann says with Monsanto, Bayer would be better able to provide farmers worldwide with a product offering that is tailored to their needs and offers them genuine added value: from the right choice of seeds through seed treatment to controlling weeds, pests and plant diseases.

In a more pharma-focused move, in December 2016 Bayer established a joint venture called BlueRock Therapeutics with Versant Ventures with combined funding of $225 million. The venture will develop stem cell therapies for curing a range of diseases.

“BlueRock Therapeutics is the second large investment made by the Bayer Lifescience Center, which has the mission to rapidly uncover, encourage and unlock fundamental scientific breakthroughs in medicine and agriculture,” Baumann says.


Lawmakers Focus On Generic Competition

Pharma companies are trying (and with some success) to overcome the impact of generic competition with a renewed focus on R&D and the reshuffling of resources. These are not the only strategies the industry uses but one of those longstanding tactics has drawn the attention of U.S. lawmakers.

In September, Reuters reported that a hearing, held by members of the House Judiciary Committee’s antitrust subcommittee, discussed ways to prevent drugmakers from using rules developed to safeguard patients to instead block the sale of cheaper medicines.

The focus of the hearing was on the use by some pharmaceutical companies of FDA’s “Risk Evaluation and Mitigation Strategies” program to protect their pharmaceuticals from generic competition.

According to Reuters, under the FDA program, generic companies often must buy samples of a drug they want to copy from the brand name company that makes the drug, rather than a wholesaler.

Drugmakers have been accused of refusing to make such sales, and the House and Senate are both considering legislation that would allow generic drug companies to sue to demand samples.

The legislation under consideration would also provide for damages for generic companies denied access to brand name drugs.

Under the FDA’s REMS program, 71 drugs are covered by varying levels of protection. Drugs with REMS include Indivior’s Suboxone, Sanofi Genzyme’s Lemtrada and Danco Laboratories’ Mifeprex. \

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