Top 20 pharma report.
Nonetheless, the ranking remained relatively stable (we included last year's position in the chart on the right for reference). That likely won't be the case next year, with shakeups due to further generic erosion and AbbVie's shift over to the Top Biopharma ranks. In fact, as more Tops Pharmas derive greater shares of revenue from their biologics programs, we may have to rethink the whole Pharma/Biopharma split in a few years. ...
--Gil Y. Roth Editor
01 PFIZER, INC.
235 E. 42nd St.
New York, NY 10017-5755
Tel: (212) 573-2323
Fax: (212) 573-7851
As we've seen in past years, Pfizer reflects the trends and of the rest of the Top Pharma cohort. This isn't to say that they're all following the #1 player in our market, but rather that Pfizer is so large that it manages to create a sort of microcosm for pharma as we know it.
Big patent expirations? Check!
Patent problems in India? Check!
Fewer acquisitions? Check!
Niche blockbusters for orphan indications? Check! (well, soonish)
Partnerships with other majors? Check!
Working up some biosimilars? Check!
More layoffs? Check!
Settlements large and small with governments and individuals? Check!
Non-traditional collaborations in emerging markets? Check!
Tough decisions on pursuing risky but lucrative therapeutic programs? Check!
Deep thinking about what a pharma company needs to be? Check!
This year, that involved seeing what happens when the biggest drug in the world goes off the patent cliff. Because of Ranbaxy's 180-day exclusivity period, Pfizer's Lipitor didn't go through a full year of race-to-the-bottom pricing for its statin, but the results were rough nonetheless; Pfizer lost $5.6 billion in Lipitor revenues in 2012. If you're scoring at home, $5.6 billion is larger than all but eight drugs' 2012 sales: Lantus, Advair, Crestor, Remicade, Humira, Rituxan, Herceptin and Avastin, (The fact that the last three of those drugs all come from Roche helps explain why that company is our #1 Biopharma.)
Lipitor's free-fall continued in 1Q13, with the drug shedding another $769 million in sales to come in at $626 million. That collapse has dropped Lipitor to #5 in Pfizer's sales ranks, behind Lyrica, Enbrel, Prevnar 13 and Celebrex. In a case of "what the patent gods take away, they also giveth," Pfizer received a patent extension for Celebrex in March 2013, extending coverage for that drug through December 2015, rather than May 2014.
One of the stated reasons that Pfizer purchased Wyeth in 2009--helping the company reduce the overall impact of Lipitor's expiration--did in fact hold up, despite our snarky comments. Pfizer's top three sellers, as of 1Q13, come from the Wyeth deal.
That doesn't mean Pfizer now has a stable structure. In January 2013, Pfizer spun out it animal health business in an IPO as Zoetis, a move it announced in June 2012. That move was one of a series of divestitures for the company. At the time, Pfizer held on to 80% of the new company's shares. The stock performed well in its first several months and, in May 2013, the decision was made to divest control entirely, offering Pfizer shareholders an opportunity to exchange shares and pick up an interest in Zoetis at a 7% discount, beginning in June. If it can't find enough takers, it may try again or use a special dividend to dispose of its remaining shares.
Meanwhile, top management is still considering whether to split Pfizer up further. In January 2013, chief executive officer Ian Read said the company may reorganize Pfizer around two units for branded and generic drugs. According to a Bloornberg report, Mr. Read told analysts in a conference call, "We will move toward separate management [for those segments], and at that point we'll evaluate whether shareholders would prefer to have the opportunity to invest in two separate companies or not." He also added that speculation was fruitless.
Three months later, chief financial officer Frank D'Amelio told Bloornherg that the company is in "a study year" and would spend 2013 assessing whether to make such a split. At that time, Mr. Read noted that a move of that proportion would take three years to execute. In the short term, the company will build a tramework where those two segments are a bit more transparent, so investors can get a better idea of the health of each business. Speculation, however, remains fruitless.
We've covered this topic in past years, and it looks like Pfizer is waiting to see how the Abbott/AbbVie split is received by the investing public. Abbott was in a much thornier situation than Pfizer is, dependent as Abbott was on the sales of a single drug (Humira) to fuel more than half of its pharma revenues. No Pfizer drug accounted for more than 8% of total pharma revenues in 2012 (9% in 1Q13, as Lyrica sales grew 12%).
There's one aspect of this branded/generic spit that's never been clear to us: what happens when current branded drugs go generic? Does the new branded company just stop making them, keep producing it as a new "established portfolio," or hand them off to the old generic company, even though the two firms are supposed to he independent? I suppose we'll find out the answer to that from AbbVie soon.
However Pfizer is structured, it's going to see a nice earnings bump of $1.4 billion courtesy of Protonix, a Wyeth drug that saw its pa tent expire in 2011. How will they get that much money out of an expired med? Well, Teva and Sun Pharma both launched at-risk generics of Protonix in 2007 and 2008, lost an infringement case, and recently settled with Pfizer and Takeda (which now owns Protonix' other seller, Nycomed) for $2.2 billion. Pfizer will receive 64% of the payout. And that's why they call it an "at-risk launch".
Pharma R&D remains even riskier, of course. Pfizer has seen several approvals in the past year that may help propel it into the post-Lipitor era. The most anticipated of these was Eliquis, the anti platelet treatment Pfizer co-developed with Bristol-Myers Squibb. That drug was cleared for reduction in the risk of stroke and systemic embolism in patients with nonvalvular atrial fibrillation by the FDA in December 2012 after several delays. It'll battle Pradaxa (Boehringer Ingelheim) and Xarelto (J&J) to supersede the longstanding standard of care warfarin.
Pfizer and BMS are hoping to expand Eliquis' label to cover recurrent venous thromboembolism (VTE), which will help push the drug toward its predicted mega-blockbuster status. For now, sales were quiet in 1Q13 as Eliquis had to gain a foothold against those established competitors. Strong head-to-head data will help.
Pfizer also got approval in the U.S. and Japan for Xeljanz, its oral treatment for rheumatoid arthritis (RA), in November 2012. That JAK3 inhibitor will try to carve out a niche against the injectable drugs that dominate the market: Humira, Remicade, Enbrel, and others. As with those treatments, trials are underway in a number of immunological areas. If it snags a fraction of the sales of those biologics (as well as reaching patients who can't tolerate them), Xeljanz could reach blockbuster status in short order. There are other JAK inhibitors reaching the market soon, which is why Pfizer began direct-to-consumer ads for Xeljanz in recent months.
In April 2013, the EU's Committee for Medicinal Products for Human Use (CHNLP) rejected the drug based on its risk/benefit profile. CHMP was concerned about serious infections, GI perforations and malignancies, and did not feel that the drug produced consistent reduction in disease activity and joint damage. Pfizer appealed the ruling.
The EU also dragged its heels a bit on Bosulif, an oral treatment for chronic myeloid leukemia that the FDA approved in September 2012. The European Commission gave the drug conditional marketing authorization in March 2013, pending a CHMP review.
That sounds like a somewhat productive pipeline, albeit one fraught with uncertainty about market uptake and competition. On the development side, analysts are intrigued by palbociclib, an investigational compound for breast cancer. Phase II results were impressive enough that the FDA gave the treatment Breakthrough Therapy designation, which could speed it to market. (We're talking a near-quadrupling of progression-free survival on average.) In drug development terms, that means maybe 2015 or '16. Some analysts think it could become hit peak sales of $5 to $8 billion, which would constitute a real game-changer for our mega-pharma company. Palbociclib is being co-developed with Onyx, in a deal that stretches back to the Warner-Lambert days.
As big as Pfizer is, it doesn't have an infinite R&D budget. In fact, the company slashed R&D spending by 13% in 2012, with plans to drop it by another 10% or so in 2013. Examining its pipeline and the research cuts that Pfizer has made, it looks like the company is less involved in early research and more focused on development, a model proposed by other major pharmas in recent years. That's ironic, because several of its new drugs were actually discovered and developed in house. Which is also ironic, because Pfizer was criticized for many years for not being able to develop anything that wasn't licensed or acquired.
In March 2013, Pfizer quit development of filibuvir, a treatment for hepatitis C. That field has gotten so competitive. Pfizer concluded that it wouldn't be able to make enough of an impact, and bowed out.
The company also surrendered on an Alzheimer's disease treatment it was developing with Johnson & Johnson, after a trial failed in July 2012. Pfizer and J&J did continue a Phase 11 study of the biologic as a subcutaneous formulation, which wrapped in February 2013, according to clinicaltrials.gov. There's been no word on the results, but we're going to assume that there was no fantastic result in a subpopulation that will warrant continued development.
As we said at the outset, many of the stories that you'll find in other Top Company profiles can be found within Pfizer. The world's biggest pharma has finally begun to fall back to the pack. Lucky for them, everyone else's patent woes mean they'll likely stay in the top spot for another year.
TOP 20 PHARMA NEWSMAKERS
JOHN KELLY, PFIZER GLOBAL SUPPLY
OUR #1 COMPANY CAN BE a bellwether for the rest of the industry, from R&D focus and outsourcing practices to network rationalization and technology applications. We spoke to John F Kelly, vice president of Strategy and Transitioning Sites for Pfizer Global Supply (PGS), to find out how the company has retooled and how it's positioning itself for the future, including its plans to build partnerships with a limited number of CMOs.
Contract Pharma: How has Pfizer Global Supply's structure changed since we last spoke in 2011?
John Kelly: One of the most important things is that we've developed a fundamental value proposition for what PGS brings to Pfizer, to balance Quality/Compliance, Supply Reliability and Delivering Value, without ever compromising on Quality/Compliance. In Addition we're beginning to consolidate all of our small molecule manufacturing into a single operating unit. We had an organization that was more closely aligned with the commercial businesses: Primary Care, Specialty Care, Established Products and Emerging Markets. What we've done is to begin creating Pharmaceutical Manufacturing Operations, or PharmaOps, to organize a network of small molecule manufacturing sites.
CP: When was that change made?
JK: Beginning in December 2012. That team is organized into three groups: API plants, solid oral dose, and sterile injectables.
CP: What was the rationale?
JK: We want to tie our technologies more closely together. Having these in the same team brings a different perspective to the discussion about the technology, the size and the shape of the network.
They used to be organized geographically, when we had many more plants. Then we moved to a business-facing model, and now we're looking at a technology focus.
The driver was to put common technologies together. As we look to drive efficiencies, we have teams that speak a common language about their shared technologies, working together.
We have plans to roll Emerging Markets plants into the PharmaOps group. That will put all small molecule manufacturing operations into one group. Eventually, there'll be three operations groups: small molecule, large molecule, and consumer. That's the model we're looking to build.
We're trying to bring more of the strategy function within my team. The strategy component of Network Performance, which is there to drive operational efficiencies across our network, now reports to me.
CP: Congratulations! But tell me, how do you define strategy?
JK: It means different things to different people, doesn't it? One thing it's not is a tactical, "What do we need to deliver here and now?" quick punch. What my team tries to do is to balance what we need now--what we need to deliver this year and in the next few years--with a longer-term view, beyond a multi-year horizon. Now, that's not so easy in this industry, but the reality is, you need to take that perspective.
It might involve a projection of the network that we're going to need, because it takes time to shape the network for the future. In the case of Network Performance, we need to consider the opportunities to use different tools across our sites that may take time to implement. I'm talking about tools that could set up our plants for success in the longer term.
Some people will tell you that their strategy is simply to get through the year, and that might hold up, depending on the circumstance. But we're looking at the longer term. How can we use our fundamental value proposition to deliver value to Pfizer, Inc.?
CP: How has your group been involved in doing that?
JK: We had two major strategic projects in the past two years: we spun off our Animal Health business and divested our Nutrition business.
The Animal Health move took a long time to prepare, because it was a very integrated business, at all levels. I'm talking about shared facilities, integrated processes, and more. Pfizer is very good at integrating businesses; that makes it a challenge to separate them.
As part of the Zoetis [Animal Health] spinoff, we separated 25 manufacturing facilities that were largely dedicated to Animal Health. We carved out some additional sites that were essentially two facilities on one property.
We had acquired Nutrition as part of the Wyeth purchase, and we had five manufacturing sites dedicated to that business. We divested that to Nestle in November 2012.
Those are corporate projects for Pfizer, Inc. that we supported from a strategic point of view.
CP: And how do you prepare for something like Pfizer, inc. 's potential split into two companies, branded and generic?
JK: We have a very flexible manufacturing network that can be adapted to whatever strategy the company takes in the future. Having that network flexibility is one of our key goals. Whatever the future direction of the business is, PGS is going to be there to support the company and add value going forward.
CP: What are the deciding factors in what facilities you keep or divest?
JK: Certain parts of our business clearly have technology that is in demand. Their volume and capacity utilization is high. Take sterile injectables: that's a very heavily utilized network, and we're making investments in it.
Then take our API and solid oral dose facilities: as you look at products that are going off patent and the new product pipeline, we see a different mix both in terms of the volumes required for API and the dosage units. So that's where most of our focus has been. A lot of the sites that have exited the network have come from reviews of our API and solid oral dose needs.
It's about understanding demand five-plus years down the road. Where will the volume be and where is the business going? Given the nature of our patent-protected business, we can be fairly certain as to when it will happen. You can circle the date on the calendar.
CP: Did you have many single-product facilities in the network?
JK: The majority are multi-use facilities. We had a dedicated Lipitor plant in Ireland. That was a high-volume site dedicated to making those tablets. It could potentially have been used for other purposes, but our other sites were able to handle multiple products already.
CP: Where are you headed in the short term?
JK: We have five focus areas for this year:
1 Optimizing our supply performance and inventory management. It's critical to have the right products in the right places at the right time.
2 Managing our external partners. I foresee the day when we'll be looking at our internal network and our external partners on a very even playing field.
3 Deploying our Network Performance platform across our supply network. How can we increase our performance and effectiveness across the network. When we identify a plant that's strategic going forward, we want to invest in that plant to achieve the highest levels of operational effectiveness.
4 Accelerating the transition to a future state of supply network. Changes take time, because of tech transfer, regulatory process, and other reasons. We want to get to that next state (not necessarily an "end state") more quickly.
5 Embedding an "own it" culture. We want colleagues to take ownership of the business, in terms of what we do and what we deliver. It may seem obvious, but with 22,000 supply colleagues around the world, there has to be an effort to create a culture of ownership.
We've always been a metric-driven company. We're working on forward-looking, predictive metrics, rather than ones that look at the historical scorecard.
CP: When Pfizer Inc. is reviewing its long-term strategy, how much does it tap PGS as a consultative resource?
JK: With Tony Maddaluna being part of the executive leadership of the company, we're part of the discussion. It's incumbent on us to contribute From that role. We're involved in nearly every strategic initiative that the company undertakes.
CP: We last spoke when you were just starting in this job in 2011. What have' you learned in the two years since you took on this role?
JK: As we've reshaped our network, it's been a challenge. The value that a manufacturing and supply network can deliver has become very apparent to me. Delivering on it is a challenge. Exiting sites, whether through sale or closure, is difficult; you're separating colleagues who've been with the company a long time.
It's not a case of getting rid of underperforming sites. These sites deliver, so that's not an issue. Some of them are award-winning facilities, hut because of the changing mix of our products, it necessitates that we reshape the network. That's why we make a significant effort to sell sites where we can, to retain jobs and continue operating in their communities. That's a challenge, because the market for facilities has changed. It's not that easy to sell a manufacturing site anymore. There needs to be a "win-win" value proposition for buyer and seller. We work very hard to find that sweet spot, where we can sell a facility and keep it an ongoing operation.
But in some cases there isn't a market for certain sites, usually because of overcapacity in the industry.
CP: What's the proportion of closures to sales?
JK: It's approaching 50/50. Given what we've seen in the past few years, we knew we were in a tough market. Being able to sell half our transitioning sites was a very good outcome.
CP: Is most of that interest from CMOs?
JK: It's generally split between CMOs and smaller pharma companies that are trying to enter a particular market although there is at least one example where we sold a site to a big pharma company.
CP: What types of sites garner the most interest?
JK: We've divested a consumer manufacturing site and a solid oral dose site recently. We also sold a clinical scale biologics site. It's a diverse range. What seems most effective is if we have a value proposition that includes some level of a trailing supply agreement.
It's incumbent on the buyer to have a plan to bring in new business, of course, and not rely on that supply agreement too extensively.
CP: When we spoke two years ago, you were dealing with a network of almost 500 suppliers. How has that changed?
JK: When we spun off our Animal Health business, 200 or so CMOs were supplying that group. So that by itself pared down our external network, allowing us to focus on around 200 or so suppliers. It's still a couple hundred suppliers, and that's a large number. We wait to identify that handful or so that we can work with more closely in a partnership.
CP: What's involved in that sort of partnership? Early, you mentioned the notion of a level playing field between internal network and external supply.
JK: It takes a fair amount of trust, and a level of transparency for both parties. We need to understand their full capabilities and utilize that in our decision-making when we source products.
I should say that the notion of a level playing field is in regards to our key external partners. Not all of our 200 suppliers have the capability to work with us in this way and deliver value.
Given the geographic and technology needs of our business, certain partners bring certain attributes and capabilities that might drive us to work with them more extensively.
CP: What are you looking for in (hose potential part tiers?
JK: That'll he based on their supply performance, their regulatory performance, their geography, their technology and other factors.
CP: Can you tell me anything about those forward-looking metrics you mentioned earlier?
JK: It's based on that notion that past performance is no indicator of future results. It's about looking at trends and developing new metrics that we hadn't looked at before that might be more predictive of performance. It's not ready for prime time yet.
Tel: (41) 61324 1111
Fax: (41) 61324 8001
Novartis' integrated healthcare model has kept it near the top of our charts, with contributions coming from a wide range of areas. That setup hasn't totally protected it from the patent cliff, as pharma revenues fell by $1.2 billion in 2012, which is almost exactly how much Diovan sales dropped as it began to face generic competition.
Diovan's erosion has actually been slower than anticipated in the U.S. While the combination Diovan HCT product has competition from Mylan's generic, the monotherapy, which generated more than 60% of Diovan revenues, has yet to see a generic entrant. This is because the rights to its 180-day generic exclusivity period are held by Ranbaxy, an Indian company that has gotten into a lot of trouble with the FDA in the past decade. In May 2013, Ranbaxy made a major settlement with the agency, and expects to get its generic Diovan monotherapy approved any time now. Since that approval will start the six-month exclusivity window, it looks like Novartis may not take too bad a revenue hit in 2013.
By the following year, of course, much of the bottom will fall out. Zometa and Gleevec patents will drop this year and 2015, respectively, leaving Novartis with more holes to fill. By then, revenue growth from its newer products may save the company from an extreme sales drop. Novartis certainly isn't at risk of losing its spot as the #2 pharma in the world, but the Diovan uncertainty won't help it pass Pfizer for #1.
In its November 2012 R&D update, the company noted that it had seven blockbusters by the end of 2011, and hopes to have 14 (or more!) by 2017. Gilenya crossed that barrier in 2012, and will likely be followed next year by Tasigna, Galvus and Afinitor. We're not quite sure where another six (or more!) are going to come from, since they'll (likely) need to replace Diovan, Gleevec and Zometa/Reclast. In addition, some fast-growing products may level out or fall quickly as competition mounts. (We're looking at you, Gilenya. Sure, you may have blasted through the blockbuster ranks in no time flat as a first-in-class oral treatment for multiple sclerosis, but the arrival of Sanofi's Aubagio and Biogen Idec's Tecfidera may take the wind out of your sails.)
Novartis does have a raft of products that it plans to file for registration in the next year-plus, along with label expansions for critical products. Late-stage prospects cover oncology, heart failure, COPD, and an anti-inflammatory biologic that may have some benefits against MS.
In oncology, the company projects that physicians will shift from Gleevec to Tasigna as more data comes in; Novartians contend that Tasigna has a lower risk of progression for chronic myeloid leukemia than Gleevec does, with the implication that it can lead to treatment-free remission in patients. That would be an Litter game-changer and would redound to Novartis' credit.
The company also hopes to see good results from Jakavi, its JAK1/JAK2 inhibitor to treat the blood cancer myelofibrosis. Novartis got Jakavi approved in the EU, Canada and other markets, but licensing partner Incyte has the U.S. rights locked up. Incyte managed $136 million in Jakafi sales in 2012, and $48 million in 1Q13. Novartis saw $35 million in 1Q13 revenues from non-U.S. markets.
Novartis received Breakthrough Therapy designation for a treatment for patients with anaplastic lymphoma kinase positive (ALK+) metastatic non-small cell lung cancer (NSCLC), based on strong Phase I results. Two Phase II trials are ongoing and the company plans to go into Phase III later this year, with a filing as early as 2014, if all goes well.
There are also very high expectations for the company's daily COPD combo-treatment QVA149. Peak sales estimates run as high as $5.0 billion, if Novartis can get its highest dose approved. One of the two ingredients in QVA149, glycopyrronium bromide, was approved in the EU in October 2012 as the Seebri Breezhaler, a once-daily maintenance dose of COPD.
Novartis made history in November 2012 when it received FDA approval for Flucelvax, the first flu vaccine made by cell culture rather than egg-based manufacturing. The new vaccine, to be made at a facility in NC paid for in part by the U.S. Department of Health and Human Services, should be able to accommodate both seasonal influenza and a pandemic disaster. The company is trying to build up its vaccine portfolio into a profit-making unit.
Novartis suffered a regulatory setback in April 2013 when India's Supreme Court ruled that Gleevec (imatinib) is not eligible for patent protection in that country. Novartis had received a patent for imatinib in 1993, but the version in Gleevec is a compound that allows for bioavailability. The company argued that the molecule that was patented in 1993 "could not safely be administered to patients and represented only the first step in the process to develop Glivec as a viable treatment for cancer." It's a complex case, and not simply a compulsory licensing incident, although the Indian government has complained that the price of a round of treatment of Gleevec is too high.
In June 2013, Novartis began investigating a report that sales reps in India have been artificially inflating sales for Galvus diabetes medication, lying on invoices and using bonus money to buying Galvus from wholesalers, which would registered it as sales.
In other regulatory-legal news, Novartis was charged with colluding with competitors in two European markets--J&J in the Netherlands over generic fantanyl, and Roche in Italy over blocking Avastin in favor of Lucentis--and also got sued twice in four days in April 2013 by the U.S. government over kickbacks--to doctors to prescribe hypertension and diabetes drugs, and to pharmacies to move kidney transplant patients over to its immunosuppressant drug. The physician-related suit includes the charge of a $10,000 dinner for three at famed sushi restaurant Nobu. They should've held out for Masa. In November 2012, Novartis paid $20 million to the U.S. and Texas over Medicare fraud charges.
Each of those events (plus the ongoing quality troubles as a number of Novartis and Sandoz sites) sounds bad, but the worst press Novartis got in the past year came when chairman Dan Vasella retired, and Novartis revealed that it would pay him as much as $78 million over six years as part of a noncompete clause.
The press, the Swiss public, and many shareholders went ballistic. Coming in the same year that Novartis posted a sales shortfall and (more importantly) 2,500 layoffs, the package came off as obscene. Within weeks, both parties canceled the clause, even though Dr. Vasella pledged "to make the net amount available for philanthropic activities."
Novartis has challenges ahead with multiple expirations, but its pipeline is delivering at the right time to see it through.
03 MERCK & CO., INC.
One Merck Dr.
P.O. Box 100
Whitehouse Station. NJ 08889-0100
Tel: (908) 423-1000
Fax: (908) 735-1253
Merck and Sanofi swapped spots again in our Top 20 ranks, with Sanofi's currency problems trumping Merck's major patent expiration. But, boy, was that expiration a doozy. Singulair, previously Merck's top seller, lost patent protection in August 2012 in the U.S., and sales for the year fell by $1.6 billion. Singulair revenues dropped another $1.0 billion in 1Q13, and will post at least that big a drop in 2Q13, leaving Merck with a $2.0 billion hole to climb out of, just to stay even with 2012.
Further, as a result of ceding territories in its legal settlement with J&J, Merck's revenues for Remicade took a $600 million hit in 2012. Good thing Merck has Januvia and its 23% growth rate to keep it going!
Well, until 2013, that is. Merck's runaway best-selling diabetes treatment posted a 4% sales drop in 1Q13. The company contends that this was a result of wholesaler inventory drawdowns, and that sales would grow at mid-single-digits in the U.S. for the rest of the year and low double-digits everywhere else. In comparison, sales of Janumet, a combo of Januvia and metformin, grew 4% in 1Q13 to $409 million.
The bigger worry for Merck is that Januvia will turn out to be tied to an increased risk of pancreatitis and pancreatic cancer in users. An animal study conducted in 2008 seemed to show a risk for that extremely lethal cancer, and in March 2013, the FDA and EMA both began investigations into whether GLP-1 therapies like Januvia increase that risk in patients. The company contends that it has mountains of evidence from its clinical trials and patient records demonstrating the safety of Januvia, but if there's one thing we've learned from diabetes treatments, it's that you never know what will crop up over long timelines and large patient bases.
With Januvia slowing down, and patent expirations coming for Temodar and Maxalt--and their combined sales of $1.6 billion in 2012--Merck needs a boost from its pipeline.
Two years ago, chief executive officer Ken Frazier declared that Merck wouldn't cut its R&D budget in order to goose earnings. It was an admirable mission statement, showing that Merck is out to develop useful therapies, not cater to short-term shareholders. In March of this year, he took another big R&D step, replacing research chief Peter Kim with Roger Perlmutter. Dr. Perlmutter had left Merck in 2000, moving over to Amgen where he oversaw R&D operations and helped get approval for nearly a dozen drugs, including Prolia/Xgeva, Sensipar, and Nplate. Shortly before we went to press, Dr. Perlmutter removed Merck's "franchise head" management layer, resulting in some senior-level layoffs. More reductions in R&D are planned in the months ahead.
Outside observers considered Dr. Perlmutter's hiring a reproof to Dr. Kim's 10-year tenure, but Mr. Frazier was very careful not to lay the company's R&D problems at Dr. Kim's feet. Merck did have some high-profile development issues in recent years. The company tried for years to market a combination of extended-release niacin and laropiprant, to get niacin's cholesterol-lowering benefits without the facial-flushing side effects. The drug was approved by the EMA in 2008, but shot down by the FDA in the same year. Turns out, the FDA's caution was warranted. In December 2012, a massive clinical trial revealed that the combo not only had no beneficial effects compared to statins, but that it also increased adverse effects, including diabetic complications. Merck withdrew the drug from all markets.
In February 2013, Merck announced that it was delaying filing its new osteoporosis treatment, odanacatib, for approval until 2014, rather than the first half of 2013, as originally planned. The company noted that it needed to examine the efficacy and safety results of an ongoing extension trial. The data-monitoring committee flagged a side effect from the trial, but Merck hasn't disclosed what it is. All they've told the public is that "we continue to believe in the potential of odanacatib to address unmet medical needs for patients with osteoporosis and look forward to filing in 2014."
Merck is still pushing forward with vorapaxar, the antiplatelet drug it picked up when it bought Schering-Plough. One Phase HI failure led the company to write off $1.7 billion in R&D costs, but it's pushing forward with the drug for prevention of cardiovascular events in patients with a history of myocardial infarction but no history of stroke or transient ischemic attack (TIA). In February 2013, vorapaxar failed in a trial to prevent a secondary stroke in patients who've had strokes or TIA, and it boosted the rate of intracranial bleeding, to boot.
Even Merck's successes haven't been game-changers. We wrote last year about its first-in-class HCV treatment, Victrelis, which posted $500 million in revenues in its first full year, but got destroyed by Vertex's competitor. Victrelis revenues were flat at $110 million in 1Q13, and more competition is coming.
Merck also gained approval for a drug that's brought on condemnation among industry-watchers. In May 2013, FDA approved Liptruzet, a combination of Merck's Zetia and atorvastatin (generic Lipitor), to lower LDL cholesterol. In a press statement about the approval, the company noted, "No incremental benefit of Liptruzet on cardiovascular morbidity and mortality over and above that demonstrated for atorvastatin has been established." To paraphrase, "This branded drug does not appear to be any better at preventing heart attacks than generic Lipitor." Given the controversy surrounding Merck's treatment of its previous Zetia combo, Vytorin, it's surprising that the FDA approved the drug before a large outcomes trial, due to finish in 2014, was assessed.
On the plus side, Zostavax sales recovered after years of shortages due to manufacturing problems. Those gains were more than offset by the ongoing generic erosion of Cozaar/Hyzaar, but at least the shingles treatment is well on its way to reaching blockbuster status for Merck.
R&D failures and ongoing patent expirations have given Merck executives a lot of sleepless nights, but the company may have a cure for that! In May 2013, Merck's got a favorable FDA advisory panel result for first-in-class insomnia treatment suvorexant. As we went to press, Merck received a complete response letter for surovexant, calling for a lower starting dose of the drug than Merck had been planning. No to new trials, but yes to new CMC.
Merck's also optimistic about its PD-1-targeting melanoma treatment, lambrolizumab, but that candidate only recently began Phase II trials. In June 2013, Merck announced plans to conduct a trials in advanced melanoma and NSCLC later in the year. The FDA gave lambrolizumab Breakthrough Therapy designation in April 2013, so it could conceivably reach market quickly (albeit behind BMS' PD-1 candidate, nivolumab). If the NSCLC trial works out, Merck could have a mega-blockbuster.
It's a big bet, but Merck's R&D shortfall in years past means the company has to swing for the fences to stay competitive in its post-Singulair years.
174 Avenue de France
Tel: (33) 1 5377 4000
Fax: (33) 1 5377 4296
Currency fluctuation giveth, and it taketh away. Last year, a strong Euro pushed Sanoh ahead of Merck for the #3 spot in our ranks. This year, an 8% drop in the value of the Euro makes Sanofi's performance Look worse than it was. Pharma revenues actually grew 5% last in constant exchange rates (CER), to nearly [euro]30 billion. Still, we're fickle taskrnasters here at Contract Pharma, so Sanofi is officially the #4 company in our 2012 list.
Much of Sanofi's growth came from the world's best-selling diabetes drug, Lantus, which added [euro]1 billion in revenues Last year (+26% in CER). Sanoi caught a break in February 2013 when Novo Nordisk's Lantus competitor, Tresiba, received a complete response letter from the FDA, in which the agency asked for an outcomes trial. That move could keep Tresiba out of the U.S. market for years, and Sanofi will be the prime beneficiary.
Lantus' gains, along with revenues from the Genzyme acquisition, have helped offset the slower-than-expected generic erosion of Plavix. Sanofi received much lower royalties from BMS for Plavix and Avapro sales in the U.S., but Sanofi's Plavix revenues were slightly up in Euros, from [euro]2040 to [euro]2066. Sanofi's Plavix revenues dropped 6% in 4Q12 and 11% in 1Q13, while Sanofi's Avapro/Aprovel sales dropped 34% and 21% in those quarters, respectively. Meanwhile, sales of cancer treatment Eloxatin cratered in 1Q13, falling 85% to $78 million. Without that drop, Sanofi's top products would have had a flat quarter, instead of an 8% fall.
Along with the erosion of Plavix sales, Sanofi is also out $53 million, after France's antitrust authority fined the company for disparaging Plavix generics. Teva complained that Sanofi engaged in a "strategy of denigration" against its generic entry in 2009. Sanofi projects that it will lose $1.1 billion in earnings (sales plus royalties from BMS) for Plavix in the first half of 2013.
We've covered Sanofi's plans to move into the post-Plavix era previously: buy Genzyme, do heavy-duty internal/external R&D, grow in emerging markets, vaccines, generics and animal health, and, of course, make cost cuts. No major restructuring programs were announced in the past year, but the company did reveal its plans to consolidate its operations in its home country of France in September 2012. R&D operations in general were tabbed to grow or be maintained, while industrial vaccine operations would have to "improve [their] economic performance." Sanofi hopes for 900 voluntary retirements by 2015 as part of "streamlin[ing] support functions to respond to the Group's diversification and improve their efficiency."
Shortly before press time, Reuters reported that Sanofi plans to drop 207 jobs in France, the net result of 376 layoffs and 169 new job openings on the R&D side. That news source said that union documents showed a net loss of 445 employees being at the Sanofi Pasteur vaccine unit (754 layoffs and 309 new roles), and another 243 jobs cut from its animal health and generic businesses. Saofi would not confirm those figures.
The fate of Sanofi's research site in Toulouse has been up for debate, after Sanofi announced it would move anti-infectious research there to a site in Lyon. In May 2013, the company reported that it will look at spin-offs, local startups and "creation of a technological platform to provide services for Sanofi and other biotechnological or pharmaceutical companies" at the site.
In September 2012, Sanofi got FDA approval for Aubagio, the oral multiple sclerosis treatment that came over with the purchase of Genzyme. That treatment, caught between Novartis' established Gilenya and Biogen Idec's potential mega-hit Tecfidera, may not reach blockbuster status. Initially, the EMA voted that Aubagio doesn't count as a New Active Substance, which would put the drug at risk of generic exposure as soon as 2016. Sanofi requested a review of that decision and, shortly before press time, the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHIMP) reversed that decision. The move gives Sanofi eight years of data exclusivity and two more years of market exclusivity from the date of approval.
The company is still waiting for approval for MS treatment Lemtrada, the future of which was a point of contention during negotiations to buy Genzyme. Analysts aren't too high on Lemtrada's prospects, arguing that newer MS drugs may overtake its benefits. CHMP recommended it for approval based on a pair of Phase III trials comparing it to Rebif.
One of Sartofi's biggest drug approvals was for a product with a limited patient base. In January 2013, the FDA approved Kynamro, a cholesterol treatment co-developed with Isis, to help reduce bad cholesterol in patients with homozygous familial hypercholesterolemia (HoFH). There are only a few hundred people in America with HoFH, but what's significant is that Kynarrup is the it uses antisense, a gene silencing technique that's been long promised to transform drug development. Only one antisense drug has been approved before this one, and Kynamro stands a chance at becoming the first commercially successful one.
Sanofi also made news with the approval of Zaltrap, a colorectal cancer treatment. However, it wasn't the sort of news the company wanted. Several months after the August 2012 approval, doctors at Memorial Sloan-Kettering Cancer Center Lambasted the drug's pricing, contending that it was twice as high as that of Avastin, while not appreciably better when adjusted for dosage size. Within a week, Sanofi offered an effective 50% discount on Zaltrap in the U.S.
Sanofi's partner on Zaltrap is Regeneron, a 25-year-old pharma firm (and the newest addition to our Top 10 Biopharma ranks, thanks to the sales of Eylea in 2012). The companies are also collaborating on dupilumab, a biologic treatment for asthma (and other indications) that may revolutionize treatment of that illness, as well as other programs. In February 2013, Sanofi informed Regeneron of plans to raise its equity stake in the company; it currently holds 17% of shares and but has an agreement in place not to acquire more than 30%.
In June 2013, the FDA approved the sBLA for Sanofi's four-strain influenza vaccine, Fluzone Quadrivalent, in people age six months and older. The new vaccine will include two A strains and two B strains to protect against variations in flu seasons.
Not all the R&D results have been positive. Also in June 2013, Sanofi threw in the towel on a pair of Phase III candidates, iniparib for non-small cell lung cancer, and otamixaban, an anticoagulant. Sanofi said it would take a $285 million charge to write down iniparib, but didn't mention costs related to otamixaban.
For now, Sanofi's pharma fortunes are tied to Lantus and its successor, Lyxumia, which was approved in Japan shortly before press time. If the latter doesn't suffer the same fate as Novo Nordisk's Tresiba, Sanofi may gain some much needed breathing room as it passes by its patent cliff.
05 GLAXOSMITHKLINE, PLC
980 Great West Rd.
Brentford, Middlesex 1W8 9GS
Tel: (44) 020 8047 5000
Fax: (44) 020 8047 7807
GlaxoSmithKline is at a crossroads. Year-in and year-out, GSK is among the biggest of the big, but its overreliance on a single product has made it vulnerable and has left the company searching for the way forward. It's suffered a boatload of patent expirations, but none have been as damaging as those that beset the competitors ahead of it in our ranks.
GSK is the first company in this year's list to have an utterly out-of-whack[TM] ratio between its top seller and its second-best performer. In this case, Advair brought in 6.4 times the revenues of Avodart. In fact, Advair garnered more sales than all of GSK's other blockbusters combined.
That's not as bad as some other companies in our ranks, as you'll see. To be fair, had diabetes treatment Avandia not been reduced to rubble by a super-restrictive REMS program, GSK would have had a little more balance in its portfolio. Still, it sets up a situation where GSK has to rely on Seretide staying ahead of next-generation asthma and COPD treatments (and that its unique delivery method remains difficult to substitute). Can they get their pipeline to pay off in time?
GSK finally completed its hostile(ish) takeover of development partner Human Genome Sciences in August 2013, raising its initial bid by $1.0 billion to top out at $3.6 billion. The move brings lupus treatment Benlysta and HGS' bio-pipeline under GSK's aegis. Benlysta posted sales of $110 million in 2012.
In February 2013, decided on an "expansion of our new major change programme," which is British for "more restructuring." The move piggybacks the restructuring announced in 2Q12, and is expected to yield $1.5 billion in savings by 2016, at a cost of $2.3 billion. Part of the move entails reducing its presence in Europe due to the "sustained shift ... in the European reimbursement and pricing environment." GSK's sales in Europe dropped 7% in 2012 and fell 3% in 1Q13 as a result of government price cuts.
During its 1Q13 earnings announcement, GSK announced plans to establish a Global Established Products portfolio of "tail" pharma products. The group should include around 50 products with annual sales of $4.5 billion, and will have its own management group. Sales for that segment will be split out beginning in 2014, but there's no GSK talk (yet) of spinning GEP into its own company. In a conference call, chief executive officer Sir Andrew Witty said the move "opens up optionality for us in the future," which is British for "maybe." GSK is also looking to sell its Lucozade and Ribena drink brands, which some analysts contend could bring in around $1.5 billion.
Those structural fixes will help juice earnings, but GSK needs to see pharma growth soon. The company has had a number of FDA approvals recently, including two oral treatments for melanoma, COPD drug BREO Ellipta, a quadrivalent flu vaccine, and an anti-toxin for inhalational anthrax. There are also applications pending in the U.S. and EU for albiglutide, a once-weekly diabetes treatment. The NDA was filed in January 2013, so that might take a while to process.
Peak combined sales estimates for the two melanoma drugs range from $750 million to $2.3 billion, while BREO Ellipta, a new combination treatment co-developed with Theravance, could become the successor to Advair. No one is projecting $8 billion in revenues for the once-daily drug, especially because it hasn't been cleared to treat asthma, but some estimates do range as high as $4 billion in annual sales.
There's a multi-billion-dollar question mark at the center of GSK. An FDA advisory panel recently voted to reduce the REMS program on diabetes treatment Avandia, after "reanalysis" of the controversial trial that showed increased risk of heart attacks and strokes. If the FDA acts on the panel's advice, will GSK be able to benefit? The company hasn't expressed any interest in widening Avandia's use, and the drug lost its patent protection 2011. It brought in $3.2 billion in 2006, before evidence arose of its increased risk of heart attacks.
GSK faces some tough headwinds in Europe. Alternatives to Advair, the loss of Vesicare (expired co-marketing pact), and well as generic erosion for a number of products, including Valtrex, Paxil, Lamictal, Combivir, has left the company in a mild decline. For 2012, that puts GSK ahead of the game. If BREO Ellipta and the myeloma drugs can break big in their markets, and abiglutide can get off the launch pad, GSK might be in a good position when its next round of patent expirations hit in 2015.
06 ASTRAZENECA, PLC
2 Kingdom St.
London W2 6BD
Tel: (44) 00 7604 8000
Fax: (44) 020 7604 8151
AstraZeneca is the last of our top six companies to post a sales drop in 2012, and it was a doozy. A wave of expirations and other price pressures led to a $5.6 billion shortfall, with little to offset it. Only Pfizer posted a larger total sales drop, and only Bristol-Myers Squibb (coming in at #11) fell by such a large percentage. The loss of patent protection for Seroquel IR was the main culprit, lopping $3.0 billion off of 2012's results, and another $627 million from 1Q13.
Even AZ's top performer, Crestor, showed weakness, as the statin faced pressure from generic Lipitor. Its 6% drop last year accelerated in 1Q13, with sales falling 12% to $1.3 billion. The drug lost a patent baffle in Australia in March 2013, where it brought in approximately $350 million in 2012 sales, but AZ successfully defended Crestor's patents in the U.S. in December 2012, leading to a settlement with several generic companies and opening the door for an off-brand Crestor several months prior to its July 2016 pediatric exclusivity extension. Nexium will go next, likely cratering its $4.0 billion in revenues.
There's little growth from AZ's newer products, certainly not enough to hold back the next wave of patent expirations. This situation cost chief executive officer David Brennan his job in April 2012, and the company now has to hope that the new top dog, Pascal Soriot, can turn things around.
Mr. Soriot previously served as chief operating officer of Roche's pharma division and chief executive at Genentech, so he has some idea of what a productive pharma company looks like. His first move after joining the company in August was to conserve the company's cash by suspending $2.2 billion in share repurchases.
In March 2013, Mr. Soriot offered his strategy for AZ's future. In his words, the company's strategic priorities are
* Driving our on-market growth platforms to return to growth as we move through a period of patent expiries and revenue declines;
* Progressing the Phase II pipeline, that has the potential to double Phase Ill asset volume by 2016, and deliver on the promise of our biologics portfolio;
* Launching a steady flow of specialty care products, balancing the company's historic strength in primary care;
* Rebuilding the R&D engine through innovation and distinctive science supported by co-location of our teams and better access to globally recognized science clusters;
* Dramatically simplifying the business, improving productivity and building a culture that supports long-term success;
* Leveraging business development and acquisitions to deliver upside to the company's base plan and to strengthen the pipeline further.
As part of that, AZ's focus will narrow to three areas--Respiratory, Inflammation & Autoimmunity; Cardiovascular & Metabolic Disease; and Oncology--while picking its spots in Infection/Vaccines and Neuroscience.
None of these moves look like they'll cover the short-term devastation that AZ faces. Even doubling Phase Ill assets by 2016 doesn't offer much growth before the end of the decade. As is, if everything breaks right, Mr. Soriot contends the company can exceed revenues of $21.5 billion in 2018. (In a sign that not everything is going to break right, AZ took a $140 million writeoff in June 2013 when it gave up in Phase III on a co-developed compound, Rigel's fostamatinib, an oral RA treatment.)
So a best-case scenario means that 2018 AZ will be almost 25% smaller than the 2012 version. You can bet that AZ isn't planning to support the current infrastructure with (at least) 25% lower revenues, so Mr. Soriot has to slash costs while still getting something out of R&D.
Last year's writeup included a pre-Soriot restructuring announcement intended to "create a simply and more innovative R&D organization with a lower and more flexible cost base." This year's overlapping attempt at "dramatically simplifying the business [and] improving productivity" will involve firing 5,050 employees by 2016, at a cost of $2.3 billion and savings of $800 million each year.
As part of the reorg, AZ announced plans to build R&D centers close to bio-clusters, in order to take advantage of talent and partnership opportunities. The company will focus on Cambridge, UK, Gaithersburg, MD and Moldnal, Sweden. For Cambridge, AZ will spend around $500 million on a new site to house its HQ and consolidate its small molecule and biologics R&D.
AZ has also restructured its executive team to reflect its R&D priorities. Research head Martin Mackay was ousted in January 2013, after barely two years on the job, and AZ now has three senior R&D positions covering discovery and early-stage development for small molecules and for biologics, and late-stage development.
Can AZ survive long enough to accomplish its goals? The company still has high hopes for anti-platelet drug Brilinta. Once projected as a Plavix-buster, Brilinta posted revenues of $51 million in 1Q13, with a 29% increase in prescriptions from 4Q12. Early analyst estimates of $1 to $2 billion (or greater!) by 2015 have been revised to $1.3 billion or so by 2018. AZ has a diagnostic that identifies a subset of patients who may stand to benefit from the drug, but will that be enough to get Brilinta to break out against Lilly's Effient and generic Plavix?
In addition to Brilinta, AZ hopes for growth from its diabetes partnership with Bristol-Myers Squibb. Their co-developed Onglyza treatment brought in $90 million (+27%) for AZ in 1Q13, but reimbursement issues have hampered prescriptions this year. They received EU approval for Forxiga, an SGLT2 inhibitor for type 2 diabetes, in November 2012, but it's in the early stages of rollout, with negligible sales. The FDA issued a complete response letter for Forxiga's U.S. application early last year; no word on how that's advancing.
In August 2012, BMS and AZ closed their deal to co-buy Amylin, giving each a share of Byetta and Bydureon revenues ($69 million in 1Q13). It's early days for that partnership, but the $3.2 price tag for half of Amylin (along with a $135 million option to "certain additional governance rights over key strategic and financial decisions regarding Amylin's portfolio"), means AZ needs to see significant results.
It'll get darker for AstraZeneca in the next few years; we hope the board, the shareholders and every other relevant party has the patience to see Mr. Soriot's strategy through.
07 JOHNSON & JOHNSON
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Tel: (732) 524-0400
Fax: (732) 524-3300
Finally! One of our Top 20 companies actually grew its pharma revenues in 2012! Johnson & Johnson's engine was firing on all cylinders last year, with major increases by newer products offsetting relatively mild declines. Remicade remains tops at the company, with four times the revenue of J&J's second-biggest seller, Velcade. That's one of the highest ratios in our ranks (although Humira and Seretide/Advair laugh at Remicade), but J&J doesn't appear hyper-dependent on its top seller, as it posted six other blockbusters in 2012, has two more primed to cross the billion-dollar mark in 2013, and is advancing a pipeline with potential mega-drugs in oncology and hepatitis C.
Sure, the company's consumer healthcare reputation remains a work-in-progress (at best), and the device business is facing around 10,000 lawsuits due to faulty artificial hips, but we're here to discuss the pharma unit (which is still negotiating a multi-billion-dollar settlement for improper marketing of Risperdal), so let's not focus on the negatives! J&J had a good year, by 2012 big pharma standards! Zytiga, its new oral treatment for prostate cancer, absolutely blew up in its first full year, more than offsetting the final collapse of Levaquin revenues. It's growing fast enough that it may just compensate for the decline of Aciphex sales, too.
At the same time, J&J's portfolio of autoimmune biologics--Remicade, Stelara and Simponi--combined to post sales of $7.8 billion (+17%) in 2012, and showed a similar growth rate in 1Q13.
For the longest time, most of the talk about J&J's new drugs centered around Xarelto, its anti-clotting drug intended to treat acute coronary syndrome (ACS). Although the drug reached the market in mid-2011 to treat deep vein thrombosis (DVT) in certain surgery patients, J&J hasn't been able to convince the FDA to approve it for ACS, where it was expected to fight for a multi-billion-dollar prize against Pradaxa and Eliquis. In November 2012, the agency cleared it to treat blood clots in patients with DVT or pulmonary embolism, but sent J&J its second complete response letter in March 2013 regarding the ACS label.
There's no word on when that'll be resolved, but J&J didn't take its eye off the R&D ball all this time. In addition to the massive success of Zytiga, the company has also seen a breakout from Invega Sustenna, the long-lasting version of its schizophrenia treatment, while getting approvals for several drugs with lower sales potential like Sirturo, a treatment for multidrug-resistant tuberculosis.
In March 2013, J&J received FDA approval for Invokana, a first-in-class diabetes treatment intended to lower blood glucose. Even with a pretty extensive set of postmarketing studies, getting Invokana onto the U.S. market is quite an achievement for J&J. Forxiga, a competitor SGLT2 inhibitor from AstraZeneca and Bristol-Myers Squibb, was turned down by the FDA because of liver cancer risks, but did receive approval in the EU late in 2012. A few days before lnvokana's approval, Lilly and Boehringer Ingelheim submitted an NDA for their own SGLT2 inhibitor, but J&J will have a significant head start on them.
There is a question of how well J&J will do in this market, given that they have to build up a diabetes sales force, but that's a much better question than, "Will we ever get our diabetes drug approved?"
The company is also hoping to get further into huge market for hepatitis C treatments with simeprivir, a drug co-developed with Medivir, which received priority review status from the FDA in May 2013. J&J also co-markets Vertex's HCV treatment, Incivo/Incivek, but that drug demonstrates how hyper-accelerated the field is. When Incivek hit the market in mid-2011, it broke records in patient uptake, posting $782 million in sales in half a year. By 2012, growth began to slow as new treatments were approved, and Lncivek reached $1.3 billion in total revenues. For 2013, it's on a pace to dip back below $1.0 bill ion. J&J reported Incivo revenues of $162 million in 1Q13, an increase of 23%. We can't recall ever seeing a drug have that steep a take-off then fall back to earth without receiving a recall or black box warning. So it's great news that J&J submitted simeprivir for approval in March 2013, but it's tough to guess how big a bite it can take out of the HCV market.
At an analyst meeting in May 2013, J&J outlined its plans to file for approval a slew of new products in the next four years, including simeprivir, a pair of cancer treatments that have received Breakthrough designation from the FDA, two more autoimmune biologics, several vaccines, and a three-month version of Invega Sustenna.
On a longer timeline, J&J is conducting Phase II trials on an inhalable formulation of party-drug/horse-tranquilizer ketamine. Early research has shown ridiculously good results in treating depression and suicidal ideation in people with major depressive disorder, as in, they get better overnight, rather than the months it can take for a conventional antidepressant to begin working. So apparently, my pharmanaut pals back at college really were on to something.
On the device end of the business, J&J hasn't shied away from major acquisitions to secure its market position, most recently the $21.3 billion buyout of Synthes in 2011. The company has been focused more on product development and partnerships on the pharma side of things. Still, a company as large J&J needs to find major new markets just to keep afloat. It may have found several. That should help keep chief executive officer and (as of 2013) chairman Alex Gorsky secure while he tries to solve the rest of J&J 's raft of problems.
(Note: we made it through an entire J&J writeup without mentioning any of its product recalls, even though they extended into the pharma side with a June 2013 recall of 32 million packages of oral contraceptives!)
08 ABBOTT LABORATORIES
100 Abbott Park Rd.
Abbott Park. IL 60064-6400
Tel: (847) 937-6100
Fax: (847) 937-9555
Welcome to the top! Now get out! Abbott's Humira was the world's top-selling drug in 2012, closing in on the $10 billion mark after a 17% uptick last year. As a reward, Abbott has split off its proprietary pharmaceuticals division into a new company, effective January 1, 2013.
We'll focus this report on AbbVie's efforts as it works through its first year as a standalone business. Now that Abbott has taken its $5.1 billion in generic sales (not quite good enough to get it in the Top 20 ranks) and left, AbbVie faces the problem of having the biggest drug in the world and not much beside it.
Humira's sales are so outsized that it represents the biggest #1-to-#2 ratio in the industry, with sales 7.8 times larger than any other product in its portfolio. In 1Q13, with AbbVie's proprietary-only portfolio, Humira posted more in sales than ALL of the company's other products. With the broadest label in its category and new indications still getting approved, Humira is sure to keep growing in the double digits, while the rest of AbbVie's drugs struggle along (AndroGel excepted, and that's starting to slow down).
In fact, when we run AbbVie as a standalone company next year, it's almost certain to be listed as a Top Biopharma, rather than a Top Pharma company, since its biologic revenues will account for more than half of its drug sales. Knocking Amgen down to #3 is quite a start for a new company! (But if you don't like that criterion for what makes a biopharma versus a pharma, we should note that paring away Abbott's generic business would have dropped pre-AbbVie to #10 in our ranks, with 2012 revenues of $18.0 billion.)
Given the importance of Humira to AbbVie's fortunes, the company is taking out all the stops to prevent competitors from developing a biosimilar of the drug in time for its patent expiration in 2016. The company is also working to downplay the biosimilars threat by developing new, patented formulations and delivery methods for Humira, but it's also been taking its case to court.
In March 2013, AbbVie sued the EMA to block the release of patient-level data from clinical studies, a followup to its April 2012 petition to the FDA to block any biosimilar of Humira, since development would constitute a violation of trade secrets. The EMA suit appeared to be in response to a request from UCB Pharma in September 2012 for Humira's clinical study reports; AbbVie argued
"Those reports therefore provide a very specific road map for a company wishing to develop a TNF antagonist for the therapeutic use in question, by enabling it to develop a similar 'biologics/biosimilar' strategy in order to produce a follow-on medicinal product or to add new therapeutic indications to an existing medicinal product. The reports also provide information about some of the hurdles the applicants had to overcome, which could reduce the development process for a medicinal product by two to three years."
UCB withdrew its request, but AbbVie is still wrestling with the EMA over this issue. We can't exactly blame AbbVie for trying every avenue to delay or stop biosimilar development, but it will seem a little dodgy if the company begins its own bioimilar initiative down the line.
AbbVie's dependence on Humira will grow even more severe as some of its key products wither. TriCor was hit with generic competition in the U.S. in November 2012, and the company's other cholesterol treatments, Trilipix and Niaspan, will get face generics within the next year. Those three thugs represented around 13% of proprietary drug sales in 2012. The company plans to lay off hundreds of salespeople in its cardiovascular area in anticipation of those revenues drying up.
So how's AbbVie going to build up its drug portfolio to complement Humira? Not with the chief scientific officer who helped launch the new company. In May 2013, the company mentioned in an SEC filing that CSO John Leonard will retire in a few months when his successor is named. Dr. Leonard had been with Abbott since 1992.
The company suffered a significant R&D failure in October 2012 when safety issues forced it to end Phase III trials of bar-doxolone (co-developed with Reata Pharmaceuticals) to treat chronic kidney disease and diabetes. Abbott had ex-U.S. rights to the drug, and some sales estimates had been in the billion-dollar range. Enrollment for trials of ABT-199, a treatment for chronic lymphocytic leukemia, were paused while the company worked out dosing and monitoring approaches for certain patients at risk of a harmful side effect.
The new company's R&D focus is on six areas: HCV, neuroscience, immunology, oncology, renal disease and women's healthm and AbbVie touts 20 mid- and late-stage programs in its pipeline. The company has hopes of getting in on the massive hepatitis C virus (HCV) market with an unnamed, interferon-free, oral Phase III treatment that received Breakthrough designation from the FDA in May 2013. The company is also continuing to advance an oral selective JAK1 inhibitor, co-developed with Galapagos, to move into the rheumatoid arthritis and Crohn's disease spaces. Elsewhere in the immunology arena, AbbVie announced a collaboration with Alvine in May 2013 focused on an oral treatment for celiac disease. The pact involved a $70 million upfront payment and an option to acquire either the compound or equity in Alvine, which is handling Phase II work.
So there are some prospects, but there's nothing in the immediate timeline that's going to narrow the spread between Humira and everything else it sells. Richard Gonzalez, the chairman and chief executive officer of the new AbbVie, has his work cut out for him, even as he counts the dollars pouring in from what could be the best-selling drug of all time.
09 ELI LILLY & CO.
Lilly Corporate Center
Indianapolis, IN 46285
Tel: (317) 276-2000
Fax: (317) 277-6579
Lilly climbed in this year's ranks, but only because BMS out-plummeted it. The Indianapolis pharma may hold steady in next year's ranking, too, although it has a pretty steep patent cliff ahead. Revenues fell $2.0 billion in 2012, with Zyprexa shedding $3.0 billion in sales.
Shortly after press time last year, Lilly received a six-month extension on Cymbalta's patent protection in the U.S., courtesy of pediatric exclusivity. (The drug isn't approved for people under 18, and Lilly doesn't plan on pursuing a pediatric indication.) That means Lilly's top-selling drug will now face generic competition beginning in December 2013, cramming most of its revenue loss into a single fiscal year. That's the best light we can shine on the prospects of the company losing most of a $5.0 billion revenue source.
Lilly also got good news in August 2012, when a U.S. court upheld its compound patent for Alimta, giving it protection through 2017. That'll keep its #2 drug on the market long enough to become #1 (unless Humalog passes it up, as it did in 1Q13). Still, the specter of disappearing Cymbalta and Evista revenues led Lilly to lay off 1,000 sales reps in April 2013. The move cleared out almost 30% of Lilly's U.S. sales force, at a cost of $64.7 million.
As with most of its competitors, Lilly hasn't had enough production from its pipeline to offset its expiring drugs. Effient, the Plavix-killer co-developed with Daiichi Sankyo, seems to have plateaued below the $500 million mark, despite the multibillion-dollar expectations for that drug. In August 2012, a head-to-head trial demonstrated no advantage for Effient over generic Plavix in acute coronary syndrome. That could kill Effient's prospects for significant growth.
Lilly suffered other R&D failures in the past year, and the company can ill afford any more hiccups. There were so many that one analyst wondered if the company has pushed too many high-risk projects into late-stage development. (In drug development, as we know, there aren't exactly a lot of low-risk candidates out there.)
Shortly after press time in July 2012, schizophrenia treatment pomaglumetad methionil washed out in one Phase II trial, and was dropped from development a month later, when a second trial's results came in.
The company also stopped development of enzastaurin in May 2013, after a poor showing in a lymphoma trial. Tabalumab, a MAb that came over with Lilly's 2008 purchase of ImClone, failed to show efficacy in Phase III trials against rheumatoid arthritis (RA) in February 2013, but the company will continue to pursue it as a treatment for lupus. In January 2013, development partner Bristol-Myers Squibb gave up its rights to another ImClone candidate, necitumumab. No official statement, but the drug had safety issues in one Phase III trial.
Lilly did receive Fast Track status from the FDA for another ImClone-derived drug, ramucirumab, to treat gastric cancer. Royalties from Erbitux sales added up to $397 million in 2012, so it would help if ImClone's pipeline started to help pay off its $6.5 billion purchase price.
Lilly had better fortune with its oral JAK1/JAK2 inhibitor for RA. In June 2013, the company posted positive results from a Phase IIb trial of the drug, which is being co-developed with Incyte Corp. The study showed that clinical improvements observed in week 24 of the trial were maintained through 52 weeks.
Lilly's most publicized failure--Alzheimer's disease (AD) treatment solanezumab--is another sign that the company is swinging for the fences. In December 2012, the company announced it would keep working on solanezumab, despite trial results that would not support a BLA filing. Lilly will start a new Phase III trial in patients with mild AD beginning in 3Q13, in hopes of finding a patient population that benefits from this treatment to block beta-amyloid plaques. In June 2013, the company had to cancel another AD treatment in Phase II, due to toxicity issues.
That leaves evacetrapib as the big potential blockbuster in Lilly's pipeline. A CETP inhibitor that raises HDL cholesterol while reducing the LDL variety evacetrapib could be a huge seller for Lilly, or it could meet the same fate as Pfizer's torcetrapib and Roche's dalcetrapib. The company began a trial of evacetrapib in high-risk vascular disease in 2012 in collaboration with the Cleveland Clinic. At a recent healthcare conference, a Lilly speaker said that there will be an update on the key Phase III trial later this year.
After all of its R&D mishaps, the company's historical focus on diabetes has become even more critical to its future. Lilly and development partner Boehringer Ingelheim submitted their oral SGLT2 inhibitor, empagliflozin, to the FDA in March 2013. The drug managed to control glucose and sustain weight loss, but will be playing catch-up with J&J's Invokana if it gets approved in early 2014.
Lilly plans to submit dulaglutide, a once-weekly treatment for type 2 diabetes, sometime in 2013. That drug is meant to take on Sanofi's top-seller, Lantus, which is only formulated for daily use, and also showed positive results against Byetta and Januvia. Another trial will test it against Novo Nordisk's Victoza.
Lilly also has an insulin glargine drug (LY2963016) that may qualify in Europe as a biosimilar of Lantus, giving it a quicker path to the market than if it was submitted as a new drug. In January 2013, Boehringer Ingelheim relinquished its interest in a basal insulin product (LY2605541) from the companies' development pact. Lilly is forging ahead with that drug, and will continue all of its pre-planned clinical trials. That's another high-risk move, since a similar product from Novo Nordisk was rejected by the FDA, pending an extensive safety trial. If it hits, it could be big, but that's how we got into this mess.
Lilly's optimism about diabetes also stretches into its insulin manufacturing operations. The company plans to add two insulin cartridge-filling lines and boost its insulin API capacity at its Indianapolis-based facilities with a $320 million investment. Previously, the company only filled insulin vials in the U.S., but the market has shown growing interest in injection pens. When complete, Lilly's expansion will employ 175 people.
Thanks to that Cymbalta extension, Lilly got a six-month reprieve on D-day, but time is running out. It's admirable that the company is sticking with Alzheimer's disease, but by the end of the decade, Lilly might resemble Novo Nordisk, a high-powered diabetes company with a few interesting side programs.
10 TEVA PHARMA
5 Basel St.
P.O. Box 3190
Petach Tikva, 49131 Israel
In a year when almost every pharma posted losses or scant gains, Teva managed 11% growth in 2012, moving it up two spots to #10 in our Top Pharma ranks. A full year of Cephalon's portfolio under its belt helped to juice results, as did another double-digit gain for relapsing multiple sclerosis treatment Copaxone.
Teva got some good news for top-seller Copaxone, which made up 22% of total pharma sales in 2012. In June and July 2012, the company received favorable patent rulings for Copaxone in the U.S. and UK, respectively. As a result, Teva should remain protected from generic exposure through 2015 at least.
In fact, the company is hoping for much longer coverage than that. Unlike the sudden implosion of revenues a typical drug faces when generics enter the field, Teva argues that Copaxone is so complex, with such a poorly understood mechanism of action, that a generic version might require full clinical trials from a regulatory body in order to get on the market. Further, MS is such a difficult disease to treat, and so prone to unpredictable, acute flareups that degrade the patient's nervous system, that doctors may be inclined to keep using Copaxone and not risk a lesser effect from a generic product. This is a case where we might see extreme reluctance to move a patient from a drug that's working fine. (The new oral MS treatments that have been making news are meant to be used if Copaxone fails or produces intolerable side effects.)
Teva is also hoping to stay ahead of the generic Copaxone curve by introducing a new dosage form that requires injection three times a week instead of the current daily injection regimen. The company has also moved forward with development of oral laquinimod for MS, with hopes of leapfrogging the oral treatments developed by Novartis, Sanofi/Genzyme and Biogen Idec in recent years.
With Copaxone (relatively) sorted out, chief executive officer Dr. Jeremy Levin can continue his work of trying to bring Teva into its specialty pharma future.
In December 2012, Dr. Levin gave a presentation to investors in which he outlined the shape of the new Teva and its growth plans. He noted that Teva shouldn't be too reliant on a single product as it currently is, and wants to expand the company's portfolio through new drugs--many licensed in or co-developed with partners--as well as New Therapeutic Entities (NTEs), Teva's term for new uses, formulations, or combinations of existing marketed drugs.
The company decided to sell its injectables manufacturing site in Irvine, CA in February 2013. The facility suffered quality issues in 2010 and Teva has poured a lot of money into remediation. Some were surprised at the decision to let the site go, but Dr. Levin noted that five other Teva facilities could take over its production. As with the Mirabel site in Montreal that Teva sold to Halo last year, the company would likely keep a supply agreement in place with the buyer of the Irvine facility.
In April 2013, he announced plans to reduce Teva's manufacturing footprint further, part of his strategy to lower expenses by $2 billion in the next five years. At that time, he noted that the company's high-priced acquisitions from the previous decade had left Teva with an inefficient structure that needed streamlining. The company has also shut down some R&D programs and ended collaborations that were outside its comfort zone.
Teva also sold off its animal health business in the U.S. to Bayer HealthCare in September 2012 for $60 million upfront and $85 million in milestones related to manufacturing and sales targets. The facility in St. Joseph, MO and Teva's Animal Health business, received a consent decree of permanent injunction in 2009, barring the unit from selling veterinary drugs. Some products returned to market in 2011 and Bayer has restored several more, with plans during the next 12 to 18 months to bring more products back after the massive GMP failures from 2007 to 2009.
In April 2013, Teva established a Global Specialty Medicines Group, with the goal of "optimiz[ing] our commercialization," according to Dr. Levin. The GSM will use the company's local generics operations to leverage its specialty offerings. In order to make its way into the post-Copaxone era, Teva will need to break into the Chinese market, where it has little presence. Its generic products are much more likely to succeed there than its higher-priced branded meds.
The company is also making strides in building a stable branded portfolio to smooth out the lumps of the generic market. In 1Q12, Teva benefited from first-to-file status for Zyprexa and an "insurance" payout from Ranbaxy for generic Lipitor. Without those boosts in 1Q13, generic revenues dropped $324 million in the U.S. The company will face more pain throughout the year, as Provigil sales fall off a cliff (4Q12 dropped 93%, from $350 million to $25 million; 1Q13 sales fell from $291 million to $24 million).
Teva is a mega-powerhouse in generics, with $10 billion in 2012 revenues, but its branded and biosimilars portfolios will dictate its future. Dr. Levin seems to taken Teva's foot off the M&A pedal, and now faces the hard work of integrating the company he inherited while advancing its R&D partnerships and finding new uses for its existing portfolio.
11 BRISTOL-MYERS SQUIBB Co.
345 Park Ave.
New York, NY 10154-0037
Tel: (212) 546-4000
Fax: (212) 546-4020
Bristol-Myers Squibb tied AstraZeneca for the biggest pert.) centage drop in revenues in 2012, with a 17% fall. Plavix sales fell $4.5 billion after its May 2012 patent expiration, and another $450 million in Avapro dollars evaporated during the year. Like AZ, it has more expirations to contend with in the next few years. Unlike AZ, BMS has some bright spots in its future.
Orencia and Sprycel raced past the $1.0 billion mark last year, and will soon be joined by Yervoy. The company also gained approval for coronary syndrome treatment Eliquis late in 2012, opening the door for BMS and development partner Pfizer to try to cut into Pradaxa's early market lead. Long-term estimates for Eliquis still consider it a double-blockbuster (bringing in at least $1.0 billion annually for each partner), but its soft launch in 1Q13 only brought in $22 million.
Meanwhile, BMS may have a mega-ace up its sleeve, as next-gen oncology immunotherapy nivolumab posted unprecedented benefits in patients with metastatic melanoma. Some analysts are excitedly projecting Avastin-like revenues from the drug.
These great results notwithstanding, BMS' "string of pearls" strategy got all tangled up last year. For years, the company has made small and mid-sized acquisitions and licensing deals to boost its pipeline and help it survive the post-Plavix period. A number of these moves have paid off, but R&D is a cruel mistress.
In January 2012, the company spent $2.5 billion to buy Inhibitex and its Phase H oral hepatitis C treatment (BMS-094). In August 2013, BMS discontinued development of Inhibitex's compound after safety issues arose, writing off $1.8 billion in the process. (Please note that we referred to the Inhibitex purchase as "a relative bargain" after Gilead spent $11 billion on Pharmasset.)
Eight months later, the company's chief scientific officer, Dr. Elliot Sigal, was replaced by Dr. Francis Cuss. Since the age difference between Dr. Sigal and Dr. Cuss is only three years (61 to 58), some analysts took this as a sign that Dr. Sigal's early retirement was attributable to the Inhibitex failure. Dr. Cuss, a 10-year veteran of BMS, was credited with integrating several past acquisitions--Adnexus, Medarex and ZymoGenetics--into the company's R&D organization.
Shortly before BMS went public with the problems in the BMS-094 trial, the company made its biggest splurge yet, going halfsies with AstraZeneca to buy Amylin (total effective price: $7.0 billion). We covered that move in the As We Go To Press section of last year's report. Amylin's commercial products, Byetta and Bydureon, contributed $137 million to BMS in 1Q13 and are expected to grow as BMS and AZ market the heck out of them. (Early assessments of the buyout need to be revised, since BMS was negotiating at a time when it knew something bad was happening with its $2.5 billion Inhibitex deal.)
The partners have built up a significant diabetes portfolio, with Amylin's products, Onglyza/Kombiglyze, and Forxiga, a first-in-class treatment for Type 2 diabetes. The FDA rejected Forxiga (a.k.a. dapagliflozin) in January 2012 based on concerns about breast and bladder cancer, but the EMA approved it in November 2012. (Sales in 1Q13 were negligible.) In June 2013, BMS and AZ received priority review status for metreleptin, an orphan treatment for lipodystrophy that came over with the Amylin acquisition. It's not expected to be a huge product, but after the drug washed out as an obesity treatment, it still seems poised to help a patient group.
The Amylin move helped build an entire diabetes team out of whole cloth, but we're skeptical that BMS will make another multi-billion-dollar deal anytime soon. There was some talk in the Wall Street Journal in March 2013 that BMS was looking for a major acquisition, potentially of Biogen Idec or Shire, "according to people familiar with the company's thinking."
That sort of talk tends to come from banks and other firms that benefit from assembling M&As, not from producing therapeutics. BMS has taken its biggest patent hits already, and even though there's more to come as Abilify, Sustiva and Baraclude (as a result of bad news from a patent court in December 2012) face generic competition in the next few years, the company looks poised to weather the storm. It swung for the fences on a few occasions, and if Inhibitex was a strikeout, then the 2009 purchase of Medarex (for $2.3 billion), which yielded Yervoy and potentially nivolumab, was a grand slam. The company has enough promising late-stage assets, fast-growing new products, and inter-company partnerships to keep it from being M&A fodder anytime soon.
12 TAKEDA PHARMACEUTICAL CO.
1-1, Doshomachi 4-chome
Chuo-ku, Osaka 540-8645 Japan
Tel: (81) 66 204 2111
Fax: (81) 66 204 2880
A 5% drop in the value of the yen kept Takeda from taking advantage of Bristol-Myers Squibb's weakness. In constant currency, Japan's largest pharma posted a 3% gain in drug revenues in fiscal 2012 (which ended March 31, 2013).
Somehow, Takeda managed to post that 3% increase in pharma sales, even though its key products dropped 21% (!) from their 2011 figures, led by a $2.3 billion drop in Actos revenues. The company doesn't break out sales of individual products very clearly, so we may be missing something in the reading, but even adding in the sub-$500 million products that Takeda lists in its annual statement and databook, sales of "major products" fell 10%, or $1.2 billion, in 2012. Accounting for both that and its reported growth means that there's $1.8 billion of "other" floating around in Takeda's pharma books. Sure wish we had loose change like that in our sofa cushions.
Opaque accounting notwithstanding, Takeda is trying to stick to a growth path despite losses from Actos and Blopress from generic competition. The acquisition of Nycomed has helped with that, providing nearly $1.0 billion in Protonix revenues (and a sizeable infringement settlement; see Pfizer's report for more on that) and entre into emerging markets where Takeda had little penetration, particularly Russia, Brazil and China.
In the U.S., it hopes for a big diabetes score with its DPP4 inhibitor, Nesina, which was approved by the FDA in January along with two combo-drugs (with Actos and metformin, respectively). Takeda also expects solid performance in the U.S. from the gout drugs that came over with last year's URL Pharma purchase, Uloric and Colcrys.
In May 2013, Takeda unveiled the latest in its rolling three-year mid-range plans. The mid-range strategy includes focusing on six therapeutic areas--Cardiovascular & Metabolic, Oncology, CNS, Immunology & Respiratory, General Medicine, and Vaccine--and getting more efficient at marketing, sales and manufacturing, using Nycomed's legacy infrastructure to improve procurement methods.
The biggest organizational news tied to that plan was the decision to integrate the Millennium Oncology unit into Takeda more fully. In May 2013, Takeda announced that Millennium's chief executive officer, Deborah Dunsire, would step down, to be replaced by her lieutenant, Anna Protopapas. In a Pharmalot interview, Ms. Protopapas commented, "The driver here is to really capture synergies and capturing the way we do ... back-offce operations, the ways of doing development and leveraging efficiencies." Oncology will still be led by Millennium's Cambridge, MA campus, but various functions will be streamlined for efficiency and savings. She noted that a third of Takeda's R&D budget is spent on oncology.
Along with its new three-year plan, Takeda unveiled its "Vision 2020" strategy for the future. It was a bit short on details, but had plenty of corporate cheering and stressed the need for diversity in its talent pool. The company made several smaller buys in the past year, mainly to shore up its new vaccine division, but it's anybody's guess as to whether Takeda will climb up our ranks as it gets past the Actos and Blopress patent cliffs.
Binger Strasse 173
Tel: (49) 6132 77 0
Fax: (49) 6132 77 3000
Pradaxa remains the big story at Boehringer Ingelheim, in more ways than one. The oral anticoagulant posted mammoth results in 2012, reaching blockbuster status in its second full year, with $1.4 billion in sales. It's also attracted a sizable amount of injury lawsuits in the U.S. due to internal bleeding side effects. The FDA has received a large number of post-marketing reports of GI bleeding in patients who have used Pradaxa, but in November 2012, the agency concluded that those rates are no higher than with new users of the standard treatment, warfarin, but will continue to evaluate the data for its ongoing safety review. (It doesn't hurt that an "antidote" for Pradaxa is in development, to help counter some of those excessive bleeding episodes.)
Pradaxa now has two competitors on the market in J&J/Bayer's Xarelto and Pfizer/BMS' Eliquis, but those drugs have plenty of ground to make up, after Pradaxa's huge U.S. launch. In 1Q13, Xarelto posted $158 million in sales, while Eliquis, which was approved in December 2012, launched with $22 million in revenues. With three of these anticoagulants on the market, we'll see how the FDA chooses balances the risk-benefit ratio as more data comes in.
Pradaxa was approved in China in February 2013, a critical market for BI. The company reported 32% growth in China in 2012, one of only three companies to increase market share in that span.
In January 2013, the FDA gave priority review (and orphan drug) status to BI's non-small cell lung cancer treatment afatinib, which recently demonstrated a near-doubling of progression-free survival against chemotherapy. BI expects the agency to take action on the NDA by 3Q13, along with a companion diagnostic co-developed with Qiagen.
BI is also making progress in its diabetes partnership with Lilly. Following on the approval of Tradjenta, the companies submitted empagliflozin, an oral SGLT2 inhibitor, for approval in both the EU and U.S. for the reduction of blood gluclose levels in patients with type 2 diabetes.
However, in January 2013, BI terminated development of one of the Lilly compounds it was working on, a novel basal insulin analog, citing "independent strategic portfolio considerations." Lilly plans to continue development and submit the treatment to the FDA as early as 2014.
With Spiriva showing solid growth (13% in Euros) and Pradaxa continuing its boom, BI's position seems secure.
14 BAYER HEALTHCARE
Tel: (49) 214 30 1
Fax: (49) 214 30 66328
Last year, we noted that Bayer is pushing to hit a goal of 26% overall growth in pharma revenues between 2011 and 2014, from [euro]9.9 billion to [euro]11.5, so 2012's 9% sales growth (in Euros) makes a very good start. In fact, the company was so happy that it made a 2015 target of [euro]13.0 billion in pharma revenues!
Bayer more than offset generic losses to Yasmin with strong performance from other established products. In 1Q13, Bayer saw an additional [euro]200 million in revenues from new products like Xarelto, Eylea and Stivarga, and expects solid results from newly approved prostate cancer treatment Xofigo. Bayer hopes to add first-in-class pulmonary hypertension treatment Riociguat to that stable of new products. All told, the company expects those five drugs to generate total sales of [euro]5.5 billion at peak, albeit including partners' shares.
As part of that goal, Bayer and partner J&J are trying to get Xarelto's label expanded, but failed to get approval for prevention of heart attacks and strokes in patients with serious chest pain or history of cardiac illness. FDA approved it for treatment of deep vein thrombosis and pulmonary embolism in November 2012. Bayer will need all five new and pending drugs to perform, as multiple sclerosis treatment Betaferon declines against the pressure of next-generation MS drugs. The company has some lofty performance goals ahead, but some wise partnering efforts have put it in a position to succeed.
15 ASTELLAS PHARMA
2-3-11. Nihonbasht-Honcho 2-chome, Chuo-ku
Tokyo, Japan 103-8411
Tel: (81) 3 3244 3000
Fax: (81) 3 3244 3272
A stellas maintains a stronghold through its transplantation/immunology and urology franchises. With only mild declines, its immunosuppressant Prograf continues to provide steady revenues despite generic competition in the U.S. Part of the reason is that these drugs are often taken long-term and generics are not as sought after in transplantation as with other therapeutic areas. In Europe, Prograf sales are steady thanks to an exclusive once-daily injectable, while continued sales growth is expected in Japan and Asia. In the meantime, Astellas has several clinical-stage drug candidates in clinical development, including ASP015K (to treat rheumatoid arthritis, etc.), ASKP1240 (prevention of organ transplant rejection), and Diannexin (prevention of delayed graft function in kidney transplantation).
In the overactive bladder space (OAB), Vesicare is the leading treatment in Japan, the U.S., and Europe. Thwarting impending declines with Vesicare's first patent expiry in 2015, newly approved Myrbetriq, which offers a different mechanism of action to treat OAB, will likely pick up any slack. Myrbetriq became available in the U.S. in late October 2012. This should provide plenty of time to implement its strategy of launching a new-generation drug to supplement the one heading toward expiry, and moving patients over to the newer therapy.
As parts of its 2014 MTP strategy, Astellas is striving to become a global category leader in a third therapeutic area, oncology A step towards realizing this goal comes with the September 2012 FDA approval of XTANDI (ertzalutamide), an androgen receptor inhibitor for the treatment of prostate cancer (developed in partnership with Medivation). On the not-so-bright side, this past May, the FDA Oncologic Drugs Advisory Committee (ODAC) voted that the application for tivozanib did not demonstrate a favorable benefit/risk profile for the treatment of advanced renal cell carcinoma (RCC). While the FDA is not bound by the Committee's guidance, its input will be considered in the review of the tivozanib, which is expected in late July.
Other oncologic efforts include the recent partnership with Ambrx for the discovery and development of novel antibody drug conjugates (ADCs), which allow for the targeted delivery of drugs. Astellas paid $15 million upfront, and will pay as much as $285 million in research, development, regulatory and sales milestones for an undisclosed number of oncology targets, which Astellas would have worldwide rights to develop and commercialize.
In May, president and CEO, Yoshihiko Hatanaka, announced plans to restructure its R&D framework. Initiatives include utilizing more external capabilities and resources, undertaking new therapeutic areas and technologies, including regenerative medicine and vaccines, and ensuring sufficient late-stage pipeline investment. Through the establishment of Astellas Innovation Management (AIM), the company aims to enhance external opportunities during the preclinical development stage, and consolidate research functions. These initiatives, scheduled during FY2013, involve reallocating resources by closing and scaling back U.S.-based research functions, some of which will transfer to the Tsukuba Research Center. OSI Pharmaceuticals will be closed, along with Perseid Therapeutics. Astellas Research Institute of America LLC will be scaled back to focus on CNS therapies. The losses related to these initiatives are approximately JPY 11 billion have been accounted for in the FY14 forecast.
As a strictly innovative drug firm, the company prides itself on its drug discovery capabilities and development portfolio, as well as a well-balanced business platform. If its OAB strategy works, Myrbetriq will make up for any losses Vesicare may suffer under pending expiry, steadying revenues as other oncology initiatives ranging from early to late-stage development candidates, progress.
16 DAIICHI SANKYO CO.
3-5-1 Nihonbashi-Honcho, Chuo-ku
Tokyo 103-8426 Japan
Tel: (81) 3 6255 1111
Fax: (81) 3 5255 7035
Daiichi's five-year business plan aims to transform the company into a 'Hybrid Business Powerhouse' by strengthening business in key markets (Japan, India, and U.S.) and emerging markets. The goals, mapped out below, entail achieving sales of Yen 1,300 billion in 2017. We're still waiting on a few late-stage development prospects from last year's report, but Daiichi's pipeline appears to be on track. Ranbaxy woes however, may linger.
The Olmesartan franchise remains essential to the company's portfolio, while it suffered from generic competition in the U.S., overall sales were up. With the looming patent expiry in the EU and Japan, anticipated product launches in 2014-15 in atrial fibrillation and venus thromboembolism by expanding in emerging countries through Ranbaxy, along with plans acquire external assets and deploy its next-generation product, edoxaban, will be vital. Daiichi also plans to expand its presence in biologics and the biosimilar business and has received a grant toward expanding bio-production facilities.
Additional per year targets include: achieving more than two new major indication launches for new medical entities (NME) including new biologics, bringing four major indications to late development stage for biosimilars, and initiating nine Phase 1 projects. Upcoming projects scheduled to be approved/launched in 2015-16 include Edoxaban in VTE, Prasugrel in CVA, Etanercept biosimilar for RA. Additionally, the company is seeking further indications for antiplatelet agent Prasugrel, marketed as Effient in the U.S. in cooperation with Eli Lilly and Co.
The company is hoping to recoup its leadership in the U.S. injectable iron market through the launch of Injectafer for iron deficiency anemia. Luitpold Pharmaceuticals, a Daiichi Sankyo Group Co. headquartered in Shirley, NY, is positioning this next-generation product to succeed the struggling anemia treatment Venofer in the niche injectables market. Luitpold is also plans to release competitive generic injectables onto the market. LPI experienced a 5.4 billion yen decline in sales as mainstay product Venofer was negatively affected by competing products, and LPI itself was affected by a warning issued by the FDA in the early part of the FY11 concerning its plant in Shirley.
In other product news, Daiichi and partner Mitsubishi Tanabe Pharma launched the selective DPP-4 inhibitor Tenelia tablets, which offer a new treatment option for type 2 diabetes, and Daiichi launched its osteoporosis treatment PRALIA (denosumab) Subcutaneous Injection in Japan. Daiichi has been working on denosumab since 2007, when it licensed the rights from Amgen to develop and market the antibody in Japan. It's also approved to treat bone complications from multiple myeloma and bone metastases, and is currently in Phase HI trials for early-stage breast cancer.
Helping to address the thorn in Daiichi's side, subsidiary Ranbaxy Laboratories has taken actions to correct the conduct that led to the investigations by the U.S. Department of Justice (DOJ) and the U.S. FDA. These efforts include undisclosed changes to management, culture, operations and compliance. According to a company statement, Daiichi Sankyo believes that certain former shareholders of Ranbaxy concealed and misrepresented critical information concerning the U.S. DOJ and FDA investigations.
Ranbaxy sales declined 29% in the fourth quarter, primarily impacted by the recall of atorvastatin in the U.S. market due to possible glass contamination. The company says it has taken several Corrective and Preventive Actions (CAPA) and began shipment of atorvastatin to its formulation facility in the U.S. Also, during the quarter, 15 regulatory agency inspections from the U.S. FDA, EU Countries/ EMEA, Germany, South Africa and India were conducted at Ranbaxy's global manufacturing sites. Now that progress has been made in the negotiations with the FDA's DOJ, which has been a major issue the past few years, Daiichi plans to step up the evolution of its Hybrid Business Model. This includes recently integrating Daiichi and Ranbaxy's business operations in Thailand to offer generics, and utilizing Ranbaxy to support Daiichi's Brazilian subsidiary to enter the branded generics market there.
The innovative pharmaceuticals business in Japan will need to be the driving force to help counterbalance continued erosion of Olmesartan. That is, unless Ranbaxy manages to get its act together.
17 OTSUKA PHARMACEUTICAL GROUP
2-9 Kanda-Tsukasamachi, Chiyoda-ku
Tokyo 101 -0048 Japan
Tel: (81) 3-6717-1410
18 GILEAD SCIENCES, INC.
333 Lakeside Dr.
Foster City, CA 94404
19 MYLAN INC.
1500 Corporate Dr., Ste. 400
Canonsburg, PA 15317
Dey, Mylan's specialty business, focuses on respiratory, allergy and psychiatric therapies.
4-6-10 Koishikawa, Bunkyo-ku
Tokyo 112-8088, Japan
Tel: (81) 3 3817 3700
Fax: (81) 3 3811 3077
Top 20 Pharmaceutical Companies based on 2012 pharma revenues 1 Pfizer $51,214 (prev.: 1) 2 Novartis $46,732 (prev.: 2) 3 Merck $40,601 (prev.: 4) 4 Sanofi $38,259 (prev.: 3) 5 GlaxoSmithKline $33.787 (prev.: 5) 6 AstraZeneca $27.973 (prev.: 6) 7 Johnson & Johnson $25,351 (prev.: 7) 8 Abbott Laboratories $23,133 (prev.: 9) 9 Eli Lilly & Co. $20,566 (prev.: 8) 10 Teva $18,535 (prev.: 12) 11 Bristol-Myers Squibb $17,621 (prev.: 10) 12 Takeda $16,961 (prev.: 11) 13 Boehringer-Ingelheim $14,665 (prev.: 13) 14 Bayer $13,890 (prev.: 14) 15 Astellas $12.168 (prev.: 15) 16 Daiichi-Sankyo $11,504 (prev.: 16) 17 Otsuka $10.295 (prev.: 17) 18 Gilead $9.398 (prev.: 18) 19 Mylan $6,750 (prev.: 20) 20 EISAI $6.647 (prev.: 19) Note: In all Top Company profiles, dollar amounts are in millions. HEADCOUNT 91,500 (incl. 9.300 in Animal Health) YEAR ESTABLISHED 2000 PHARMA REVENUES $51,214 -11% TOTAL REVENUES $58,986 -10% NET INCOME $14,598 46% R&D BUDGET $7,870 -13% DRUGS APPROVED Drug Indication Prevnar 13 pneumococcal disease immunization for 6 years through 17 years Rebif Rebidose single-use auto-injector for relapsing forms of multiple sclerosis Xalkori ALK-positive advanced non-small cell lung cancer Inlyta adult patients with advanced renal cell carcinoma (RCC) Lyrica neuropathic pain associated with spinal capsules cord injury DRUG PROGRAMS CANCELLED Drug Indication PF-04382923 age-related macular degeneration PF-04856883 type 2 diabetes PF-04856884 renal cell carcinoma, cancer PF-04605412 cancer inotuzumab relapsed or refractory CD22+ aggressive ozogamicin non-Hodgkin lymphoma (NHL) DRUGS PENDING Dru9 Indication Xeljanz rheumatoid arthritis (EU) (tofacitinib citrate) Remoxy moderate to severe pain (U.S.) bazedoxifene- menopausal vasomotor symptoms (U.S/EU) conjugated estrogens Viviant osteoporosis treatment and prevention (U.S.) tafamidis transthyretin familial amyloid polyneuropathy meglumine (U.S.) PHASE IIB AND BEYOND Drug Indication Eliquis venous thromboembolism prevention ALO-02 Oxycodone- moderate to severe pain naltrexone core tanezumab osteoarthritis signs and symptoms (on clincial hold) dacomitinib advanced non-small cell lung cancer (PF-00299804) inotuzumab aggressive non-Hodgkin lymphoma ozogamicin palbociclib 1st line advanced breast cancer (PD-0332991) Zithromax/ malaria chloroquine MnB rLP2086 adolescent and young adult meningitis B (PF-05212366) EARLY RESEARCH PROJECTS Drug Indication PF-06282999 acute coronary syndrome RN317 hypercholesterolemia (PF-05335810) Dekavil rheumatoid arthritis PF-03715455 COPD PF-06342674 type 1 diabetes PF-04958242 schizophrenia PF-05089771 chronic pain PF-05236812 Alzheimer's disease PF-03084014 cancer PF-05280602 hemophilia PF-06252616 muscular dystrophies PF-06687859 spinal muscular atrophy PF-05402536 smoking cessation PF-06425090 clostridium difficile colitis PF-06444752 asthma DRUGS COMING OFF PATENT Drug Indication Spiriva COPD Lyrica pain Aricept Alzheimer's disease Celebrex osteoarthitis Viracept HIV Zyvox Nosocomial pneumonia caused by Staphylococcus aureus Vfend antifungal TOP-SELLING DRUGS Drug Indication $ (+/- %) Lyrica epilepsy / neuropathy $4,158 13% Lipitor cholesterol $3,948 -59% Enbrel inflammation (ex-N.A.) $3,737 2% Prevnar 13 pneumococcal vaccine $3,718 2% Celebrex arthritis $2,719 8% Viagra erectile dysfunction $2,051 4% Norvasc antihypertensive $1,349 -7% Zyvox bacterial infections $1,345 5% Sutent cancer $1,236 4% Premarin menopause $1,073 6% Genotropin HGH deficiency $832 -6% Xalatan glaucoma $806 -36% Benefix hemophilia $775 12% Detrol overactive bladder $761 -14% Vfend fungal infections $754 1% Chantix smoking cessation $670 -7% Pristiq neuropathic pain $630 9% ReFacto AF hemophilia $584 15% Zoloft antidepressant $541 -6% Revatio pulmonary arterial hypertension $534 0% Medrol inflammation $523 3% Alliance Revenues * $3.630 24% Aricept Alzheimer's disease Exforge hypertension Rebif multiple sclerosis Spiriva COPD Enbrel inflammation (U.S., Canada) Account for 71% of total pharma sales, down from 72% in 2011 HEADCOUNT 120,000 YEAR ESTABLISHED 1996 PHARMA REVENUES * $46,732 -3% TOTAL REVENUES $56,673 -3% NET INCOME $9,618 4% R&D BUDGET $9,116 -1% DRUGS APPROVED/LAUNCHED Drug Indication Ilaris active systemic juvenile idiopathic arthritis, acute gouty arthritis Simbrinza elevated intraocular pressure (I0P) in patients Suspension with primary open-angle glaucoma or ocular hypertension Jetrea sight-threatening vitreomacular traction and intravitreal injection macular hole Zortress organ rejection in adult liver transplant Exjade chronic iron overload in patients with non-transfusion-dependent thalassemia Bexsero meningitis Signifor injection Cushing's disease Flucelvax seasonal influenza Seebri Breezhaler COPD Votubia non-cancerous kidney tumors associated with tuberous sclerosis complex Jakavi myelofibrosis DRUGS PENDING Drug Indication Lucentis myopic choroidal neovascularization (ranibizumab) indacterol, COPD glycopryrronium bromide serelaxin acute heart failure PHASE HB AND BEYOND Drug Indication AFQ056 fragile X syndrome AIN457 psoriasis BAF312 multiple sclerosis BKM120 breast cancer DEB025 chronic hepatitis C LBH589 relaped or refractory miltiple myeloma LCQ908 familial chylomicronemia syndrome LCZ696 hypertention PKC412 acute myeloid leukemia TKI258 renal cell cancer EARLY RESEARCH PROJECTS Drug Indication LGX818 melanoma ATI355 spinal cord injury BYL719 solid tumors KAF156 antimalaria pseudomonas aeruginosa infection in cystic fibrosis FCC 3 H5N1 H5N1 quadrivalent influenza vaccine flu DRUGS COMING OFF PATENT Drug Indication Zometa cancer-related bone loss Comtan Parkinson's disease Reclast/Aclasta osteoporosis Gleevec oncology Focalin XR attendtion deficit/hyperactivity disorder Miacalcin osteoporosis TOP SELLING DRUGS Drug Indication $ (+/- %) Gleevec chronic myeloid $4,675 0% leukemia Diovan hypertension $4,417 -22% Lucentis age-related macular $2,398 17% degeneration Sandostatin group acromegaly $1,512 5% Exforge hypertension $1,352 12% Zometa bone metastasis $1,288 -13% Gilenya multiple sclerosis $1,195 142% Exelon Alzheimer's disease $1,050 -2% Tasigna chronic myeloid $998 39% leukemia Galvus diabetes $910 34% Exjade iron chelation $870 2% Neoral immunosuppression $821 -9% Afinitor oncology $797 80% Voltaren inflammation/pain $759 -4% Reclast osteoporosis $590 -4% Myfortic transplantation $579 12% Ritalin ADHD $554 1% Comtan Parkinson's disease $530 -14% Xolair asthma $504 5% Account for 55% total pharma sales, up form 53% in 2011 HEADCOUNT 83,000 YEAR ESTABLISHED 2009 PHARMA REVENUES $40,601 -2% TOTAL REVENUES $47,267 -2% NET INCOME $6,661 6% R&D BUDGET $8,168 -4% DRUGS APPROVED/LAUNCHED Drug Indication Liptruzet atherosclerosis DRUGS PENDING Drug Indication MK-7243 allergy, grass pollen suvorexant insomnia sugammadex neuromuscular blockade reversal vintafolide, MK-8109 platinum-resistant ovarian cancer Dulera COPD Noxafil oral tablet antifungal PHASE HB AND BEYOND Drug Indication MK-3641 allergy, ragweed anacetrapib, atherosclerosis MK-0859 MK-3415A clostridium difficile Infection MK-8175A contraception MK-3102 diabetes mellitus MK-8962 fertility, corifollitropin alfa vaniprevir, hepatitis C MK-7009 V212 herpes zoster V503 HPV vaccine (9 valent) HPV-related cancers odanacatib, Osteoporosis MK-0822 preladenant, Parkinson's disease MK-3814 V419 pediatric hexavalent combination vaccine MK-3222 psoriasis vorapaxar, thrombosis DRUGS COMING OFF PATENT Drug Indication Propecia hair loss Vytorin cholesterol Maxalt migraine Zetia cholesterol Cancidas antifungal TOP SELLING DRUGS Drug Indication $ (+/- %) Januvia diabetes $4,086 23% Singulair asthma $3,853 -30% Zetia cholesterol $2,567 6% Remicade rheumatoid arthritis $2,076 -22% Vytorin cholesterol $1,747 -7% Janumet diabetes $1,659 22% Gardasil HPV vaccine $1,631 35% Isentress HIV/AIDS $1,515 11% Cozaar/Hyzaar high blood pressure $1,284 -23% Varivax chickenpox vaccine $1,273 6% Nasonex allergic rhinitis $1,268 -1% Temodar oncology $917 -2% Fosamax postmenopausal osteoporosis $676 -21% Peglntron hepatitis C $653 -1% Zostavax shingles $651 96% Maxalt migraine $638 0% Nuvaring contraception $623 0% Cancidas antifungal $619 -3% Rotatec rotavirus vaccine $601 -8% Pneumovax pneumococcal vaccine $580 16% Victrelis hepatitis C $502 259% Account for 72% of total pharma sales, same as in 2011 DRUGS APPROVED/LAUNCHED Drug Indication Zaltrap metastatic colorectal cancer Lyxumia type 2 diabetes Once-Daily Kynamro homozygous familial hypercholesterolemia injection Aubagio relapsing forms of multiple sclerosis Auvi-Q life-threatening allergic reactions Fluzone QIV IM influenza vaccine DRUGS PENDING Drug Indication VaxiGrip QIV IM influenza vaccine Lemtrada (alemtuzumab) multiple sclerosis Lyxumia (lixisenatide) type 2 diabetes PHASE IIB AND BEYOND Drug Indication eliglustat tartrate Gaucher disease iniparib squamous NSCLC SAR302503 myelofibrosis otamixaban acute coronary syndrome alirocumab hypercholesterolemia sarilumab rheumatoid arthritis SAR399063 pre-sarcopenia EARLY RESEARCH PROJECTS Drug Indication SAR153192 solid tumors SAR650984 hematological malignancies SAR260301 PTEN--deficient tumors GZ404477 Parkinson's disease SAR391786 rehabilitation post orthopedic surgery SAR228810 Alzheimers disease SAR252067 Crohn's disease and ulcerative colitis SAR113244 systemic lupus erythematosus SAR127963 trauma brain injury SAR126119 acute ischemic stroke SAR407899 pulmonary hypertension GZ402665 Niemann-Pick type B GZ402671 Fabry disease RetinoStat wet age-related macular degeneration StarGen Stargardt disease GZ402663 age-related macular degeneration UshStat Usher syndrome 1B DRUGS COMING OFF PATENT Drug Indication Lantus diabetes TOP SELLING DRUGS * Drug Indication $ (+1/- %) Lantus diabetes $6,377 17% Lovenox thrombosis $2,434 -17% Plavix heart attack, stroke $2,656 -6% Polio/Pertussis/Hib vaccines $1,522 2% Aprovel hypertension $1,480 -18% Eloxatin colorectal cancer $1,229 -18% Influenza vaccines influenza $1,136 -1% Renagel hyperphosphatembosis $839 45% Menactra meningitis vaccine $836 18% Cerezyme Gaucher disease $814 33% Taxotere cancer $724 -44% Allegra allergic rhinitis $711 -12% Ambieri insomnia $639 -6% Adacel adult booster vaccines $638 -2% Myozyme Pompe disease $594 3% Amaryl diabetes $541 -11% Depakine epilepsy $527 -2% Account for 62% of total pharma sales, up from 61% in 2011 HEADCOUNT 99,488 YEAR ESTABLISHED 2002 PHARMA REVENUES $33,787 -5% TOTAL REVENUES $41,885 -5% NET INCOME $7,518 -14% R&D BUDGET $6,042 -3% DRUGS APPROVED/LAUNCHED Drug Indication raxibacumab inhalation anthrax Revolade/Promacta hepatitis C induced thrombocytopaenia Votrient sarcoma Fluarix Quadrivalent seasonal influenza prophylaxis MenHibrix neisseria meningitis groups C & Y & hemophilus type b disease prophylaxis influenzae Nimenrix neisseria meningitis groups A, C, W & Y disease prophylaxis Fabior acne vulgaris Sorilux scalp psoriasis Relvar/Breo COPD DRUGS PENDING Drug Indication albiglutide type 2 diabetes dolutegravir HIV infections Tyverb/Tykerb metastatic breast cancer, in combination with trastuzumab dabrafenib metastatic melanoma trametinib metastatic melanoma Flu pre-pandemic pre-pandemic and pandemic influenza H5N1 prophylaxis Anoro/UMEC COPD Relvar/Breo asthma Duac low dose acne vulgaris PHASE IIB AND BEYOND Drug Indication MAGE-A3 melanoma, non-small cell lung cancer immunotherapeutic Arzerra follicular lymphoma Benlysta systemic lupus erythematosus, vasculitis mepolizumab severe asthma sirukumab rheumatoid arthritis darapladib atherosclerosis dolutegravir + HIV infections abacavir sulphate + lamivudine vercirnon Crohn's disease Relenza i.v. influenza Patrome (IPX066) Parkinson's disease Tyverb/Tykerb gastric cancer, head and neck squamous cell carcinoma trametinib + metastatic melanoma, adjuvent therapy dabrafenib Zoster herpes zoster prophylaxis Mosquirix malaria prophylaxis MMR measles, mumps, rubella prophylaxis 2696273 adenosine deaminase severe combined immune deficiency (ADA-SCID) drisapersen Duchenne muscular dystrophy migalastat HCI Fabry disease fluticasone furoate asthma umeclidinium COPD alitretinoin chronic hand eczema EARLY RESEARCH PROJECTS Drug Indication FRAME resectable non-small cell lung cancer WT1 breast cancer 1995057 acute lung injury otelixizumab rheumatoid arthritis DRUGS COMING OFF PATENT Drug Indication Lovaza hypertriglyceridemia Avodart benign prostatic hyperplasia Relenza influenza Pandemrix A(H1N1)v2009 influenza Prepandrix influenza prophylaxis TOP SELLING DRUGS Drug Indication $ (+/- %) Seretide/Advair asthma, COPD $7,996 -2% Avodart enlarging prostate $1,252 4% Flovent respiratory $1,234 -5% Infanrix pediatric vaccine $1,228 11% Kivexa HIV $1,054 6% Hepatitis vaccine hepatitis $1,024 -7% Ventolin asthma $1,000 3% Lamictal epilepsy, bipolar $967 12% disorder Augmentin antibacterial $963 -6% Lovaza cholesterol $962 5% Synflorix pneumococcal vaccine $610 9% Paxil CNS $593 -15% Rotarix pediatric vaccine $570 19% Account for 58% of total pharma sales, same as in 2011 HEADCOUNT 51.700 YEAR ESTABLISHED 1999 PHARMA REVENUES $27,973 -17% TOTAL REVENUES $27,973 -17% NET INCOME $6,405 -32% R&D BUDGET $5,243 -5% DRUGS APPROVED/LAUNCHED Drug Indication Zinforo complicated skin and soft tissue infections, community acquired pneumonia DRUGS CANCELLED Drug Indication AZD2820 obesity AZD9773 severe sepsis AZD1480 solid tumors AZD3514 prostate cancer AZD8683 COPD MEDI-570 systemic lupus erythematosus DRUGS PENDING Drug Indication Forxiga diabetes DRUGS IN PHASE IIB AND BEYOND Drug Indication Bydureon dual diabetes chamber pen SaxaDapa diabetes Faslodex 1st line advanced breast cancer metreleptin lipodystrophy CAZ AVI serious infections naloxegol opioid-induced constipation brodalumab psoriasis fostamatinib rheumatoid arthritis lesinurad hyperuricaemia in patients with gout EARLY RESEARCH PROJECTS Drug Indication AZD 1722 end stage renal disease / chronic kidney disorder ATM AVI serious bacterial infections MEDI-550 pandemic influenza MEDI-557 RSV prevention in high risk adults MEDI5117 rheumatoid arthritis AZD1208 hematological malignancies AZD2O14 solid tumors AZD8848 asthma AZD7594 COPD MEDI207O Crohn's disease MEDI-551 multiple sclerosis MEDI5872 systemic lupus erythematosus RDEA3170 chronic management of hyperuricaemia in patients with gout DRUGS COMING OFF PATENT Drug Indication Zomig migraine Nexium GERD Blopress hypertension Symbicort asthma Crestor cholesterol TOP SELLING DRUGS Drug Indication $ (+/- %) Crestor cholesterol $6,253 -6% Nexium peptic ulcer, acid reflux $3,944 -11% Symbicort asthma $3,194 1% Seroquel XR anti-psychotic $1,509 1% Seroquel IR anti-psychotic $1,294 -70% Zoladex oncology $1,093 -7% Synagis RSV $1,038 6% Atacand hypertension $1,009 -30% Seloken/Toprol hypertension $918 -7% Pulmicort asthma $866 -3% Losec/Prilosec peptic ulcer, acid reflux $710 -25% Iressa oncology $611 10% Arimidex oncology $543 -28% Account for 82% of total pharma sales, down from 83% in 2011 HEADCOUNT 127,600 YEAR ESTABLISHED 1887 PHARMA REVENUES $2,351 4% TOTAL REVENUES $67,224 3% NET INCOME $10,514 9% R&D BUDGET $5,362 4% DRUGS APPROVED/LAUNCHED Drug Indication Dacogen multiple myeloma Sirturo multi-drug resistant tuberculosis Invokana type 2 diabetes Simponi ulcerative colitis Zytiga metastatic castration-resistant prostate cancer (mCRPC) Evarrest Fibrin problematic bleeding during surgery Sealant Patch Xarelto deep vein thrombosis and/or pulmonary embolism, reduction of risk of recurrence DRUGS PENDING Drug Indication Simeprevir chronic hepatitis C virus Simponi rheumatoid arthritis (IV) Canagliflozin/ type 2 diabetes Metformin Stelara active psoriatic arthritis bedaquiline pulmonary. multi-drug resistant tuberculosis (MDR-TS) PHASE IIB AND BEYOND Drug Indication Ibrutinib relapsed/refractory patients with chronic (PCI-32765) lymphocytic leukemia, mantle cell lymphoma Siltuximab cancer (ONTO 328) sirukumab rheumatoid arthritis Prezista fixed dose combination HIV tablet (darunavir) and cobicistat (GS-9350) Invega schizophrenia--3 month injectable SustennalXeplion long acting injectable Velcade mantle cell lymphoma 1st line Yondelis soft tissue sarcoma, relapsed ovarian cancer EARLY RESEARCH PROJECTS Drug Indication methoxsalen hematological malignancies Ipilimumab prostate cancer Infliximab Stevens-Johnson syndrome, corneal blindness 1D93 + GLA-SE pulmonary tuberculosis everolimus breast cancer Cetuximab/IMRT cancer of head and neck + Ipilimumab ABT-494 rheumatoid arthritis OPC-108459 atrial fibrillation LY2940680 small cell lung cancer EDI200 X-linked hypohidrotic ectodermal dysplasia hLL1-DOX non-Hodgkin's lymphorna, chronic (IMMU-115) lymphocytic leukemia DKN-O1 multiple myeloma, solid tumors, NSCLC DRUGS COMING OFF PATENT Drug Indication Aciphex GERD Risperdal schizophrenEa TOP SELLING DRUGS Drug Indication $ (+/- %) Remicade rheumatoid arthritis $6,139 12% Velcade myeloma/Iymphoma $1,500 18% Procnt/Eprex anemia $1,462 -10% Risperdal Consta schizophrenia $1,425 -10% Prezista HIV/AIDS $1,414 17% Concerta ADHD $1,073 -15% Stelara plaque psoriasis $1,025 39% Zytiga oncology $961 219% Aciphex/Pariet acid reflux $835 -14% Invega Sustenna schizophrenia $796 111% Simponi rheumatoid arthritis $607 48% Invega schizophrenia $550 10% Account for 70% of total pharma sales, up from 65% in 2011 HEADCOUNT 21,500 YEAR ESTABLISHED 1888 PHARMA REVENUES $23,133 3% TOTAL REVENUES $39,874 3% NET INCOME $5,963 26% R&D BUDGET $2,778 6% DRUGS APPROVED/LAUNCHED Drug Indication Humira Crohn's disease/pediatric, axial spondyloarthritis, ulcerative colitis PHASE IIB AND BEYOND Drug Indication Elagolix endometriosis Elotuzumab multiple myeloma Levodopa/ advanced Parkinson's disease Carbidopa Intestinal Gel (LCIG) Daclizumab relapsing remitting multiple sclerosis Humira hidradenitis suppurativa, peripheral (adalimumab) spondyloarthritis, uveitis HCV Interferon- hepatitis C Free Combination (genotype 1) atrasentan diabetic nephropathy ALV003 celiac disease EARLY RESEARCH PROJECTS Drug Indication ABT-199 relapsed/refractory chronic lymphocytic leukemia, relapsed/refractory multiple myeloma, non-Hodgkin's lymphoma, systemic lupus erythematosus Veliparib BRCA mutated, high grade serous ovarian and breast cancer, gastric cancer ABT-122 rheumatoid arthritis ABT-981 osteoarthritis ABT-700 advanced solid tumors ABT-767 solid tumors (breast, ovarian, prostate, or pancreatic) ABT-494 rheumatoid arthritis ABT-806 advanced solid tumors ABT-263 chronic lymphocytic leukemia DRUGS COMING OFF PATENT Drug Indication Advicor cholesterol Niaspan cholesterol TOP SELLING DRUGS Drug indication $ (+/- %) Humira rheumatoid arthritis $9,265 17% AndroGel testosterone $1,185 36% TriCor/TriLipix cholesterol $1,098 -20% Kaletra HIV/AIDS $1,013 -13% Niaspan cholesterol $911 -7% Synagis RSV $842 6% Lupron hormone treatment $800 -1% Creon digestion $659 5% Synthraid hyperthyroidism $656 3% Sevoflurane anesthesia $602 -9% Clarithromycin antibiotic $501 -9% HEADCOUNT 38,100 YEAR ESTABLISHED 1876 PHARMA REVENUES $20,566 -9% TOTAL REVENUES $22,603 -7% NET INCOME $4,089 -6% R&D BUDGET $5,278 5% DRUGS APPROVED/LAUNCHED Drug Indication Amyvid imaging of beta-amyloid neuritic plaque density in patients with cognitive impairment Cialis signs and symptoms of benign prostatic hyperplasia Tradjenta add-on therapy to insulin Jentadueto type 2 diabetes Erbitux KRAS mutation-negative metastatic colorectal cancer in combination with FOLFIRI DRUGS PENDING Drug Indication liprotamase exocrine pancreatic enzyme insufficiency empagliflozin type 2 diabetes PHASE IIB AND BEYOND Drug Indication baricitinib rheumatoid arthritis, psoriasis and diabetic nephropathy ixekizumab psoriasis and psoriatic arthritis tabalumab lupus and multiple myeloma evacetrapib CV events in high-risk vascular disease dulaglutide type 2 diabetes LY2963016 type 1 and 2 diabetes basal insulin analog type 1 and 2 diabetes edivoxetine pediatric ADHD solanezumab Alzheimer's disease enzastaurin diffuse large B-cell lymphoma (DLBCL) necitumumab squamous non-small cell lung cancer ramucirumab metastatic breast, colorectal and gastric cancers EARLY RESEARCH PROJECTS Drug Indication IL-1 [beta] cardiovascular disease CSF-1R cancer Ferroportin anemia Gemcitabine cancer Hepcidin anemia NOTCH Inhibitor cancer P13 Kinase/mTOR Inhibitor cancer p38 MAP Kinase Inhibitor I cancer p70 S6 Kinase/AKT Dual Inhibitor cancer VEGFR3 cancer DRUGS COMING OFF PATENT Drug Indication Cymbalta antidepressant Humalog diabetes Envista osteoporosis Zyprexa schizophrenia and bipolar disorder Alimta nonsquamous non-small cell lung cancer TOP SELLING DRUGS Drug Indication $ (+/- %) Cymbalta anxiety, depression, $4.994 20% diabetic peripheral neuropathic pain Alimta cancer $2,594 5% Humalog diabetes $2,395 1% Cialis erectile dysfunction $1,926 3% Zyprexa schizophrenia $1,701 -63% Humulin diabetes $1,239 -1% Forteo osteoporosis $1,151 21% Evista postmenopausal $1,010 -5% osteoporosis Strattera ADHD $621 0% Account for 86% of total pharma sales, same as in 2011 HEADCOUNT 46,500 YEAR ESTABLISHED 1944 PHARMA REVENUES $18,535 11% TOTAL REVENUES $20,317 11% NET INCOME $1,963 -29% R&D BUDGET $1,356 24% DRUGS APPROVED/LAUNCHED Drug Indication Quartette next-gen extended oral contraceptive DRUGS PENDING Drug Indication Liquinimod relapsing, remitting multiple sclerosis Lonquex chemotherapy-induced neutropenia PHASE IIB AND BEYOND Drug Indication Laquinimod moderate to severe Crohn's disease Huntexil Huntington's diease ER hydrocodone pain Nuvigil bipolar disorder Reslizunmab eosinophilic asthma ProAir Spiromax asthma Glatiramer Acetate relapsing-remitting multiple sclerosis Gemcitabine, pancreatic cancer Cisplatin, Epirubicin, and Capecitabine Olanzapine eating disorder XEN4-02 pain DRUGS COMING OFF PATENT Drug Indication Copaxone galucoma Treanda chronic lymphocytic leukemia Copaxone multiple sclerosis Provigil sleep disorders TOP SELLING DRUGS Drug Indication $ (+/- %) Generics $10,385 2% Copaxone MS $3,996 12% Treanda oncology $608 364% Women's health $448 2% ProAir bronchial spasms $406 -7% Provigil insomnia $417 19% Nuvigil insomnia $347 303% Ovar chronic asthma $297 -3% Azilect Parkinson's disease $330 14% Oncology incl. biosimilars $252 -6% Account for 94% of total pharma sales, down from 96% in 2011 HEADCOUNT 28,000 YEAR ESTABLISHED 1887 PHARMA REVENUES $17,621 -17% TOTAL REVENUES $17,621 -17% NET INCOME $2,501 -52% R&D BUDGET $3,904 2% DRUGS APPROVED/LAUNCHED Drug Indication Sustiva HIV-1 infected pediatric patients Eliquis risk of stroke and systemic embolism in patients with nonvalvular atrial fibrillation Forxiga type 2 diabetes DRUGS PENDING Drug Indication Metreleptin metabolic disorders associated with rare forms of lipodystrophy PHASE IIB AND BEYOND Drug Indication BMS-790052 hepatitis C BMS-663068 HIV-1 BMS-650032 hepatitis C BMS-986094 hepatitis C BMS-936558 squamous cell non-small cell lung cancer, unresectable or metastatic melanoma Entecavir chronic hepatitis B, rheumatoid arthritis, ankylosing spondylitis. psoriatic arthritis, juvenile idiopathic arthritis BMS-188667 lupus nephritis Abatacept juvenile idiopathic arthritis aripiprazole pervasive developmental disorder EARLY RESEARCH PROJECTS Drug Indication BMS-936558 advanced melanoma (Ants-PD-1) Daclatasvir hepatitis C Urelumab solid tumors and B-cell non-Hodgkin's (BMS-663513) lymphorna BMS-906024 acute T-cell lymphoblastic leukemia or T-cell lymphoolastic lymphoma BMS-929075 chronic hepatitis C BMS-936558 renal cell carcinoma (Anti-PD-1) BMS-911543 cancer BMS-981 164 atopic dermatitis BMS-936564 acute myelogenous leukemia and selected (Anti-CXCR4) B-cell cancers BMS-982470 solid tumors BMS-962476 atherosclerosis Nivolumab non-Hodgkin's lymphorna, hodgkin lymphoma, multiple myeloma, chronic myelogenous leukemia BMS-852927 hypercholesterolemia BMS-241027 Alzheimer's disease DRUGS COMING OFF PATENT Drug Indication Sustiva HIV Ability schizophrenia, bipolar disorder Baraclude hepatitis B TOP SELLING DRUGS Drug Indication $ (+/- %) Ability schizophrenia $2.827 3% Plavix platelet inhibitor $2,547 -64% Sustiva HIV/AIDS $1,527 3% Reyataz HIV/AIDS $1,521 -3% Baraclude hepatitis B $1,388 16% Orencia rheumatoid arthritis $1.176 28% Sprycef leukemia $1.019 27% Yervoy oncology $706 96% Erbitux oncology $702 2% Avapro hypertension $503 -47% Account for 82% of total pharma sales, down from 83% in 2010 HEADCOUNT 30,481 YEAR ESTABLISHED 1781 PHARMA REVENUES $16,961 -2% TOTAL REVENUES $18,843 -2% NET INCOME $1,588 1% R&D BUDGET $3,924 10% DRUGS APPROVED/LAUNCHED Drug Indication Nesina and fixed-dose combination type 2 diabetes Oseni + Kazano Lotriga hyperlipidemia Revestive short bowel syndrome DRUG PROGRAMS CANCELLED Drug Indication TAK-701 advanced malignancies TAK-591 hypertention MLN0518 glioblastoma motesanib advanced non-squamous non-small cell diphosphate lung cancer MLN8237 acute myelogenous veltuzumab rheumatoid arthritis DRUGS PENDING Drug Indication cetilistat obesity fixed-dose hypertension combination of Azilva tablets and amlodipine besylate H5N1 pandemic influenza brentuximab CD30 positive Hodgkin lymphoma and CD30 vedotin positive anaplastic large cell lymphoma vedolizumab moderately to severely active ulcerative colitis and Crohn's disease h. pylori erradication by concomitant therapy with proton pump inhibitors PHASE HB AND BEYOND Drug Indication brentuximab relapsed cutaneous T-cell lymphoma, vedotin Hodgkin lymphoma vedolizumab ulcerative colitis, Crohn's disease lurasidone bipolar disorder hydrochloride vortioxetine generalized anxiety disorder fasiglifam diabetes orteronel prostate cancer ixazomib citrate multiple myeloma, amyloidosis alisertib T-cell lymphoma trelagliptin diabetes vonoprazan acid-related diseases ramelteon bipolar disorder trebananib ovarian cancer ganitumab metastatic pancreas cancer idebenone Duchenne muscular distrophy EARLY RESEARCH PROJECTS Drug Indication TAK-329 diabetes TAK-733 solid tumors TAK-272 hypertension TAK-063 schizophrenia MLN4924 avanced malignancies MLN0128 multiple myeloma, Waldenstrom's macroglobulinemia, solid tumors MLN0264 advanced gastointestinal malignancies MLN2480 solid tumors namilumab rheumatoid arthritis Lu AA24530 major depressive and generalized anxiety disorders AMG 403 pain ITI-214 cognitive impairment associated with schizophrenia TOP SELLING DRUGS Drug Indication $ (+/- %) Actos diabetes $1,487 -60% Blopress hypertension $2,052 -25% Prevacid GERD $1,333 -14% Lupron prostate cancer $1,410 -8% Protonix GERD $944 92% Velcade multiple myeloma $882 20% Enbrel rheumatoid arthritis $523 -1% Account for 51% of total pharma sales, down from 66% in 2011 HEADCOUNT 46,228 YEAR ESTABLISHED 1817 PHARMA REVENUES $14,665 4% TOTAL REVENUES $18,890 3% NET INCOME $3.594 75% R&D BUDGET $3296 0% DRUGS APPROVED/LAUNCHED Drug Indication Jentadueto type 2 diabetes Tradjenta (add-on to insulin) type 2 diabetes empagliflozin type 2 diabetes DRUGS PENDING Drug Indication afatinib EGFR mutation-positive advanced or metastatic non-small cell lung cancer Olodaterol COPD maintenance Pradaxa acute deep vein thrombosis and pulmonary embolism and the prevention of recurrent DVT and PE PHASE HB AND BEYOND Drug Indication BI 695500 rheumatoid arthritis BI 201335 hepatitis C BIBF 1120 idiopathic pulmonary fibrosis afatinib head and neck squamous cell carcinoma Interferon-gamma sepsis, septic shock nintedanib NSCLC, adenocarcinoma volasertb leukemia DRUGS COMING OFF PATENT Drug Indication Combivent COPD Spiriva COPD TOP SELLING DRUGS Drug Indication $ (+/- %) Spiriva COPD $4,580 4% Micardis hypertension $2,087 -6% Pradaxa atrial fibrillation $1,425 63% Combivent COPD $1,135 6% Account for 63% of total pharma sales, up from 51% in 2011 HEADCOUNT 110,500 YEAR ESTABLISHED 1971 PHARMA REVENUES $13,890 0% TOTAL REVENUES $51,123 1% NET INCOME $3,145 -9% R&D BUDGET $2,014 -7% DRUGS APPROVED/LAUNCHED Drug Indication Xarelto seondary prevention after ACS Xofigo bone metastases Stivarga advanced/recurrent colorectal cancer (CRC), gastrointestinal stromal tumors (GIST) Skyla long-term contraception Eylea neovascular (wet) age-related macular degeneration, central retinal vein occlusion DRUGS PENDING Drug Indication riociguat chronic thromboembolic pulmonary hypertension radium-223 castration-resistant prostate cancer with dichloride bone metastases regorafenib metastatic and/or unresectable GIST DRUGS COMING OFF PATENT Drug Indication Avelox bacterial infections TOP SELLING DRUGS Drug Indication $ (+/- %) Betaferon multiple sclerosis $1,564 1% Kogenate hemophilia $1,520 2% Yasmin contraception $1,344 -10% Nexavar oncology $1,018 1% Adalat hypertension $861 -3% Mirena women's health $870 8% Avalox antibiotic $625 -8% Aspirin Cardio cardiovascular $612 9% Glucobay diabetes $525 4% Account for 64% of total pharma sales, down from 65% in 2011
Editor: Gil Y. Roth
Associate Editor: Kristin Brooks
Contributing Editor: Derek B. Lowe
All profiles written by Gil Roth. except Astellas and Daiichi-Sankyo, by Kristin Brooks
The Lowe Down capsules written by Derek Lowe (http://pipeline.corante.com)
Pipeline information compiled by Kristin Brooks
Revenue information compiled by Gil Roth
Photo courtesy of Eli Lilly & Co.
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Pfizer's continued to divest itself of all distractions (nutritional products, animal health) and put its money down on what got them to the position they've reached today. Buying other companies and stripping them down like ears of corn? No, no, discovering drugs is what they're about! It's a process so important that they're building a big new site in Cambridge, just up the street from a massive Novartis construction site, and they're planning to fill it with steely-eyed drug designers. And the compounds they dream up are so important to Pfizer's pfuture that the company is going to have them made by the cheapest labor they can find, many time zones away. So you know that they mean business. Drug development, however, will take place in Groton. It's a good thing that Pfizer never bought an island in the Indian Ocean; that's probably where the toxicology testing would end up being done. If you know someone with project-management software or videoconferencing equipment to sell, put them onto this big opportunity. Chinese phrasebooks might come in handy, too--suggested entries include translations for, "You said this would be ready two months ago," and, "No, I don't think that they have any more starting material in Groton, either."
RELATED ARTICLE: ASIA NEWS
Pfizer had ... interesting times in the far east this past year. In October 2012, India's patent board revoked Pfizer's patent for cancer treatment Sutent. That followed earlier moves by the patent board to permit generics of Sutent competitor Nexavar (Bayer) and Tarceva (Roche), and for India's Supreme Court to deny a patent to Gleevec (Novartis). Pfizer appealed the board's decision, and in June 2013 the Intellectual Property Appellate Board set aside the revocation and asked the patent board to reconsider the case in light of new information.
In August 2012, Pfizer ended its three-year supply agreement with Claris Life Sciences. The companies began working together in 2009 to supply Claris' generic parenterals to the U.S., Europe and Australia under Pfizer's name. In 2010, the FDA issued a warning to Claris regarding quality issues and banned the sale of its products in the U.S. until compliance issues were resolved. The FDA lifted the ban in August 2012 following a facility inspection in February.
Also in August, Pfizer and Mylan signed a long-term strategic collaboration to develop, manufacture, distribute and market generic drugs in Japan. Pfizer will be responsible for commercialization of the combined generics portfolio, and managing the marketing and sales effort. Mylan will be responsible for operations, including R&D and manufacturing. The pact will include a portfolio of more than 350 marketed products, as well as more than 125 additional products in development. Products included in the collaboration will be sold under the Pfizer brand with joint labeling.
A month later, Pfizer set up a joint venture to manufacture and sell generics in China with Hisun Pharmaceuticals. Making the announcement, the companies noted that Hisuin will transition from an API manufacturer into an established branded generics company. Presumably, the JV will involve investment in significant dosage form development expertise, as well as building a sales force.
In February 2013, Pfizer announced plans to close its Singapore clinical research unit, laying off 30 employees as part of global R&D cuts. The site had been established in 2000.
RELATED ARTICLE: ACQUISITION NEWS
Price: $255 million upfront, with $425 in milestones
Announced: October 2012
What they said: "By combining the advantages of Quillivant XR with Pfizer's commercialization expertise, we will be able to provide ADHD patients and their caregivers a new treatment option."
--Albert Bourla, president and general manager, Pfizer's Established Products Business Unit
RELATED ARTICLE: OUTSOURCING NEWS
In June 2013, Pfizer sold a 500,000-sq.-fit. commercial manufacturing facility in Bristol, TN to UPM Pharmaceuticals. Financial terms weren't disclosed, but as part of the deal UPM will continue to manufacture Pfizer's current portfolio of products within the facility for two years. The site was part of King Pharmaceuticals, which Pfizer acquired in 2010.
The acquisition will provide UPM with large-scale commercial capabilities for manufacturing and packaging of solid oral dosage tablets and capsules, as well as semisolid manufacturing of creams and ointments. The facility will also provide for tech transfer support, pilot plant scaleup capabilities, analytical and microbial testing, as well as dedicated suites for potent compounds.
UPM's president, James E. Gregory, noted that the facility "will give UPM the capability to annually produce 3.5 billion tablets and 680 million capsules; this will be a dramatic growth opportunity for our company and our clients."
RELATED ARTICLE: Biographical Note
John F. Kelly is vice president of Strategy and Transitioning Sites for Pfizer Global Supply (PGS). Mr. Kelly joined Pfizer in 1982 as Plant Services Engineer at the Brooklyn, NY site. In 2011, he was appointed vice president, Strategy and Transitioning Sites for PGS in New York. His responsibilities include driving PGS strategy and global sourcing, and leading the Transitioning Sites Operating unit.
Prior to his current position, he held assignments in New York (Technical Services, Plant Network Strategy) Brooklyn (Engineering, Manufacturing), Barceloneta, PR (Manufacturing, Quality Operations) and Vega Baja, PR (Site Leader).
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As mentioned in my Pfizer writeup, Novartis is confidently spending a bundle on an expanded facility in Cambridge. As the first movers in the "Let's take Big Pharma to Massachusetts" trend, they can feel proud for having been trendsetters. (Meanwhile, the degree to which New Jersey is emptying out is startling.)
The confidence is apparently justified. Novartis has one of the more wide-ranging drug pipelines in the industry, which is a good thing, since it's looking at some patent-expiration worries. Nothing at AstraZeneca or Eli Lilly level, you understand (that is, more worrisome than terrifying), but inevitable just the same. The company doesn't spend much time talking about its strategy to anyone else, so it's hard to piece together Novartis' plan to deal with all this. That wide range of drugs includes some prospects in extremely competitive fields, so the company might be looking for areas where there aren't so many elbows being thrown (the company has mentioned Alzheimer's as an interest, which is nothing if not wide open). But the wide-open fields got that way for good reasons. There will be some balancing to do ...
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Novartis makes no noises about splitting up its consolidated structure, although there's occasional chirping from financial firms that would stand to gain by brokering that sort of split. With the departure of chairman, former chief executive officer, and Alcon-deal architect Dan Vasella, the reasoning goes, it might be time to devolve. But that deal hasn't been a flop like Merck's purchase of Schering-Plough, and it doesn't seem to be a drag on the rest of the company's performance. (The April 2013 resignation of the chief fiancial officer, Jon Symonds, also added a little fuel to that breakup fire.)
Still, as we do each year, we provide a breakdown of Novartis' various revenue streams, and where they would each fall within our Top Companies listings.
Pharma: $32.2 billion (would fall to #5, between GSK and AZ)
Alcon: $10.2 billion ($4.0 billion in opthalmic pharmaceuticals would be added to Pharma, pushing Novartis past GSK
Vaccines/Diagnostics: $1.9 billion (that would be good enough for #8 in our Top Biopharma ranks)
Sandoz (generics): $8.7 billion (good enough to squeeze between Gilead and Mylan for #19 on our list)
Consumer: $3.7 billion (down $900 million from last year, mainly because of those production problems at its Lincoln, NE site)
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Novartis's total revenues and diversified structure have enabled it to challenge J&J as one of the biggest companies in the industry. The Swiss titan is also challenging J&J for the biggest meltdown of a consumer health manufacturing facility. Novartis' site in Lincoln, NE went into Operation: Shutdown in December 2011 after a scathing FDA warning letter. Consumer Health sales dropped $900 million in 2012, which the company attributes "mainly" due to the problems at Lincoln.
In April 2013, the company announced plans to lay off 300 workers from the site, and to refocus the facility to process only oral and powdered drugs. The FDA inspected the site in February 2013, and Novartis began shipping an animal health product from the site in April. Novartis has also used some CMOs to produce several of its OTC products until Lincoln gets cleared by the agency. Those products include Excedrin, Lamisil and Triaminic, which resumed shipping in 4Q12.
In January 2013, Novartis recalled 200 lots of Triaminic and Theraflu because their CR caps didn't work correctly. FDA received a dozen reports of children unscrewing bottle caps. The lots were manufactured before the warning letter in 2011.
Novartis has also been working its way out from warning letters issued in late 2011 to Sandoz sites in Colorado, North Carolina and Canada. The Colorado site was cleared in 4Q12, but another Sandoz facility was cited by FDA in May 2013. That one, in Unterach, Austria, handles parenterals and came over with the $1.2 billion EBEWE purchase in 2009.
RELATED ARTICLE: CHINA PIVOT
In April 2013, Merck opened a new manufacturing facility in Hangzhou, China. The site will provide drugs for China and the Asia-Pac region. The $120 million, 75,000-[m.sup.2] facility can hold 16 high speed packaging lines for tablets and sterile medicines. The company estimated the site's annual capacity as more than 300 million, and noted that it will package products for both clinical trials and commercial operations.
RELATED ARTICLE: PHARMA BEDFELLOWS
In a sign of how weird the pharma landscape has become, Merck and Pfizer entered a collaboration pact to develop an SGLT2 inhibitor for diabetes. In April 2013 Merck bought in with a $60 million upfront payment and will pay further milestones, in exchange for a 60% share of revenues (as well as "certain costs"). The companies will collaborate on the development of Pfizer's ertugliflozin and a combination of that compound with Janumet.
That same month, Merck began collaborating with Bristol-Myers Squibb in hepatitis C. The companies are in a non-exclusive deal to conduct Phase II trials of a once-daily oral combo of their experimental HCV drugs. Merck will conduct the trials; financial details weren't disclosed, and further development isn't covered under the pact.
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T he return of Roger Perlmutter is all you need as evidence that Merck thinks that something has been going wrong in their R&D. So far, he seems to have been given a pretty free hand to shake things up, but the problem with shaking things up at that early stage is that you don't see the results for years, assuming that you ever do at all. That's a general problem with the industry and its timelines: you grab the steering wheel and give it a good twist, and the front wheels don't respond for another 10 miles. And by the time the vehicle turns, there may well be another driver entirely.
There's quite a bit later down the pipeline, but some of what's there is worrisome. The bigger the potential market for the compounds, the more questions seem to be sticking to them. Odanacatib is coming along slower than expected for osteoporosis, and might be landing in a crowded market if it finally makes it. Anacetrapib, the CETP inhibitor, could be a gigantic drug, but that mechanism has given every company that's worked on it cause to regret their decision. Merck deserves points for bravery on that one, but bravery (while necessary) is not sufficient.
RELATED ARTICLE: ACQUISITION NEWS
Price: Not disclosed; Genfar had sales of $133 million in 2011
Announced: October 2012
What they said: "With this acquisition, Sanofi has a unique opportunity to strengthen its presence in Latin America through a large portfolio of affordable pharmaceuticals in a broad range of markets in the Andean countries and Central America."
--Heraldo Marchezini, senior vice president of Latin America, Sanofi
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So now that Genzyme's pretty well digested, and now that the nasty patent expirations have hit, what is the Sanofi we see before us? The biggest company on the French stock exchange is still going around telling investors that they're undervaluing their drug portfolio. That's even with the Regneron PCSK9 inhibitor in Phase III, putting Sanofi in good position to be first to market in what could a crowded space (it's been a while since there was a big new mechanism in atherosclerosis). They're still talking about looking around for deals, but then again, so is everyone else, so deals are correspondingly harder to come by and more expensive.
You can tell that they're trying to make the most of what they have already: the company's doing such an aggressive job with the pricing of its current drugs that the European health systems are starting to push back. All this seems to point to a quiet period at the company for the next year or two, while they tend to their own pipeline, cultivate the Genzyme stuff (and the biologic/vaccine portfolio in general), and perhaps do a small acquisition here or there. Genzyme was enough of a meal for any python of this size.
RELATED ARTICLE: OUTSOURCING NEWS
In Reverse-Outsourcing News, Sanofi will serve as the CMO for Transgene's immunotherapy products. The work is expected to begin in 1Q15 at Sanofi/Genzyme's Polyclonals site in Lyon, France. Sanofi will produce clinical and commercial batches and Transgene will be a preferred customer of the commercial manufacturing platform for 15 years. The companies will invest a combined $13 million in a manufacturing suite at the Lyon site.
In March 2013, Sanofi also signed a pact to produce API for a biologic for DBV Technologies. The company will provide scale-up, process validation, and commercial scale supply of Viaskin, a therapeutic protein delivery system.
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Price: $325 million
Announced: May 2013
What they said: "Okairos' technology complements GSK's existing vaccine technology and expertise and will enable GSK to continue its work developing the next generation of vaccines. The deal also includes a small number of early stage assets."
RELATED ARTICLE: OUTSOURCING NEWS
GSK didn't make any new major outsourcing announcements in the past year, but it did sign a multiyear extension of its drug development services pact with Aptuit. That deal covers work at Aptuit's Center for Drug Discovery & Development in Verona, Italy, a site that Aptuit bought from GSK in 2010.
GSK also extended its finance and accounting partnership with Genpact for five years. In January 2013, Paul Fry, senior vice president for Finance Services in GSK's Core Business Services, said, "Our continued partnership with Genpact is a key element in our drive to deliver simpler, more efficient and standardized business processes for GSK."
RELATED ARTICLE: SETTLE UP
Shortly after last year's issue went to press, GSK pulled a Michael Corleone and settled a whole lot of accounts. In this case, the company made $3 billion in settlements with the feds and the states (and D.C.) regarding Medicaid fraud, Avandia marketing, and improper sales and marketing of numerous products, including Paxil, Wellbutrin, Lamictal, Zofran, Imitrex, Lotronex, Flovent, Valtrex, and Advair. As part of the settlement, GSK entered into a corporate integrity agreement with the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services. The CIA also covers some of GSK's manufacturing operations, because of the fallout from its former manufacturing site in Cidra, PR.
In smaller-scale nuttiness, GSK fired the head of its China R&D unit, Jiangwu Zang, after learning that a study from his unit published in Nature Medicine contained false data.The study didn't involve patients directly, but did use some blood samples. At press time, there was no word as to whether this was an isolated incident, or if GSK is searching other trials from Mr. Zang and his team for questionable data.
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All year there have been rumors and rumblings about rearrangements inside GlaxoSmithKline. But looking back, that seems fairly normal. They've had a number of redos in the way that their research departments are set up, each time touted as The Way Things Should Really Be. I'm not sure what they do with all the posters, letterheads, notepads and other stuff that bears the acronyms and logos of the previous systems--if they have a cogeneration plant somewhere, I suppose they could burn it all for fuel.
Some of the big investment firms don't seem particularly keen on the company, and many of its investors seem fixated on the stock's dividend, regarding any growth from new drugs as an unexpected bonus. But that dividend will depend on some new drugs coming along (won't it?), a fact that income investors sometimes seem to lose sight of. GSK has a lot of stuff coming up in front of the FDA, with Breo/Relvar as perhaps the big one. These regulatory hearings will decide GSK's strategy, their dividend ... and maybe (if things don't go so well) another Grand Strategy. Here's hoping for no new slogans and posters.
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So here's another company trying the Totally New Site gambit, this one in the original Cambridge (UK, that is). At least the construction crews in the New World's Cambridge can dig away without fear of disturbing hordes of Roman silver, although the recent identification of Richard Ill's gravesite does at least take him out of the equation. I recommend caution. Given the way things have been going for AstraZeneca the last few years, I wouldn't rule out someone digging through the roof Beelzebub's living room. Admittedly, Cambridge is not its traditional location, but you never know.
But whatever magic this location (or any location) can work won't be apparent for another several years. In the meantime, AZ is dealing with an absolutely hair-curling string of costly clinical failures and patent expirations, with little prospect of near-term relief. The company is making a lot of deals, up and down its whole development timeline, in the hopes that these will do what it hasn't been able to do for itself. There have been layoffs, initiatives, re-organizations, and consolidations, and there will surely be more. By the time the new site gets opened, what sort of AZ is going to be moving into it?
RELATED ARTICLE: ACQUISITION NEWS
Target: Pearl Therapeutics
Price: $560 million, plus $590 million in milestones
Announced: June 2013
What they said: "Pearl's novel formulation technology, together with its development products and specialist expertise, are a great complement to AstraZeneca's long-established capabilities in respiratory disease, one of our core therapy areas."
--Pascal Soriot, chief executive officer, AZ
Target: Omthera Therapeutics
Price: $443 million, including Contingent Value Rights
Announced: May 2013
What they said: "[Lead compound] Epanova offers real potential both as a distinctive monotherapy for the treatment of hypertriglyceridemia and in combination with Crestor for patients at high risk of adverse cardiovascular events. This is an exciting acquisition that clearly complements our existing portfolio in cardiovascular and metabolic disease, one of our core therapy areas."
Price: Not disclosed
Announced: April 2013
What they said: "Cardiovascular disease is projected to remain the single leading cause of death worldwide over the next decade and beyond. Through novel approaches like LCAT, we hope to shift the treatment paradigms in this area to help prevent and treat these conditions."
--Dr. Bahija Jallal, executive vice president, Medlmmune unit of AZ
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Now that the long-running problems with product recalls, unapproved promotions, and so on have (generally) died down, the underlying strength of J&J's drug business is easier to appreciate. These guys are a behemoth, with a well-spread-out portfolio of products and a lot going on in the clinic, not that they feel to urge to update people very often about much of it. I suspect that there are whole programs that have been born and died in the place without ever being mentioned, the sorts of things that smaller companies would have press-released all over the landscape.
But J&J isn't shy about going out to get things to sell, if need be. There are surely quite a few VPs in there somewhere whose entire jobs consist of keeping track of all the deals that have been made or are in the works. Between the pharma/biologic side of the company and the medical devices and consumer care units, this company is so well-rounded that it looks like some sort of business school case rather than something from the real world. There's bound to be some luck involved in that, but it takes a lot of skill to manage that, too.
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Target: Aragon Pharmaceuticals
Price: $650 million upfront, and $350 in milestones, plus royalties
Announced: June 2013
What they said: "[This acquisition) further enhances our leadership in prostate cancer drug development.
"--Peter F Lebowitz, M.D., Ph.D., Global Therapeutic Area
Head, Oncology for Janssen R&D
Price: not disclosed
Announced: June 2012
What they said: "COR-1 is an early stage development compound with a novel mechanism for treating heart failure that has the potential to improve heart function by suppressing antibodies that can exacerbate this condition."
--Peter M. DiBattiste, M.D.,
Global Therapeutic Area Head, Cardiovascular
Disease and Metabolism, Janssen R&D
RELATED ARTICLE: OUTSOURCING NEWS
J&J continued to suffer supply constraints for cancer treatment Doxil in 2012, due to problems at its CMO, Ben Venue Labs. Not that money matters compared to the number of cancer patients who had to delay or forego treatment, but Doxil revenues fell from $402 million in 2011 to $83 million last year. The company reported that it had restored full access to the drug in the U.S., by employing an "alternate manufacturing approach" (that is, a second CMO finishing bulk product made by BVL). The FDA approved a generic version of Doxil in February 2013 from Sun Pharma, and has cleared subsequent lots of J&J's bioutsourced Doxil several times in 2013.
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Oh, do I hate typing AbbVie, but we seem to be stuck with it. And Abbvie itself is stuck with a few things, too: the loss of some big cardiovascular moneymakers (Tricor and Niaspan), leaving more than half its revenues to come from one drug. The good news is that drug is Humira, and since no one still knows what a biosimilar would look like or what will happen if one gets approved, its 2016 patent expiration might not matter so much.
There's a lot of oncology and CNS in the late-stage pipeline, as well as hepatitis C. But that last one looks like a brutally competitive market, and CNS has a notoriously high failure rate, even out through Phase III. So it's too early to say what's going to happen here: a few regulatory successes, and AbbVie will actually be in good shape for a while. A nasty run in the clinic ... well, they still have Humira, and if anything happens to that, things will get very bad indeed. As I've mentioned before this year, there seem to be a lot of investors buying AbbVie stock for its dividend, but drug stocks are not exactly certificates of deposit. They're ... urn, certificates of excitement. That's it.
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Doom and gloom has been the theme for these notes on Lilly over the past few years, with occasional updrafts all the way up into mere pessimism. And it's hard to make the case for anything different this time. The company's valiant, praiseworthy, and thus far utterly unfulfilling quest to treat Alzheimer's has continued, with its beta-secretase inhibitor dropping out of Phase II before we could even find out if it worked or not. That comes after a valiant and not-so-praiseworthy attempt to persuade the world that its Alzheimer's antibody trials really did work, despite every appearance of having done no such thing.
The company's making strong efforts in oncology and diabetes, but none of these are going to make the upcoming losses of Cymbalta, Humalog, and Evista easy to take. The best case you can make is that things are going to be really nasty for a while until the newer drugs kick in. And the worst case, well ... let's not dwell on that one, OK? But without some headlines within the next year about drugs that actually work in Phase II and Phase III, Lilly and its investors are going to experience it. Thus the focus on Alzheimer's--just one semi-efficacious approved drug there might turn things around. But what are the odds?
RELATED ARTICLE: ACQUISITION NEWS
Target: MicroDose Therapeutx
Price: $40 million upfront, $125 million in milestones
Announced: June 2013
What they said: "The MicroDose [respiratory] platform is both simple and attractive, and their addition will help us to address the unmet needs of the youngest and oldest patients, who have a requirement for a better way of taking the medicines they rely upon."
--Michael Hayden, President, Teva
Global R&D, and chief scientific officer
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Deal after deal, acquisition after acquisition: that's what made Teva the big generics force it is today. But now that it's the biggest company in that category, management seems to be looking around and wondering why, exactly, they went to all the trouble. The generics business is competitive and cutthroat, with lower margins than those of discovery-based drug companies. It's supposed to have some stability to make up for that, though, and Teva's probably waiting for some of that to kick in any time now. Problem is, a good bit of its (high-margin) money is coming from Copaxone, a compound that it has exclusivity on, and the multiple sclerosis space has become hugely competitive over the last two or three years.
Teva's latest idea is to split the difference between generics and completely new drugs, with something called a New Therapeutic Entity. This would be a reworked version of an existing drug--different enough to sell for more money, but similar enough to have a shorter (and cheaper) path to approval. It all depends on how many opportunities there are in that space, and no one's quite sure yet. And would a compound that's different enough to persuade payers to spend more on it really be similar enough to get an easy regulatory path?
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In June 2013, the Obama administration relented and allowed Teva's Plan B One-Step emergency contraceptive to he sold over the counter without age restrictions. The administration has yielded many disappointments since 2009, but it was quite disheartening to see the Obama White House follow the same anti-science agenda of its predecessor. In 2011, the secretary of Health and Human Services, Kathleen Sebelius, overruled an FDA decision to permit the OTC distribution of Plan B One-Step, earning the ire of a federal judge who ordered the decision reversed. The (male) judge wrote that Sec. Sebelius' move "was politically motivated, scientifically unjustified, and contrary to agency precedent."
The FDA had determined that the product was safe and not likely to be abused, but Sec. Sebelius complained that the agency's studies had not determined whether 11-year-old girls would be capable of reading and understanding the Plan B One-Step's instructions. This seems like something to take up with the Department of Education and not the FDA.
Teva will have to file a supplemental application for wider OTC distribution of the emergency contraceptive, which the FDA has promised to approve without delay.
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Bristol-Myers Squibb managed in the past year to set some kind of dollars-per-unit-time record for deals that didn't work out. Others have blown more cash, but it took them longer. The disastrous foray into a hepatitis C acquisition (Inhibitex) blew up spectacularly within months, but (at least from outside) there doesn't seem to have been much that BMS could have done about it. Like all the rest of us, they have to live and die by the clinical results, which this time came up very bad indeed. They're still in the hunt, though, in what's becoming one of the most competitive markets around.
But that's just one disease area, and this is a big company (albeit lacking consumer care, animal health, and some of the other sidelines of their competitors). Oncology has been a strong point, but Plavix's expiration was just the beginning; BMS is going to have to make up for several more patent expirations and sales-rights agreement changes in the next couple of years. While some other companies look to be cruising along placidly, at BMS they're going to be bailing water, fixing holes in the hull, repainting the railings and running fire drills, all at the same time.
RELATED ARTICLE: ACQUISITION NEWS
Price: $35 million
Announced: May 2013
What they said: "Takeda has taken another major step toward its goal of establishing a world-class global vaccine business by acquiring Inviragen and its advanced vaccine candidate against dengue."
--Rajeev Venkayya, M.D., executive vice president, head of Takeda's Vaccine Business Division
Target: Envoy Therapeutics
Price: $140 million, including upfront and contingent payments
Announced: November 2012
What they said: "Since our initial investment in 2009, it has been clear to us that Envoy's scientific excellence in combination with their vision for the utilization of bac TRAP technology have great potential to create and explore truly innovative targets across multiple therapeutic areas."
--Dr. Paul Chapman, general manager of Pharmaceutical Research Division at Takeda.
Target: LigoCyte Pharmaceuticals
Price: $60 million upfront, plus milestones
Announced: October 2012
What they said: "This acquisition is a major step forward in the expansion of Takeda's vaccine business, and a demonstration of Takeda's dedication to preventing illness in children and adults around the world."
--Dr. Rajeev Venkayya
RELATED ARTICLE: LOWE DOWN
Takeda's move this year to take direct control of Millennium, after a period of hands-off management, doesn't look like the act of a company that's confident about the future. Leaving that site alone was a great idea, they said, and completely the right plan--until it wasn't. But Takeda has been scrambling ever since the expiration of the Actos patent--despite many efforts over the years, nothing ever came along that could make up for that revenue when it finally went away. There seems to be a lot in the late-stage pipeline, but that does not equal revenue, not quite.
Takeda's chief executive officer has been talking about cozying up to academia for new ideas; it's a popular strategy, but not one that has much to point at so far. And the company is also talking about "urgency: which is one of those words I've never been sure about. In the abstract, I can see the point, but in practice, I worry that it just stirs people up to look busy. To get all Zen about it, urgency has to come from within--it doesn't get applied externally, not if you want it to have any long-term efficacy.
RELATED ARTICLE: ACQUISITION NEWS
Target: Steigerwald Arzneimittelwerk
Price: not disclosed
Announced: May 2013
What they said: "This acquisition broadens our product offering for the treatment of gastrointestinal disorders and gives us the opportunity to enhance our presence in Germany, the fast-growing regions of East-Central Europe, and the CIS countries."
--Dr. Marijn Dekkers, chief executive officer, Bayer AG
Price: $1.1 billion
Announced: April 2013
What they said: "Our experience in the field of gynecology combined with our sales and distribution expertise will help to further develop Conceptus" business."
--Andreas Fibig, president, Bayer HealthCare Pharmaceuticals
Target: Teva Animal Health (U.S.)
Price: $60 million, plus $85 million in milestones
Announced: September 2012
What they said: "Teva's animal health business is a great strategic fit that allows us to strengthen and broaden our range of animal care solutions for our customers."
--Dr. Joerg Reinhardt, chief executive officer, Bayer HealthCare
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|Date:||Jul 1, 2013|
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