The global pharmaceutical industry is once again giving out mixed messages. US drug approvals hit a 21-year high in 2017 and rose in the EU too – but beneath the surface, some of pharma’s most profitable products appear to be growing old while the pipelines of many seem worryingly dry.
2018 looks set to be an interesting year – coloured by the prospect of M&A, patent expiry and pricing challenges, but also invigorated by exciting advances in immunotherapy and oncology and the push towards curative therapies. One commentator has remarked that while some companies’ pipelines are in terrible shape, in certain therapy areas – notably cancer – innovation is so rich it could become a problem. It’s a narrative worthy of Oscar season. With the industry poised for another year of the good, the bad and the ugly, here’s the director’s cut on a classic trilogy.
The good, the bad…
So how did 2017 close out? Forecasts from GlobalData, based on predicted global revenues to November 2017, show that the make-up of the Top 10 companies in 2017 closely resembles that of 2016. But that doesn’t tell the whole story. Pfizer comfortably remains the world’s largest pharma company (by global Rx sales), with an estimated 12.1% growth in 2017, lifting its revenues beyond $50bn for the first time since 2012. This was driven largely by higher-than-expected sales of its pneumonia vaccine, Prevnar, which accounted for more than 11% of its total revenues in the third quarter of 2017. Its closest rival, Novartis, also grew impressively – boasting a projected uplift in Rx sales of 9%.
Beyond Pfizer, the biggest positive movers in the top 20 include Shire, Bayer and Merck & Co. Shire’s incredible revenue growth of almost 57%, helped by its $32bn acquisition of Baxalta in 2016, lifted it into the top 20 for the first time in its history. However, investors fear that challenges in the $11bn haemophilia market could lead to a slump in the haemophilia business it inherited through the Baxalta purchase. Bayer’s growth – a healthy 14.6% – was stimulated by a steady performance by Xarelto in Europe and Asia, and strong sales of its eye medicine Eylea in Japan, Europe and Canada. Nonetheless, new rival innovation in the anticoagulant market is already presenting challenges for Xarelto. For Merck, double-digit growth (10%) of its Rx business saw the company consolidate its position as the 5th biggest prescription drug company – with forecast sales of $38.6bn. The organisation has made significant strides in oncology, cardiovascular and CNS.
Naturally, other leading companies found 2017 much more turbulent. The most notable being Teva, whose global prescriptions sales are forecast to have slumped by a hefty 61%. The Israeli multinational has blamed the decline on the increase in generic drug approvals by the FDA, saying that increased competition and ‘customer consolidation’ had hurt sales. The only other top company to experience negative double-digit growth was Gilead Sciences, whose global Rx sales are forecast to slide by more than 13%. The fall is not wholly unexpected – this was flagged by the company in early 2017 as the double-edged sword of developing curative treatments became apparent. Gilead’s success with its curative Hep C portfolio had ultimately led to a diminishing population of target patients and played havoc with its revenues. The company hopes its $12bn acquisition of Kite Pharma (August 2017) will help it steal a march on the lucrative CAR-T market through its treatment for advanced lymphoma. Despite the bumpy ride, Gilead remains in the global top 10.
In Europe, the top 10 takes on a very different shape. Sanofi has overtaken Roche and Pfizer to reclaim its place at the top of the rankings. GlobalData forecasts that prescription sales at Sanofi grew by 7.7% in 2017, lifting its European revenues beyond $10bn for the first time since 2011. Sanofi’s success enabled it to steal the number one position from Roche, despite the Swiss giant itself managing revenue growth of 3.8%. Elsewhere, GSK’s Rx revenues slid by 5%, although estimated sales of almost $7.7bn were still enough to maintain its place as the fourth largest pharma company in Europe. Likewise, Gilead maintained fifth position despite a 17% drop in revenues.
The second half of the top 10 European companies is taken up by five companies that do not feature among the top 10 global pharma. AstraZeneca, Takeda, Astellas Pharma, Novo Nordisk and Recordati take up the final five positions, though only two – Takeda (+3.9%) and Astellas (+9.3%) – recorded growth. Novo Nordisk revenues fell by 6%.
A fistful of dollars
So what’s happening beneath the headline figures? Which therapy areas – and brands – have been driving the most growth and why? Here, GlobalData analysts review the trends in some of the most prominent therapy areas.
Oncology
Oncology has long been a key area of profit opportunity, but the recent explosion of immuno-oncology treatments has further extended the possibilities for growth. In 2017, Roche maintained its position as the market leader in oncology – continuing to be head and shoulders above its nearest rivals in terms of global sales. GlobalData forecasts 2017 oncology revenues of $28bn for Roche, almost 2.5 times the level of its closest competitor, Celgene ($11.6bn). The latter enjoyed a sales uplift of 16.3%, making it one of seven companies in the top 10 outfits to deliver strong double-digit growth in oncology in 2017.
By far the biggest growth has been seen at Merck & Co, whose estimated oncology revenues increased by a mighty 148% in 2017 to reach $4.1bn. “Merck’s success in oncology will likely continue, driven by Keytruda’s lead in the frontline non-small cell lung cancer setting,” says Cai Xuan, senior analyst, oncology and haematology, GlobalData. “Though its main competitor, BMS’ Opdivo, was first to the NSCLC market, Merck’s frontline trial for Keytruda succeeded whereas Opdivo’s failed. This failure was one of the biggest surprises in the oncology space in 2016, leading to a rapid reversal in fortunes for Merck and giving Keytruda the upper hand in one of the most lucrative oncology indications.”
The oncology market is certainly evolving. “Some of the most interesting play is in immuno-oncology, where combination therapies are increasingly being explored. Companies are looking to pair their PD-1/PD-L1 checkpoint inhibitors with a variety of other agents to stimulate a more robust anticancer immune response,” says Xuan. “It will also be interesting to see how gene therapies and cell-based therapies, like CAR-T, develop.”
So what does all this mean for Roche, whose 2017 growth of 3.6% appears flat by comparison with others? Is its era of dominance coming to an end? Perhaps not yet. “The main drivers of revenue for Roche are well-established, standard-of-care blockbuster oncology drugs including Rituxan, Herceptin and Avastin. But these are approaching the end of their patent lives,” says Xuan. “Roche is hoping to stem revenue loss by introducing new formulations, combining older drugs with newer agents, or relying on newer drugs to make up for the revenue loss. Though it’s unlikely that those strategies will be able to completely reverse Roche’s fortunes, they may certainly slow the rate of biosimilar erosion. Roche will likely take the biggest loss in Europe, where nationalised healthcare systems are keen to mandate the use of cheaper biosimilar/generic versions of drugs.”
Immunology
Another major growth area is in immunology, where the increased prevalence of autoimmune diseases has led to a surge of companies looking to capitalise on the opportunity. The leading company in the field is AbbVie, which is hardly surprising given that Humira has been the world’s best-selling drug since 2013. “Humira is entrenched as a first-line biologic for the treatment of numerous conditions – and despite the EU launch of biosimilars in 2018, we anticipate that it will remain a top-selling drug until its patent expiry in the US in 2023,” says Alexandra Annis, senior analyst, immunology, GlobalData. “Elsewhere, Celgene has seen large growth in 2017 (+46%) – driven by sales of Otezla, the first oral small molecule to be approved for psoriasis and psoriatic arthritis. Similarly, Novartis has enjoyed 31.7% growth thanks to another psoriasis/psoriatic arthritis treatment – Cosentyx – while GSK’s lupus therapy, Benlysta, has helped it increase immunology revenues by almost 45%.”
The immunology market has seen setbacks too, with sales at both Pfizer (-3.6%) and Amgen (-10.8%) notably declining. “These declines are driven by the patent expiry of Enbrel and subsequent brand erosion caused by the launch of biosimilars,” says Annis. Another top-selling drug also experienced decline for similar reasons: J&J’s Remicade – still in the top 10 best-selling products of 2017 – fell back by 7.5% due to increased global uptake of biosimilars. This was not enough to prevent J&J growing its immunology revenues (+4.8%) and maintaining its position as the second biggest player in the market.
The rise of biosimilars is likely to present the main challenge to immunology products in 2018, particularly in Europe where biosimilar uptake is generally stronger than in the US.
Ophthalmology
Ophthalmology is dominated by a small number of the same therapies marketed by different companies in different regions; Regeneron, Bayer and Santen all market Eylea, whereas Novartis and Roche market rival anti-VEGF, Lucentis. “In the EU, where there’s a high prevalence of AMD, Bayer has enjoyed great success with Eylea – growing revenues by 18% in 2017,” says Alice Stevens, analyst, cardiovascular and metabolic disorders, GlobalData. “Conversely, EU sales of Novartis’ Lucentis have fallen by 7.4%. In response, Novartis is planning to launch a new anti-VEGF, brolucizumab, as well as a new port-delivery system for the sustained release of Lucentis. It hopes these measures will help offset Lucentis’ EU patent expiry in 2022.”
Regeneron remains the leading player, with 10% growth in 2017 thanks to superior data for Eylea against Lucentis. In second position, Allergan experienced modest sales growth of 2.3%. “Allergan’s main ophthalmology product – Restasis – is the go-to treatment for dry eye, but is due to go off patent in the next five years,” says Stevens. “The company plans to launch the highly anticipated Abicipar Pegol, which will offer a novel therapy in the AMD/ME space – although its introduction is not expected in the EU until 2020.”
Central Nervous System
2017 was a quiet year in CNS. The most prominent growing companies were Merck & Co (49.8%), Takeda (39.1%) and Sumitomo Dainippon Pharma (25%), with growth primarily the result of strong and varied portfolios. However, the imminent US patent expiry of Sumitomo Dainippon’s main drug, Dastrolaline, in April 2018, could see its sales fall.
“Biogen was the largest seller in the CNS market in 2017 and this is forecast to continue,” says Rahael Maladwala, analyst, neurology and ophthalmology, GlobalData. “Tecfidera (MS) and Spinraza (Spinal Muscular Atrophy) are expected to generate big sales, while Tysabril (MS and Crohn’s Disease) and Avonex (MS) are expected to see sales drop due to patent expiries and competition. Biogen also has Aducanumab in the pipeline, which is forecast to generate huge sales in the future; however, it must be noted that it is being developed for the treatment of Alzheimer’s – where 98% of drugs fail Phase III trials. We’ll need to wait for the trial results to see how likely it is to launch.”
Pfizer has large sales in CNS – $8.5bn in 2017. The majority come through Lyrica (~$5bn). However, the US patent for Lyrica expires in 2018. Pfizer has launched a controlled-release version to maintain sales. In Europe, a patent dispute over Lyrica became arguably the biggest CNS story in recent years. Pfizer ultimately lost. Patent expiries also led to large declines in CNS sales at Teva (-17%) and Eli Lilly (-27.5%).
Neurology experienced slow growth, largely because few diseases are very well understood. “However, there is a movement towards greater research in this area, with companies on the look-out for curative and disease modifying agents,” says Maladwala. “Three CGRP monoclonal antibodies will launch in the US for migraine in 2018 – with a fourth anticipated in 2019. KOLs are hugely excited by the prospect, with the treatments expected to generate big sales in the coming years. Interestingly, the first three all launch within six months of each other and clinical trials have shown efficacy and safety data to be extremely similar between them all. Small factors like position to market, route of administration and dosing frequency will play a large role in deciding market share.”
Respiratory
GSK continues to dominate the respiratory market, with 2017 sales of $10.5bn – more than double its nearest rival (AstraZeneca). Its revenues grew by a further 9% last year. “A large percentage of this growth was driven by Ellipta, but Nucala – a biologic approved for asthma and COPD – also played its part,” says Annis. The category has also seen the recent introduction of a major drug class in COPD; the triple combination therapy. GSK, AZ and Chiesi are each playing in this new market.
The biggest movers in respiratory were Teva (+26%) and Vertex Pharmaceuticals (+23.7%). “Vertex’ growth has been helped by obtaining reimbursement for its CFTR modulator, Orkambi, in Europe,” says Pavan Kottamasu, analyst, cardiovascular and metabolic disorders. “CFTR modulators are curative rather than systematic and are expected to perform well. Vertex has two – with Kalydeco sitting alongside Orkambi in an impressive respiratory portfolio.”
Cardiovascular
The cardiovascular market enjoyed a relatively upbeat 2017. The majority of players enjoyed impressive uplifts in sales, not least Pfizer, whose cardiovascular revenues grew by an estimated 146%. This was largely thanks to Eliquis overtaking Bayer’s Xarelto as the leader in novel oral anticoagulants. Despite this, Bayer still usurped Sanofi as the leading player in cardiovascular, with revenues growing by an estimated 12.9% compared to a 3% fall at Sanofi.
Merck & Co grew cardiovascular revenues by 130%, while GSK enjoyed a 214% uplift, mainly due to its PAH treatment Volibris.
Big box office
The evolution of these therapy areas has naturally impacted the league table of the world’s best-selling drugs. Humira remains at the top, but Celgene’s Revlimid has jumped ahead of Roche’s Avastin, MabThera and Herceptin. Sanofi’s Lantus (-18.8%), Amgen’s Enbrel (-10.8%) and Gilead’s Harvoni (-48.5%) are among those whose revenues have fallen sharply.
A few dollars more
So where next? GlobalData forecasts that Novartis will topple Pfizer as the world’s biggest prescription drug company within the next five years. It estimates that Novartis’ global revenues will reach $73.6bn in 2022, compared to $71.1bn at Pfizer – and that by the close of the following year, a significant gap will have opened up between the two firms. Revenues for 2023 are forecast as $80bn (Novartis) and $74.5bn (Pfizer). These two players will have a comfortable advantage over their nearest rival – Roche ($57bn). However, time, market forces and M&A may, like all the best movies, take the plot in a completely unexpected direction.
* The data this article was based on is available in full online: pmlive.com/top_pharma_list