2013 In Review: Big biotech delivers the industry's key blockbuster franchises

A recent article by Jonathan Rockoff and Ron Winslow in The Wall Street Journal – which focuses on the reduced number of blockbuster medicines reaching the market – provides an interesting context for new drug approvals in 2012 and 2013.

A notable finding – attributable to the consulting firm ZS Associates – is that in terms of US sales performance, only 13 of 271 new drug launches since 2006 (just under 5 percent) have subsequently delivered revenue of $1 billion or more. Furthermore, Rockoff and Winslow cite that drugs launched between 2006 and 2010 averaged annual US sales of $143 million three years after reaching the market, versus $208 million for those drugs launched between 2000 and 2005.

It is not the first time that this latter period has been identified as reflecting a reduced level of both drug approvals and associated commercial return for the pharmaceutical industry. Indeed, an analysis of the largest blockbuster drugs (those generating peak annual sales in excess of $5 billion) by FirstWord earlier this year concluded that Merck & Co.'s diabetes treatment Januvia – launched in 2006 – was the last product of this commercial scale to reach the market - Spotlight On: Is pharma entering the dawn of a new blockbuster age?

As Ganesh Vedarajan – who heads up ZS Associates' oncology and specialty therapeutics practice – attests, blockbusters are becoming increasingly scarce for a multitude of reasons (payors, higher barriers to entry and greater segmentation of patient types) with FirstWord's own analysis showing that multi-billion dollar brands, such as Januvia and Lipitor, are particularly endangered species.

But is the industry on its way to reversing this trend?

The FDA approved 39 innovative new drugs in 2012, and although the number is expected to be around 30 in 2013 (the FDA has been keen to stress that 2012's haul should not be considered typical), the administration has approved some products that hold notable commercial opportunity.

Furthermore, many of the key drugs launched since the beginning of 2012 appear to have exceeded initial expectations, based on how consensus revenue projections have evolved. Indeed, of 11 key launches selected by FirstWord since the beginning of last year, only two products – Bristol-Myers Squibb and Pfizer's Eliquis and Pfizer's Xeljanz (heavily referenced in The Wall Street Journal article) – have underperformed regarding sales performance to date.

FirstWord Lists: What new drug launches have exceeded expectations and which ones have underwhelmed

Eliquis in particular represents a disappointment, given that many analysts had expected the anticoagulant to become of one of those increasingly rare products that delivers global peak sales in excess of $5 billion.

However, perhaps the most intriguing element of recent regulatory trends is that 2013 has witnessed the approval of two products that are expected to reach this revenue benchmark, but neither drug has been developed by Big Pharma – Biogen Idec's multiple sclerosis treatment Tecfidera and Gilead Sciences' hepatitis C therapy Sovaldi.

Can anything be read into the success of Biogen Idec and Gilead, as large cap biotechnology players versus their Big Pharma rivals in 2013?

"You have to remember that drug discovery and development is a stochastic process," David Grainger – CEO at the drug development consultancy TCP Innovations – told FirstWord, "so it is difficult to make a meaningful conclusion from only a few examples." One assessment is perhaps that there is no longer a great deal of difference between 'big biotech' and 'big pharma.'

That said, Grainger notes that from a commercial perspective, there are elements of success for both Tecfidera and Sovaldi that stem from the compounds not being developed by larger companies. Would Big Pharma, for example, have taken the risk of navigating "a clever line to gain exclusivity for a well known compound," as Biogen Idec did with Tecfidera; Grainger suggests that potential investors at both ends of the spectrum – Big Pharma and venture capitalists – would have been too conservative to make this gamble.

Similarly, it was Gilead which paid $11 billion to acquire Pharmasset and gain access to Sovaldi rather than "conservative Big Pharma," suggests Grainger. Ultimately these decisions are largely attributable to a single individual and whether that person has the confidence and backing to make these calls. Whether these individuals are more likely to exist in companies with a biotech culture largely remains conjecture, but for the industry as a whole, Tecfidera and Sovaldi will significantly help to boost the commercial return of new drug launches as we move into 2014.

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