FirstWord Lists – The key biopharma themes of 2013

With the start of 2014, FirstWord takes a look at the themes and issues that have shaped pharmaceutical industry headlines over the past 12 months...

'Big Biotech' comes of age

One could argue that the industry’s most prominent biotech players have been outperforming Big Pharma for some time, while others would suggest that the likes of Pfizer, Sanofi and Merck & Co. have provided little in the way of competition when it comes to innovative new drug launches.

But 2013 was the year that saw a number of the largest biotech players step up to the plate and deliver new products to the market that are not only innovative, but which are expected to be among the biggest selling of all time.

ViewPoints: Biogen Idec's multiple sclerosis treatment Tecfidera set to become one of pharma's fastest-ever blockbusters

ViewPoints: Regulatory momentum builds for Gilead Sciences' sofosbuvir – now branded as Sovaldi

Immuno-oncology emerges

The R&D story of 2013 was undoubtedly the accelerated emergence of cancer immunotherapies, which dominated proceedings at the ASCO meeting.

In one of the year’s most explosive investor notes, Citi analyst Andrew Baum proclaimed the emergence of these therapies as a pre-cursor to the end of cancer as we know it and a market opportunity worth $35 billion within 10 years.

FirstWord Lists – Who, where and when – the race for supremacy in the $35 billion immuno-oncology race

In Focus: Bristol-Myers Squibb's R&D shake-up – A tale of two acquisitions

Diabetes market expectations reset

Having delivered runaway growth in recent years, investor and analyst expectations for the ‘oral’ diabetes market have been somewhat revised over the past 12 months.

Safety concerns initially blunted revenue growth in the early part of 2013, but this (largely dismissed) scare somewhat disguised longer-term trends, which emerged when Q2 results were announced; a slowdown in underlying growth and increased pricing pressure in the US market as a result of numerous – but largely undifferentiated – products competing in most of the key drug classes. With a spate of new approvals anticipated in 2014, these trends look set to continue.

Goldman Sachs analysts recently pointed out that most of the major players in the oral diabetes market have underperformed their peers in 2013: Novo Nordisk (-21 percent), Sanofi (-16 percent), Eli Lilly (-24 percent), Merck & Co. (-7 percent) and AstraZeneca (-11 percent). Bristol-Myers Squibb (34 percent) is the only exception with its perceived leadership of the immuno-oncology race the key value driver.

Spotlight On: Pricing pressures redefine diabetes market expectations

ViewPoints: Revenue miss for Merck & Co.'s Januvia provides clear indication of marketing battle in diabetes space

ViewPoints: Five key takeaways from the American Diabetes Association (ADA) meeting

A biosimilar breakthrough

The past 12 months witnessed a key regulatory breakthrough for the biosimilars industry – the approval of Celltrion and Hospira’s biosimilar monoclonal antibody Inflectra (a biosimilar version of Remicade) in Europe.

With patent exclusivity for Remicade in the larger European markets intact until 2015, there will be no immediate demonstration as to how Inflectra will compete commercially. With the European approval pathway for more complex biosimilars validated, focus appears to be shifting to the commercial challenges for biosimilars. This has delivered a somewhat sobering trend over the past 12 months, shaped in equal measure by rising bars to entry and, for smaller specialist players, the shadow of Big Pharma as likely biosimilars market leader.

For further analysis see 2013 In Review – A biosimilar breakthrough?

Roche raises the bar

From a development perspective, Roche has led the way in simultaneously raising the efficacy bar-to-entry and reducing the opportunity for biosimilar versions of its cancer antibody products (in developed markets at least).

Building on the approval and launch of Perjeta in 2012, Roche further enhanced its HER2 breast cancer franchise with Kadcyla and more recently gained approval for Gazyva as a successor to Rituxan for the treatment of chronic lymphocytic leukaemia. This strategy is far from complete, but 2013 has provided significant momentum for Roche’s efforts.

For further analysis see 2013 In Review – Roche's biosimilar defence strategy gains momentum

Product exclusions find favour with US PBMs

The obvious opportunity for biosimilars to compete on cost and drug pricing was never far from the headlines in 2013. Intriguingly, however, it is in the US market where the most notable developments have occurred over the past 12 months.

The exclusion of selected brands from approved formularies emerged as a key testing tactic for US pharmacy benefit managers such as CVS Caremark and Express Scripts, most notably in the form of the latter’s decision to remove a number of high-profile drugs including Novo Nordisk’s diabetes treatment Victoza - see ViewPoints: As Novo Nordisk finds to its loss, price is now king in the US diabetes market.

More recently, Express Scripts cited the emergence of new and expensive hepatitis C therapies as necessitating more aggressive pricing policies, suggesting that elements of the US payer system are adopting a European-style approach - see Why Talk Of A Hepatitis C Price War Should Act As A Warning To The Pharma Industry-At-Large.

GlaxoSmithKline’s pipeline delivers

The FDA may not have approved as many innovative drugs in 2013 as it did in 2012 (the administration recently pointed out that last year’s performance should not be viewed as a normal benchmark), but this will matter little at GlaxoSmithKline. The UK drugmaker has already secured four new drug approvals in 2013 (Breo Ellipta for COPD, Tivicay for HIV, and Mekinist and Tafinlar for melanoma) and is expected to gain the nod for another COPD treatment – Anoro Ellipta – by the end of December.

Outperforming its Big Pharma peers in terms of regulatory performance is one thing, but attention in 2014 will realign to how these products perform commercially. Prescription data suggest a robust launch for Tivicay, Mekinist and Tafinlar, but it is Breo and Anoro for which revenue expectations are highest - see ViewPoints: Is GlaxoSmithKline's Breo Ellipta launch off to a sluggish start? and In Focus: GlaxoSmithKline's Anoro – can physicians be convinced sufficiently to drive drug towards blockbuster aspirations.

China/Emerging markets

Partially offsetting this strong regulatory performance in the US, was GlaxoSmithKline’s less auspicious role in a large-scale corruption probe in China, with company officials accused of making bribes worth 3 billion Yuan ($494 million) to local physicians.

In contrast to suggestions earlier this year that the investigation could trigger GlaxoSmithKline to pull out of the Chinese market, recent comments from government officials indicate that charges will be pressed against some local staff rather than the company itself. This should soften the long-term impact of the investigation, which at one point appeared to threaten how pharma companies would operate in the Chinese market for some time.

Big Pharma’s Q3 performance in the emerging markets reflected the China slowdown, but also illustrated continued deceleration in growth across other key territories. Price cuts and generic erosion rates similar to those seen in developed markets were again features of the 2013 emerging markets landscape, which have helped to continue shifting the investor attitude to these territories from 'bullish' to 'cautious,' noted analysts at Sanford C. Bernstein recently.

FDA – friend or foe?

Second-guessing the FDA – more specifically trying to assess whether the administration is friend or foe to drug manufacturers – has become a popular pastime for industry commentators in recent years. The past 12 months have not made playing this game successfully any easier; the FDA rejected (or has taken a more cautious stance towards) a number of products approved with apparently little issue in Europe – see Novo Nordisk’s Tresiba and Sanofi’s Lemtrada, but also facilitated the earlier approval of therapies via the introduction of the Breakthrough Therapy designation. Similarly, the softening of restrictions on GlaxoSmithKline’s Avandia seemed to somewhat contradict the more cautious stance towards Tresiba.

In Focus: FDA rejection of Tresiba – unexpected, unnecessary and avoidable? – How a delayed US launch for Novo Nordisk's blockbuster in waiting continues to shape the diabetes market

Spotlight On: Lemtrada decision illustrates FDA's balancing act / Could Genzyme, Sanofi have done a better job with trial design?

One remit appears to be clear, the FDA will seek to approve products more readily that treat conditions where no therapeutic option is available, with cancer at the forefront of this initiative.

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