Global Pharma US & EU Outlook 2015: First –In- Class Innovations and Cost Optimization Plays Major Role In Shaping Up Business for Large Cap Pharmaceutical Companies
Strategy Diversification Divested: Productivity measurements, Divestment of non-core assets resulting in healthy Cash position- Will accelerate Next wave of targeted acquisition
In the recent years several new therapies have been approved in the area of diabetes (SGLT-2, GLP-1 agonists), Multiple Sclerosis, HCV, melanoma and breast cancer from major pharmaceutical companies. Many of them are expected to reach multibillion dollars peak sales in the near-term which is likely to compensate the patent expiry loss in top-line revenue. Novel mechanisms like anti-PD1, anti-PCSK9 and CDK inhibitors have also got exclusive attention by large cap Pharma companies. Most companies are in race to acquire assets in these hot therapy areas. Companies who already have these assets are investing heavily in clinical development programs. The interest in pursuing opportunities in Oncology therapy is unhindered for all major Pharma companies. Research investments in oncology likely to continue for several more years due to the significant unmet need exist in this area.
But for a few companies, patent expiry impact continues to haunt the top-line and they are finding it difficult to replace declining sales with Proprietary pipeline products. Beyond 2013, the impact of patent loss will further aggravate the revenue decline. They have chosen strategies of prioritization pipeline assets, cost efficiency measures, divestment of non-core assets which yield poor margins and increase focus on therapy areas where they have already proven its mettle. Increase in dividend payout and share repurchase are some near term measures where they are actively participating. Gain in financial strength through divestment of non-core assets (OTC, Animal Health, Consumer health, Diagnostics) will be utilized in pursuing opportunities in high margin therapy areas. At the same time it has becoming more difficult to find such lucrative assets because they are scarce and if available are trading at very high premium in speculation of getting acquired (ex. Roche-Alexion). Going forward, Economies of Scale will also play a major role in swapping the non-core business among major pharma including Vaccines, OTC and animal health to improve margins.
Global Pharma continues to remain attractive due to management efforts on the restructuring of entire business model, cost efficiency measures, de-consolidation, acquisition of high value targeted assets, share repurchase program and dividend policy.
In the recent years several new therapies have been approved in the area of diabetes (SGLT-2, GLP-1 agonists), Multiple Sclerosis, HCV, melanoma and breast cancer from major pharmaceutical companies. Many of them are expected to reach multibillion dollars peak sales in the near-term which is likely to compensate the patent expiry loss in top-line revenue. Novel mechanisms like anti-PD1, anti-PCSK9 and CDK inhibitors have also got exclusive attention by large cap Pharma companies. Most companies are in race to acquire assets in these hot therapy areas. Companies who already have these assets are investing heavily in clinical development programs. The interest in pursuing opportunities in Oncology therapy is unhindered for all major Pharma companies. Research investments in oncology likely to continue for several more years due to the significant unmet need exist in this area.
But for a few companies, patent expiry impact continues to haunt the top-line and they are finding it difficult to replace declining sales with Proprietary pipeline products. Beyond 2013, the impact of patent loss will further aggravate the revenue decline. They have chosen strategies of prioritization pipeline assets, cost efficiency measures, divestment of non-core assets which yield poor margins and increase focus on therapy areas where they have already proven its mettle. Increase in dividend payout and share repurchase are some near term measures where they are actively participating. Gain in financial strength through divestment of non-core assets (OTC, Animal Health, Consumer health, Diagnostics) will be utilized in pursuing opportunities in high margin therapy areas. At the same time it has becoming more difficult to find such lucrative assets because they are scarce and if available are trading at very high premium in speculation of getting acquired (ex. Roche-Alexion). Going forward, Economies of Scale will also play a major role in swapping the non-core business among major pharma including Vaccines, OTC and animal health to improve margins.
Global Pharma continues to remain attractive due to management efforts on the restructuring of entire business model, cost efficiency measures, de-consolidation, acquisition of high value targeted assets, share repurchase program and dividend policy.
1. ASTRAZENECA: LATE STAGE PIPELINE MATURING; FOCUSED DEVELOPMENT ON RESPIRATORY, PSORIASIS AND ANTI-PD1 WILL SUPPORT LONG TERM GROWTH
Late stage development is positive but near term pressure immense
R&D Strategy
Long-term CV study and R&D Updates
Brilinta preferred over Plavix in NSTE-ACS patients in the US
Strengthening Business in Diabetes: Acquisition from BMY
Late Stage Development Program
Selumetinib (PhIII, NSCLC, MEK inhibitor, Array Pharma)
Lesinurad (PhIII, URAT1 inhibitor/Hyperuricemia in Gout): did not reduce gout flares but biomarker uric acid level met the end point for approval
Immunotherapy anti CTLA and anti-PD1 will strengthen the franchise long-term
Olaparib (PARP Inh, Ovarian cancer)- FDA approval
AZD9291 (once daily, oral Tyrosine kinase inhibitor, second-line NSCLC)
Inflammation pipeline: Benralizumab (IL-5R antibody, severe asthma and COPD)
Competitive landscape of cytokine targeted therapies (Tralokinumab, Dupilumab, Lebrikizumab, Mepolizumab
Brodalumab (IL-17RA antibody, Psoriasis, Psoriatic arthritis, Ph III)
Outlook of respiratory franchise going forward: Symbicort, Pearl and Almirall
Anti-infective franchise update (AZD0914)
Nexium OTC approved and generic entry in 2015
The impact of competition on Faslodex
Key milestones
Table 1: Competitive Landscape of Biologics in Severe Asthma
2. GLAXOSMITHKLINE: RELIANCE ON LOW MARGIN CONSUMER HEALTH AND VACCINES; UNABLE TO REVIVE RESPIRATORY FRANCHISE
Respiratory business competitive and large outcome trials became futile
Cost savings to keep up the operating margins and Potential ViiV IPO to fund NVS JV buy-out
Our views on the recently approved drugs from GSK
Eperzan/Tanezeum (Albiglutide): Superior efficacy, better tolerability, ease of administration and compliance benefit should position Albiglutide better than competition in earlier lines of treatment
Mepolizumab (IL-5 inhibitor, UR, once monthly, severe eosinophilic asthma)
Competitive Landscape in severe asthma
Advair Generics
Key milestones
Table 1: Bydureon, albiglutide & Victoza Clinical data comparison
3. MERCK: ANTI-PD1 AND HCV WILL REMAIN GROWTH DRIVERS GOING FORWARD!!
IMPROVE-IT Outcome data positive, boosted confidence on other aggressive LDL reducing antibodies therapy
TECOS should help DPP-IV expand their share in a fast growing but highly genericized diabetes market
Acquisition of Cubist for $9.1b will fortify MRK’s anti-infective acute hospital care franchise
Collaboration with Bayer for novel cardiovascular assets ($1b+)
Ebola Vaccine acquisition and development
Keytruda Potential
HCV Therapy (grazoprevir/elbasvir, PhIII): targeted for patients who do not tolerate market leading Sovaldi
Regulatory Developments – Gardasil, Belsomra, Grass and Ragweed sublingual allergy tablets, Sugammadex, Odanacatib
Isentress and anti-retroviral development
Diabetes Franchise – Ertugliflozin, Januvia/Janumet, Omarigliptin
Keytruda in Second-line NSCLC: Potential additional indications –breast cancer
Remicade Biosimilar impact in Europe: patent expiry in major EU countries in Feb 2015
Key milestones
Table 1: Keytruda: List of on-going combination studies
Table 2: On-going Phase III clinical trials for HCV combo
Table 3: On-going clinical trials of Keytruda
Table 4: Competitive Landscape of Anti-PD1
4. MERCK KGAA: EMERGING MARKET AND ANTI-PD1 TO LIFT THE OUTLOOK; ACQUISITION OF SIGMA-ALDRICH TO STABILIZE BUSINESS GROWTH
Acquisition of Sigma-Aldrich for $17b would add over $2.1b in topline
Strategic alliances with PFE to develop Immuno-oncology pipeline- anti-PD1
Erbitux in first line CRC
Erbitux Biosimilar threat is limited due to different manufacturing process in EU/US
Gonal-F- Biosimilar competition
Performance materials
Merck Millipore in life sciences tool market (€2.6b)
Consumer Health (€472m - ~4% of total sales)
Emerging market continues to support the company growth going forward (€1.8b)
Key Milestones
Table 1: Merck Serono PhII and PhIII pipeline assets
Chart 1: Merck KGaA - Revenue Contribution By Strategic Divisions In 2013
Chart 2: Geographic contribution based on 2013 sales
5. NOVARTIS: STRENGTHENING POSITION IN ONCOLOGY: HEART FAILURE AND PSORIASIS THERAPY WILL FIND NEW BLOCKBUSTERS
LCZ696 (valsartan with neprilysin inhibitor; twice daily) in chronic heart failure patients: Superiority can command higher prices and reimbursement
Rationale for fixed dose combination and Paradigm HF
Patent expiry pressure immense
Targeted and cellular therapy approach in Oncology
CART Technology
Gilenya in Multiple Sclerosis continues to be key growth driver but market ramp up of Tecfidera (BiogenIdec) is extraordinary despite PML issue
Lemtrada was effective but disease progressed after discontinuation
SERELAXIN (RLX-030) in Acute Heart Failure – Unmet need but FDA rejected the approval for more efficacy data
Signifor LAR – Approved in Cushing’s disease and in acromegaly: Sandostatin LAR Replacement ready in active acromegaly
Signifor/ Pasireotide will penetrate in patients inadequately controlled on Sandostatin. Signifor LAR will take up market share from Sandostatin LAR before the patent expiry in 2017
Secukinumab (Cosentyx) in Plaque Psoriasis - Trying To Be Different in a Crowded Space
Current treatments of psoriasis and psoriatic arthritis
Long term safety data is the key for gaining acceptance by Dermatologist
Panobinostat (UR, multiple myeloma, oral HDAC inhibitor) - negative recommendation from FDA and safety concerns coupled with no improvement in overall survival
Patent expiry impact and potential drivers
Sandoz growth to be driven by biosimilars and respiratory generics
Key milestones
Table 1: Efficacy data of LCZ696 in PARADIGM-HF
Table 2: Competition in Acromegaly
Table 3: PASSPORT-Efficacy and Safety Comparison: SIGNIFOR LAR VS. SANDOSTATIN LAR
Table 4: Select Late- & Mid-stage pipeline: Plaque Psoriasis
Table 5: PHIII Clinical Data on Plaque Psoriasis of marketed products
Table 6: Patent Expiry Impact Through 2019
Table 7: Sandoz Biosimilar Pipeline Status
6. NOVO NORDISK: BUSINESS GROWTH IS LIMITED BY PRICING AND COMPETITIVE PRESSURES IN DIABETES
Xultophy made the entry in Europe-US filing delayed
Competitive pressures on Victoza: Semaglutide needs to show at least comparable efficacy to Trulicity
Dulaglutide Phase III data non-inferior to Victoza suggests slightly better efficacy with once weekly advantage
Dulaglutide Efficacy and safety data comparison based on ADA conference vs. Victoza (AWARD-6)
Insulin Franchise: Bio-similar insulin’s and Novel Insulin’s impact cannot be neglected
Liraglutide 3mg obesity (Saxenda): FDA advisory committee voted in favor (14-1) and approved
Clinical safety and Efficacy from SCALE study vs. Contrave
Pricing and Safety likely to hamper the market reimbursement and uptake, but delayed progression to pre-diabetes may help
Regulatory concerns of pancreatitis, thyroid cancer & CV risk for high dose regimen in obesity
Haemostasis franchise - Turoctocog (NovoEight), NovoThirteen (Cartridecacog), N8-GP
Haemophilia A market size and competition – Novoeight competing long-acting pipeline product from Biogen Idec / Sobi, but may score with a first mover advantage in Hemophilia A
Key milestones
Table 1: Clinical data comparison of weekly GLP-1 Vs Victoza
Table 2: Obesity - Efficacy data comparison vs. marketed drugs
COMPANIES COVERED:
AstraZeneca
GlaxoSmithKline
Merck
Merck KGaA
Novartis
Novo Nordisk
Late stage development is positive but near term pressure immense
R&D Strategy
Long-term CV study and R&D Updates
Brilinta preferred over Plavix in NSTE-ACS patients in the US
Strengthening Business in Diabetes: Acquisition from BMY
Late Stage Development Program
Selumetinib (PhIII, NSCLC, MEK inhibitor, Array Pharma)
Lesinurad (PhIII, URAT1 inhibitor/Hyperuricemia in Gout): did not reduce gout flares but biomarker uric acid level met the end point for approval
Immunotherapy anti CTLA and anti-PD1 will strengthen the franchise long-term
Olaparib (PARP Inh, Ovarian cancer)- FDA approval
AZD9291 (once daily, oral Tyrosine kinase inhibitor, second-line NSCLC)
Inflammation pipeline: Benralizumab (IL-5R antibody, severe asthma and COPD)
Competitive landscape of cytokine targeted therapies (Tralokinumab, Dupilumab, Lebrikizumab, Mepolizumab
Brodalumab (IL-17RA antibody, Psoriasis, Psoriatic arthritis, Ph III)
Outlook of respiratory franchise going forward: Symbicort, Pearl and Almirall
Anti-infective franchise update (AZD0914)
Nexium OTC approved and generic entry in 2015
The impact of competition on Faslodex
Key milestones
Table 1: Competitive Landscape of Biologics in Severe Asthma
2. GLAXOSMITHKLINE: RELIANCE ON LOW MARGIN CONSUMER HEALTH AND VACCINES; UNABLE TO REVIVE RESPIRATORY FRANCHISE
Respiratory business competitive and large outcome trials became futile
Cost savings to keep up the operating margins and Potential ViiV IPO to fund NVS JV buy-out
Our views on the recently approved drugs from GSK
Eperzan/Tanezeum (Albiglutide): Superior efficacy, better tolerability, ease of administration and compliance benefit should position Albiglutide better than competition in earlier lines of treatment
Mepolizumab (IL-5 inhibitor, UR, once monthly, severe eosinophilic asthma)
Competitive Landscape in severe asthma
Advair Generics
Key milestones
Table 1: Bydureon, albiglutide & Victoza Clinical data comparison
3. MERCK: ANTI-PD1 AND HCV WILL REMAIN GROWTH DRIVERS GOING FORWARD!!
IMPROVE-IT Outcome data positive, boosted confidence on other aggressive LDL reducing antibodies therapy
TECOS should help DPP-IV expand their share in a fast growing but highly genericized diabetes market
Acquisition of Cubist for $9.1b will fortify MRK’s anti-infective acute hospital care franchise
Collaboration with Bayer for novel cardiovascular assets ($1b+)
Ebola Vaccine acquisition and development
Keytruda Potential
HCV Therapy (grazoprevir/elbasvir, PhIII): targeted for patients who do not tolerate market leading Sovaldi
Regulatory Developments – Gardasil, Belsomra, Grass and Ragweed sublingual allergy tablets, Sugammadex, Odanacatib
Isentress and anti-retroviral development
Diabetes Franchise – Ertugliflozin, Januvia/Janumet, Omarigliptin
Keytruda in Second-line NSCLC: Potential additional indications –breast cancer
Remicade Biosimilar impact in Europe: patent expiry in major EU countries in Feb 2015
Key milestones
Table 1: Keytruda: List of on-going combination studies
Table 2: On-going Phase III clinical trials for HCV combo
Table 3: On-going clinical trials of Keytruda
Table 4: Competitive Landscape of Anti-PD1
4. MERCK KGAA: EMERGING MARKET AND ANTI-PD1 TO LIFT THE OUTLOOK; ACQUISITION OF SIGMA-ALDRICH TO STABILIZE BUSINESS GROWTH
Acquisition of Sigma-Aldrich for $17b would add over $2.1b in topline
Strategic alliances with PFE to develop Immuno-oncology pipeline- anti-PD1
Erbitux in first line CRC
Erbitux Biosimilar threat is limited due to different manufacturing process in EU/US
Gonal-F- Biosimilar competition
Performance materials
Merck Millipore in life sciences tool market (€2.6b)
Consumer Health (€472m - ~4% of total sales)
Emerging market continues to support the company growth going forward (€1.8b)
Key Milestones
Table 1: Merck Serono PhII and PhIII pipeline assets
Chart 1: Merck KGaA - Revenue Contribution By Strategic Divisions In 2013
Chart 2: Geographic contribution based on 2013 sales
5. NOVARTIS: STRENGTHENING POSITION IN ONCOLOGY: HEART FAILURE AND PSORIASIS THERAPY WILL FIND NEW BLOCKBUSTERS
LCZ696 (valsartan with neprilysin inhibitor; twice daily) in chronic heart failure patients: Superiority can command higher prices and reimbursement
Rationale for fixed dose combination and Paradigm HF
Patent expiry pressure immense
Targeted and cellular therapy approach in Oncology
CART Technology
Gilenya in Multiple Sclerosis continues to be key growth driver but market ramp up of Tecfidera (BiogenIdec) is extraordinary despite PML issue
Lemtrada was effective but disease progressed after discontinuation
SERELAXIN (RLX-030) in Acute Heart Failure – Unmet need but FDA rejected the approval for more efficacy data
Signifor LAR – Approved in Cushing’s disease and in acromegaly: Sandostatin LAR Replacement ready in active acromegaly
Signifor/ Pasireotide will penetrate in patients inadequately controlled on Sandostatin. Signifor LAR will take up market share from Sandostatin LAR before the patent expiry in 2017
Secukinumab (Cosentyx) in Plaque Psoriasis - Trying To Be Different in a Crowded Space
Current treatments of psoriasis and psoriatic arthritis
Long term safety data is the key for gaining acceptance by Dermatologist
Panobinostat (UR, multiple myeloma, oral HDAC inhibitor) - negative recommendation from FDA and safety concerns coupled with no improvement in overall survival
Patent expiry impact and potential drivers
Sandoz growth to be driven by biosimilars and respiratory generics
Key milestones
Table 1: Efficacy data of LCZ696 in PARADIGM-HF
Table 2: Competition in Acromegaly
Table 3: PASSPORT-Efficacy and Safety Comparison: SIGNIFOR LAR VS. SANDOSTATIN LAR
Table 4: Select Late- & Mid-stage pipeline: Plaque Psoriasis
Table 5: PHIII Clinical Data on Plaque Psoriasis of marketed products
Table 6: Patent Expiry Impact Through 2019
Table 7: Sandoz Biosimilar Pipeline Status
6. NOVO NORDISK: BUSINESS GROWTH IS LIMITED BY PRICING AND COMPETITIVE PRESSURES IN DIABETES
Xultophy made the entry in Europe-US filing delayed
Competitive pressures on Victoza: Semaglutide needs to show at least comparable efficacy to Trulicity
Dulaglutide Phase III data non-inferior to Victoza suggests slightly better efficacy with once weekly advantage
Dulaglutide Efficacy and safety data comparison based on ADA conference vs. Victoza (AWARD-6)
Insulin Franchise: Bio-similar insulin’s and Novel Insulin’s impact cannot be neglected
Liraglutide 3mg obesity (Saxenda): FDA advisory committee voted in favor (14-1) and approved
Clinical safety and Efficacy from SCALE study vs. Contrave
Pricing and Safety likely to hamper the market reimbursement and uptake, but delayed progression to pre-diabetes may help
Regulatory concerns of pancreatitis, thyroid cancer & CV risk for high dose regimen in obesity
Haemostasis franchise - Turoctocog (NovoEight), NovoThirteen (Cartridecacog), N8-GP
Haemophilia A market size and competition – Novoeight competing long-acting pipeline product from Biogen Idec / Sobi, but may score with a first mover advantage in Hemophilia A
Key milestones
Table 1: Clinical data comparison of weekly GLP-1 Vs Victoza
Table 2: Obesity - Efficacy data comparison vs. marketed drugs
COMPANIES COVERED:
AstraZeneca
GlaxoSmithKline
Merck
Merck KGaA
Novartis
Novo Nordisk
