By Kevin E. Noonan --
As reported last week by FierceBiotech, EvaluatePharma, a market forecasting firm specializing in the life sciences sector, released its prediction on the future of the pharmaceutical industry. According to EvaluatePharma, six of the top ten selling drugs by 2014 will be biologics. Today, half of the top ten best-selling drugs are conventional small molecule drugs, as shown in the table below; in terms of sales, these drugs account for about 61% of the revenues garnered by the top ten best-selling drugs.
Top 10 Drug Products by Sales in 2008
EvaluatePharma predicts this situation will change dramatically by 2014: as shown below, seven out of the top ten best-selling drugs will be biologic drugs. Moreover, biologics drugs are predicted to account for a 75% of the revenues, an almost 2-fold increase in the relative contributions of biologic drugs to the sector.
Top 10 Drug Products by Sales in 2014
The reason for this expected change is generic competition for small molecule drugs that will be off-patent by 2014, including current best-sellers Nexium®, Lipitor®, Plavix®, Advair® and Diovan®. The report also notes that "anti-cancer antibodies appear set to easily become the most valuable therapeutic class of drug." The report also notes that some traditional Big Pharma companies stand to benefit from their association (partnering) or acquisition of biotechnology companies, with Roche being a clear example as purveyors of three of the top ten predicted best-selling drugs in 2014 (Avastin®, Rituxan® and Herceptin®) representing about one third of the revenues from these drugs. Notably absent from the list are companies like Pfizer and GlaxoSmithKline that today have drugs in the best-selling top ten. Accordingly, EvaluatePharma suggests that it may behoove such companies to pursue small and mid-sized biotech companies, particularly now during the economic downtrend that has reduced the valuations of these biotech companies.
These results are consistent with other reports. Biologics sales currently are around $75 billion, with 22 biologics drugs breaking the $1 billion "blockbuster" drug barrier in 2007. These revenues can only be expected to increase, and much of this cost can be expected to be borne by government under Medicare, Medicaid, and other programs, particularly since many biologic drugs are directed to end-of-life diseases like cancer. Senator Schumer, in a press release issued in conjunction with the introduction of his follow-on biologics bill in the Senate (S. 726) estimated that the bill "would save federal programs like Medicare and Medicaid at least $10 billion dollars by bringing needed competition to the marketplace" (see "Third Follow-on Biologics Bill Introduced in 111th Congress"). This estimate is consistent with a Congressional Budget Office report, stating that implementation of a follow-on biologics regulatory scheme would save health programs such as Medicare and Medicaid about $8.1 billion over the 2010–2019 period, as well as reduce costs for private health insurance plans and lower insurance premiums for employers by almost 0.2% by 2019 (see "BIO Says CBO Estimate of Follow-on Biologics Savings Is Based on 'Troubling Assumption'").
While these numbers pale in comparison with the monies expended by the Federal government over the past several months, they bring to mind Senator Everett Dirksen's famous (perhaps apocryphal) aphorism that "A billion here, a billion there, and pretty soon you're talking real money." These numbers provide more than adequate political motivation for follow-on biologics legislation, making it all the more critical that interested observers make sure their Congressional representatives know precisely what is at stake in this debate.
It would be interesting to compare the predictions shown here, in which the drugs were ranked on basis of sales in dollars, with the predictions that would result if the drugs were to be ranked on the basis of number of prescriptions.
Posted by: Dan Feigelson | June 22, 2009 at 01:20 AM
The future success of biological products is accomplished by the consequence of lost IP protection of these small molecules. The battle of the generic markets will be coming soon. Whether the biological products may lead the market is still abstract. For sure, the market for a brand new drug is getting difficult.
Posted by: Ting-Wan Lin | July 02, 2009 at 09:55 PM