With thirty-nine approvals from the FDA, 2012 triggered a wave of optimism in the pharmaceutical industry.  But if 2012 was characterized by an increased number of approvals, the sales potential of many of those new products was underwhelming.  For 2013, the number of approvals may have gone down, but the quality (in terms of clinical impact and sales potential) has increased dramatically.

Twenty-seven approvals (twenty four of them drugs) in 2013 may be twelve less than the 2012 haul, but it is still above average across the last two decades.  And in any case, the number of approvals is a poor surrogate for the productivity of the industry.

With between five and seven products headed for blockbuster status, and Sovaldi™ potentially reaching peak sales in excess of $10billion annually, the output from the global pharmaceutical industry in 2013 shows signs of return to the glory days of the late 1990s.  Indeed, arguably, 2013 may be the best year ever in terms of future sales potential for newly-approved products.  Predicted global sales of these medicines five years after launch dwarf the equivalent figure for the class of 2012 by as much as 10-fold.  With this kind of R&D productivity, things look rosier for the global pharmaceutical industry than they have done for more than a decade.

Interestingly, the proportion of approvals that target a new mechanism of action remains low (some 11 out of the 24 drug approvals, or 46%, compared to 15/35, or 43%, in 2012), suggesting the industry continues to churn out incremental innovations.  But among those eleven there are drugs that offer real clinical benefit, and with it a real chance of blockbuster status.

Of the class of 2012, only Gilead’s Stribild™, for HIV, seemed headed for billion-dollar annual sales.  Muted 2013 sales for two others, Eliquis™ (an oral anticoagulant from BMS) and Xeljanz™ (Pfizer’s pan-Jak inhibitor for RA) suggest that that the optimism of their owners, and some commentators, that they too might also become blockbusters was just that: optimistic.

On the flip side, market enthusiasm and further positive Phase 3 data in pre-chemotherapy patients has seen Xtandi™ (Medivation/Astellas) exceed expectations and with sales likely in excess of $300m in its first year, it may become a second blockbuster from the 2012 cohort.

By contrast, the market potential for the 2013 approvals looks far rosier.  Once again, it is Gilead that leads the way with the approval of Sovaldi™ sofosbuvir, whose almost perfect efficacy against HCV (at least for some of the common genotypes) coupled with its utility in an interferon and ribavirin-free regimen seems certain to propel it to blockbuster sales within 18months of launch.  Indeed, consensus 2018 sales for combos containing this drug are pushing $10billion – making it likely to become the first new megablockbuster since Avastin™ (approved in 2004).

The  excitement from so many potential blockbuster approvals must be tempered by the realization that the companies who spent the vast majority of the global pharma R&D budget still have precisely nothing to show for it

Invokana™, the first SGLT-2 inhibitor to be approved (after FDA concerns over Foxiga from AZ/BMS handed victory in the race to market to JnJ), has also enjoyed a solid launch.  Despite increasingly heavy competition in the diabetes marketplace, as clinicians try to work out the best way to use the rash of new products approved over the last five years, Invokana™ is also slated to reach blockbuster heights.  The ultimate size of the market for SGLT-2 inhibitors, though, will likely depend on comparative data for hard clinical outcomes (including coronary heart disease) that will be collected over the next decade, and could significantly boost or kill sales of any of the anti-diabetics currently in the marketplace.

Biogen’s Tecfidera™ for MS seems certain to contribute the third blockbuster among the 2013 approvals.  In marked contrast to the travails of Sanofi in the MS arena (with 2012’s approval Aubagio™ and the re-positioned anti-CD52 antibody, being developed as Lemtrada™, rejected by the FDA in 2013 despite prior approval for CLL and impressive early clinical data), clinicians love Tecfidera™, and once established at the top of the heap in MS it will be hard to shift.  The contrast between the performance of the two companies is particularly striking:  while Biogen performed some deft moves to establish exclusivity on a well-known molecule, Sanofi stand accused of bungling the late-stage development of Lemtrada™, with clinical trial designs unable to prove the comparative risk:benefit in the eyes of the FDA.

The 2013 crop of cancer drugs is similarly exciting.  Two (at least) seem likely to make the grade as blockbusters, although they compete for patients with B-cell malignancies: Imbruvica™ ibrutinib from Pharmacyclics/JnJ and “super-Rituxan” Gazyva™ obinutuzumab from Roche’s Genentech unit.  Both had breakthrough designations (and became the second and third such drugs to be approved this year), and full randomized, double-blinded datasets in various leukaemias are still being collected.  Which will come to dominate – or, perhaps more likely, how they will be used in combination – is still hotly debated, but the impressive response rates in refractory disease (over 60%) and the frequency of complete responses suggest significant sales will accrue to both, one way or another.

“Super-Herceptin” Kadcyla™ (previously known as T-DM1 from Roche/Genentech), with $3billion annual peak sales predicted in consensus analyst forecasts, will likely provide the sixth blockbuster among the 2013 approvals.  Although it will cannabilise a substantial fraction of those sales from Herceptin™/Perjeta™, it will do so at a higher margin – delivering improved clinical outcomes to patients as well as increased profits to Roche,

Indeed, Breo Ellipta™ (GSK) may yield even a seventh blockbuster among the 2013 approvals with peak sales of $2billion by 2020 – although the degree of differentiation (and hence clinical benefit) over Advair is less impressive than for the second generation cancer biologicals.

For the remainder, prospects are much weaker.

GSK’s other approvals (the BRAF inhibitor Tafinlar™ and the MEK inhibitor Mekinist™) for the treatment of BRAF-mutant melanoma show insufficient differentiation compared to Roche’s Zelboraf™ to win significant sales as monotherapies, but could emerge as a winning combination.  Today, however, the justifiable excitement around the checkpoint inhibitors suggests that the window of opportunity for significant sales for combined MEK/BRAF inhibitors may be short, or even non-existent.

Opsumit™, Actellion’s follow-on to Tracleer™ in PAH proved underwhelming in Phase III, and the FDA continues to mandate liver testing.  It will shift some units, but the clinical outcomes for PAH patients are unlikely to be materially improved either by this drug or Adempas™ riociguat from Bayer.

At the bottom of the pile, Takeda had two poorly-differentiated products approved in Nestina™ alogliptin (a DPP-IV inhibitor) and Brintellix™ vortioxetine (another SSRI) which highlight the wasted resources going into products that have so little innovation they don’t even qualify as incremental.

If, as DrugBaron noted in 2012, “the motley collection of 2012 approvals” did not “represent good value for money as a return on the capital invested” on R&D, then in just twelve months the position has turned round entirely.   The projected sales of the seven blockbuster candidates alone justify the entire $40billion spent on global pharma R&D – but, inevitably, with so few winners the spoils will not be evenly distributed.  The big winners will be Gilead and Biogen, capturing the lion’s share of the winnings despite contributing only a small fraction of the global R&D budget (although the $10billion Gilead paid for Pharmasset clearly has to be taken into account).  Johnson & Johnson also continue to surge ahead of the crowd, while Genentech also keeps Roche firmly in the leading pack.

Solvaldi™ sofosbuvir is likely to become the first new megablockbuster approval since Avastin™ in 2004

But for the remainder of the “big pharma” cadre, 2013 was just as depressing as most of the last decade.  The real excitement that must come from so many potential blockbuster approvals must be tempered by the realization that the companies who spent the vast majority of the global pharma R&D budget still have precisely nothing to show for it.

Looking back, with 2020 hindsight, this past year may be seen as the year when global pharma split into two divisions.  Gilead and Biogen may be joining Johnson & Johnson and Roche in the Premiership, but AZ, Lilly and Merck may find staying in even the second division a tough challenge in the coming years.

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