It’s hard being on top of the game. The big players in the pharmaceutical industry are constantly immersed in a relentless fight to become number one and it’s not pretty up there. With patent pressures, changing disease profiles and higher costs, the fight is going to get even tougher. As pharmaceutical companies face increasingly lengthier, costlier and riskier procedures to bring a product to market, it will become progressively more and more difficult to successfully pursue drug development endeavours.
Many drugs never make it. On average, only one in 5000 chemical compounds makes it into a commercially viable product,1 a disappointing result to many years of R&D that renders vast corporate efforts and enormous financial investments completely worthless. For those that make it there is not much time to recoup the investment. With a patent expiry date of 20 years, 12.5 of which on average are spent in trying to bring a drug from concept to commercialisation, pharma companies are left with a very limited period of time (7.5 years at best!) to recover their money and make a profit. However, the profit has the potential to be a very large one if we are to judge by the value of global pharma sales in 2007, which was in excess of $663 billion. Of the different regions, North America sits comfortably at the top of the pharma market, with global sales of $304.5 billion; Europe trails behind with sales worth $206.2 billion; and Japan is a distant third with a pharma market that accounts for $62.2 billion. Asia (excluding Japan), Africa and Australia ranked fourth at $58.5 billion and Latin America came fifth with $32 billion.2
How large the profit is depends on the success of the drug. If a company is lucky enough to have developed a blockbuster drug, they are in for big bucks! In 2007, the top 10 selling products (Table 1) accounted for $63.8 billion, a value that represents 9.6% of the global pharmaceutical market. On top of the board is Lipitor, a cholesterol-lowering agent developed by Pfizer with global sales reported to be $13.5 billion in 2007. Lipitor is closely followed by Plavix, an antiplatelet agent developed by the partnership Sanofi–Aventis/Bristol–Myers Squibb with global sales of $7.3 billion. From the rest of the entries, AstraZeneca appears to be in a very strong position with two drugs (Nexium and Seroquel) ranked third and eighth place, with global sales of $7.2 and $4.6 billion, respectively.3
Table 1. Top 10 selling drugs in global sales in 2007
Rank Brand name Company name Global sales (in $)
1 Lipitor Pfizer 13.5
2 Plavix Sanofi–Aventis/Bristol–Myers Squibb 7.3
3 Nexium AstraZeneca 7.2
4 Seretide/Advair GlaxoSmithKline 7.1
5 Enbrel Amgen and Wyeth 5.3
6 Zyprexa Eli Lilly 5
7 Risperdal Johnson&Johnson 4.9
8 Seroquel AstraZeneca 4.6
9 Singulair Merck & Co. 4.5
10 Aranesp Amgen 4.4
Source: IMS Health, “IMS Midas”, Dec 2007. Total = 63.8
It is no surprise that the greatest contributor to the global pharma sales of the top 10 selling products continues to be the US, accounting for 65.5% of the market with sales of $41.8 billion.
Pharma versus biopharma
Of the top 10 selling drugs, two, Amgen and Wyeth’s Enbrel and Amgen’s Aranesp, are biologics. Unsurprisingly, global sales of biotechnology products increased 12.5% with respect to the previous year and accounted for more than $75 billion in 2007, doubling the rate of growth for the overall global pharmaceutical market. Once again, Europe is no contest to the US for the control of the biotech manufacturing industry, with the US currently holding more than 56% of the global market.
Interestingly, the biopharma market represents only 10% of the global pharma market, but it is estimated to hold 25% of the global pharma pipeline.3 With the decline in R&D productivity and draught of the pipeline experienced in recent years by the pharmaceutical industry, many see biotech companies and startups as a potential source for the next generation of medicines. Submission of applications for the approval of new drugs is at an all-time low and future markets will favour companies with broad flexible pipelines over those that rely on “blockbuster” drugs. The advantage that biotech companies offer is that they are small, adaptable and innovative, and have made significant breakthroughs in, for example, the field of genomics. Conversely, they have very limited access to funding and have, therefore, traditionally been unable to cope with the developmental and scaling up costs.
The Pfizer case
Pfizer has been on top of the game for many years, leading the top-10 selling drugs list with Lipitor, the biggest selling drug of all time. Unfortunately, patent protection by the company of this drug will be lost in 2011. Consequently, it is forecast that the current sales of the product, which stand at $12.7 billion in 2007 will drop down to 1$ billion in 2014.4 With a number of other products losing patent protection in coming years, the situation does not look too bright for Pfizer, with experts forecasting that current sales for their products will not increase sufficiently to compensate the massive loss of revenue and will lose the top position. Conversely, other European pharmaceutical manufacturers, such as Roche, are forecast to perform better as their top five products in 2014 are expected to be biologics.
In conclusion, year after year the pharma industry has continued to experience a healthy growth and increased profits, and to realise the success of a number of blockbuster drugs. However, with many of the world’s best selling drugs facing patent expiries between now and 2011, how is Big Pharma going to deal with the difficult times ahead? The future will belong to those companies that are fast to the market, flexible and innovative, with a healthy pipeline and who know how to bring medicines to the market.
References
1. J. Patterson, “Can Big Pharma produce the next generation of medicines?”, Pharm. Tech., 32(8), 113–114 (2008).
2. Pharm Exec staff, “The winners circle”, Pharm. Tech. Eur., 20(9), 86–92 (2008).
3. P. van Arnum, “Charting API market growth and opportunity”, Pharm. Tech., 32(7), 58¬–61 (2008).
4. G. MacDonald, “Pfizer to lose top spot by 2014”, 12 August 2008 www.in-PharmaTechnologist.com.
Source: Pharmaceutical Technology Europe: www.ptemag.com/pharmtecheurope |
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