Olivier LeMoal
With a significant number of blockbuster drugs at risk of losing market exclusivity in the next five years, Big Pharma is expected to increase market consolidation and deal building in the short to medium term, the research house and credit rating, Fitch Solution projects.
The report comes as drugmakers brace for a huge wave of loss of patent exclusivities (LOEs) in 2025-2030, which could open the floodgates for low-cost generics and biosimilars for the first time against some of the leading brands. leading pharmaceutical companies in the US and EU.
“We hope that generic companies do not waste time bringing competing generic and biosimilar drugs to market,” the authors wrote.
Fitch projects an unprecedented wave of biosimilars in the US and EU amid growing demand for cheaper pharmaceuticals and a favorable regulatory environment.
Last week, the US Secretary of Health gave the go-ahead to test a payment model designed to limit out-of-pocket costs for certain generics to a maximum of $2 per month per drug for Medicare beneficiaries.
According to industry watchers, even the major drugmakers have yet to position their projects to offset an estimated loss of more than $200 billion during 2022-2030, when some of the best-selling drugs are expected to go off-patent.
Big patent cliffs loom for big pharma like AbbVie (New York Stock Exchange: ABBV), Johnson and Johnson (New York Stock Exchange: JNJ), Pfizer (New York Stock Exchange: PFE), Novartis (NVS) (OTCPK: NVSEF), Merck (New York Stock Exchange:MRK), Eli Lilly (New York Stock Exchange: LLY) and Bristol Myers Squibb (BMY) from 2023 to 2028.
In late January, AbbVie (ABBV) faced the first of up to ten imitations scheduled to enter the market this year against its successful rheumatoid arthritis therapy Humira in the US when Amgen (AMGN) launched its biosimilar Amjevita.
Yet after navigating significant LOEs in 2020, Roche (OTCQX:RHHBF) (OTCQX:RHHBF) is largely immune to the biosimilar threat, as is Sanofi (SNY), whose Regeneron-marketed Dupixent asthma therapy (REGN) is protected by patent in the United States until 2031.
“Pharmaceutical companies often resort to M&A when faced with patent cliffs, and this is something we have seen before in past patent cliffs, such as the one from 2011 to 2015,” Fitch wrote.
In that wave of LOEs, the biopharmaceutical industry turned to M&A to offset the revenue impact of generic competition against blockbuster small molecule brands. as Bristol Myers Squibb’s (BMY) Plavix and Pfizer’s (PFE) Lipitor, currently marketed by its spin-off Viatris (VTRS).
Fitch points to Pfizer’s (PFE) trading focus in 2022 ahead of LOE for its top revenue generators such as oral JAK inhibitor Xeljanz and breast cancer drug Ibrance expected in 2025 and 2027, respectively.
Last year, the New York-based pharmaceutical giant spent ~$12 billion to acquire migraine drug maker Biohaven Pharmaceuticals and closed a ~$5 billion deal to take over the migraine disease drug developer sickle cell Global Blood Therapeutics.
Meanwhile, AbbVie (ABBV) is lifting a self-imposed $2 billion cap on settlements and preparing newer drugs to offset the impact of its Humira LOE.
Pfizer (PFE) could afford deals of this magnitude thanks to the firepower generated by its COVID franchise, but “other companies with less cash holdings may find it difficult to employ M&A as a hedging technique in the coming years”, Fitch argues
However, patent holders are expected to implement various other tactics to defend turf, including agreements to delay the release of the mimic and clinical studies to introduce perennial techniques such as new dosage forms.
Seeing the 2028 LOE for its successful Keytruda cancer therapy in the US, Merck (MRK) is reportedly developing more user-friendly formulations to replace the intravenous version.
Seeking Alpha contributors have differing views on how well Big Pharma can get through the next big LOEs. SA author Vera Glebova picks AbbVie (ABBV) over Merck (MRK) even as both will face significant patent cliffs in the coming years.
