Who's the Frailest Big Pharma of All?

Mirror, mirror, on the wall, who's the frailest big pharma of all? The patent cliff has certainly taken its toll over the past couple of years, weakening several successful pharmaceutical companies. Which are faring the worst during this tumultuous period? Let's look at some of the frailest companies out there.

Sickly sales
Plenty of large drug companies lost exclusivity for some drugs during recent years. However, for a few, expiration of patents wreaked havoc on the top line.

AZN Revenue TTM Chart

AZN Revenue TTM data by YCharts.

Bristol-Myers Squibb (NYSE: BMY  ) really went through a world of hurt. Revenue dropped nearly 18% since the beginning of 2012 after the patent for Plavix expired. From 2011 to 2012, sales of Plavix plummeted by $4.5 billion. Ouch.

AstraZeneca (NYSE: AZN  ) wasn't too far behind, with revenue falling 14%. Saying goodbye to exclusivity for Seroquel IR caused much of the damage. Sales for the drug in 2012 totaled $1.3 billion, a 70% drop from the $4.3 billion earned the prior year. 

Lipitor remained the primary driver behind Pfizer's (NYSE: PFE  ) declining overall sales. The drug still pulled in nearly $4 billion in 2012. However, that level is still far short of the $9.6 billion from 2011.

Lilly (NYSE: LLY  ) felt the pain of losing exclusivity for Zyprexa in 2011, but rising sales of other drugs, particularly Cymbalta, helped cushion the blow. Likewise, generic competition for Lovenox, Aprovel, and Plavix dented revenue for Sanofi (NYSE: SNY  ) , but the impact was offset in large part by sales growth for other products. 

Fragile futures
The biggest problem with the patent cliff is that it isn't over. More drugs will go off patent in the next few years. That, of course, means that the future for some big pharmas might look worse than the past. 

Sources: Company SEC filings and annual reports, Express Scripts. 

Lilly looks to have a rough stretch over the next three years as several blockbuster drugs go off patent. The company's current top-seller, Cymbalta, loses exclusivity at the end of this year. Humalog also loses patent protection this year, while Evista goes off-patent in 2014.

Neither Bristol-Myers Squibb nor Pfizer will fare much better. Bristol's Baraclude loses patent exclusivity this year. Abilify and Sustiva follow suit in 2015. Pfizer's Celebrex and Zyvox go off patent in 2014 and 2015, respectively. 

All isn't gloom and doom, though. Bristol should see growing sales from Onglyza, Byetta, and Bydureon -- all three part of a partnership with AstraZeneca. The company should also get a boost from Sprycel, Yervoy, and Orencia. Lilly's positives primarily stem from its animal health unit, Effient, and Forteo. 

Pfizer benefits from a wide array of drugs with double-digit annual sales growth. The company also still owns around 80% of animal-health spinoff Zoetis (NYSE: ZTS  ) , which helps cushion some of the pain associated with the patent cliff.

Puny pipelines
The future isn't just affected by drugs currently on the market, of course. What about drugs recently gaining approval or in the late-stage pipeline? 

AstraZeneca and Bristol-Myers Squibb hope to attain success with diabetes drug Forxiga, which was recently approved in Europe but has to try again for FDA approval. AstraZeneca also expects to file for regulatory approval of another diabetes drug, SaxaDapa (gotta love that name), by 2015. Other than those, though, the company's late-stage prospects that can possibly make a difference in the next two or three years aren't overly impressive.

Bristol and Pfizer should both benefit from Eliquis, the blood thinner that recently obtained FDA approval. Some analysts say that Bristol has the best early stage pipeline in the business, but its late-stage pipeline isn't as strong.

Lilly doesn't boast the most promising late-stage lineup, either. The company had some disappointing news with a phase 3 trial of its Alzheimer's disease drug, solanezumab, in August. However, Lilly is moving forward with more trials. The company also stopped one out of three phase 3 studies under way for potential rheumatoid arthritis drug tabalumab.

Pfizer looks to be in better shape. In addition to Eliquis, the company also obtained FDA approvals for chronic myeloid leukemia drug bosutinib and rheumatoid arthritis drug Xeljanz over the last several months. Pfizer counts several other promising drugs in phase 3 trials as well.

Sanofi also seems to have decent prospects. European regulators approved cancer drug Zaltrap and diabetes drug Lyxumia over the past few months. The company also boasts several other drugs awaiting approval or in late-stage studies.

Frailest of all
With all factors considered, I'd have to say that Lilly stands (shakily) as the frailest big pharma. While the company has withstood the patent cliff better than several of the others, the impending loss of exclusivity Cymbalta, Humalog, and Evista will be very tough.

Lilly doesn't appear to have anything on the radar that will replace the revenue drop that is sure to come. I have to agree with my Foolish colleague Sean Williams that the company has "the most perilous pipeline" in the industry. The stock gained nearly 39% over the past year, but I don't expect that run to continue for long. Rear-view mirrors don't help much with seeing what lies ahead.

More reflection on Eli Lilly
With two of its top three drugs poised to lose patent protection this year, is Eli Lilly a dividend stock headed nowhere fast? In a new premium report, The Motley Fool's senior pharmaceuticals analyst breaks down all of Lilly's moving parts, including an in-depth analysis of the company's must-know opportunities and reasons to buy and sell today. To find out more -- and get a full year of free updates -- click here to claim your copy today.


Read/Post Comments (7) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 01, 2013, at 9:10 PM, desertdave47 wrote:

    They're all criminals & crooks. For Profit healthcare is perhaps the most Anti Christian practice one can think of and by extension, Anti American. Proof positive by taking a sober examination of how healthcare gets done in Asia, Europe etc. For example, google Bumrungrad Hospital in Bangkok, Thailand. They list the prices for medical operations, procedures with the newest technology, doctors trained in the U.S., high end facilities, clean, modern and cutting edge technology. No, Thailand's taxes are not crazy and it's not a drain on the economy - proof positve it can happen, we can run the U.S. without health insurance companies & the for profit mindset, health insurance companies in the U.S. are a 100% unecessary middleman.

  • Report this Comment On March 01, 2013, at 11:41 PM, ankit2070 wrote:

    do not consider Novartis as big Pharma?

  • Report this Comment On March 02, 2013, at 1:24 AM, DannyHaszard wrote:

    Eli Lilly did make $69 billion on Zyprexa and they still expect to capture 20% of the US market as well as a billion year on ZyprexaXR.

    The patent only expires in the US and some Euro,Lilly announced they have an *authorized* distributor of generic Zyprexa.

    I am keenly interested in how they resolve remaining Zyprexa litigation.

    PTSD treatment for Veterans found ineffective.

    Zyprexa can cause diabetes.

    I took Zyprexa Olanzapine a powerful Lilly schizophrenic drug for 4 years it was prescribed to me off-label for post traumatic stress disorder was ineffective costly and gave me diabetes.

    *FIVE at FIVE*

    The Zyprexa antipsychotic drug,whose side effects can include weight gain and diabetes, was sold to Veterans,children in foster care, elderly in nursing homes.

    *Viva Zyprexa* *five at five* was the Zyprexa sales rep slogan, meaning *5mg dispensed at 5pm would keep patients quiet*.

    *Tell the truth don't be afraid*-- Daniel Haszard

  • Report this Comment On March 03, 2013, at 11:23 AM, Ringman1 wrote:

    Why isn't Merck included? Their pipeline is in terrible shape!

  • Report this Comment On March 03, 2013, at 7:39 PM, mkmadden wrote:

    After weeks of helping someone through the nightmare of clearing himself of Lilly's Cymbalta and a few other "prescribed" medications, and reading the horrow stories of others who have taken this POISON, if they drown in red ink... good. Hope they choke on that napalm. From what I"m reading here, seems like that's not the ONLY chemical that Lilly has marketed and sold. At least if you buy drugs from the local pusher instead f the pharmacist, you go in knowing its not going to end well. This is a sneak attack and the FDA and Pharmas should be crucified.

  • Report this Comment On March 03, 2013, at 8:09 PM, Royallgal wrote:

    As a DES daughter who was exposed 60 years ago to Lilly's DES to cure a disease they created called "accidents of pregnancy" - I have lived with numerous health issues including breast cancer. Lilly knew two years after putting DES on the market that it caused breast cancer and didn't work. Despite this knowledge, they continued to sell the drug for over 30 years exposing millions of baby boomers to cancer, reproductive abnormalities, and other serious health issues, simply for profit. DES, like BPA is an endocrine disruptor, a carcinogen. Like Zyprexa, Lilly has paid millions in out-of-court settlements to the DES exposed who have suffered injuries and many more are on the horizon.

  • Report this Comment On March 04, 2013, at 2:50 AM, montanus wrote:

    Intellect Neurosciences Issues Letter to Shareholders

    NEW YORK, Feb. 13, 2013 (GLOBE NEWSWIRE) -- Intellect Neurosciences, Inc. (ILNS), a biopharmaceutical company engaged in the discovery and development of treatments for the prevention and treatment of neurodegenerative diseases, issued the following Letter to Shareholders from Dr. Daniel Chain, Chairman and CEO.

    Dear Shareholder,

    I am quite pleased by the progress we made in 2012 despite various challenging setbacks we experienced during the year. We put the funds we received from ViroPharma to good use, on the one hand by significantly reducing our liabilities and on the other with the following achievements:

    We filed several new patent applications to protect our product candidates and technology platforms;

    We in-licensed new technologies, including two antibodies that target early neurotoxic forms of tau protein, which have application for therapeutic and diagnostic uses;

    We initiated an important collaboration with the University of California, Irvine's Dr. Frank LaFerla, Chancellor's Professor and Chair, Neurobiology and Behavior School of Biological Sciences, Director, Institute for Memory Impairments and Neurological Disorders, as well as Dr. Kim Green and his team;

    We appointed world-renowned antibody drug developer, Dr. Dan Shochat, as Consultant, VP Development;

    We developed a detailed road map and signed a Letter of Intent with Lonza regarding the manufacture of our antibody drug conjugate, CONJUMAB-A, which is being developed for age-related macular degeneration.

    We signed a Research Service Agreement with iNovacia to evaluate lead compounds for the CONJUMAB-A program;

    We initiated testing of our TauC3 monoclonal antibody in an Alzheimer's preclinical model; and

    We mounted a strong appeal against the patent challenge we face in Europe from Pfizer & Johnson & Johnson.

    We also initiated a lawsuit against one of our global pharmaceutical licensees to seek remedy for its failure to pay the $2 million milestone that was due upon the May 8, 2012 issuance of our ANTISENILIN patent by the USPTO. Based on discussions with our counsel following the recent motions and submissions by the defendants, our ability to prevail remains unabated.

    In 2013 we plan to move forward aggressively with our CONJUMAB and tau immunotherapy programs. These activities are expected to generate data that will increase the enterprise value of each program and attract new partnership opportunities that could result in substantial license revenues. This strategy is based on recent discussions with global pharmaceutical companies, several of which have expressed high levels of interest in these preclinical programs.

    An important event to anticipate in 2013 is the initiation of Phase 2 clinical trials with OX1 (VP 20629) in patients with Friedreich's Ataxia ("FA"), which we expect to occur mid-year based on statements Vincent Milano, CEO of ViroPharma, made during his presentation at the JP Morgan Health Care Conference in January. ViroPharma intends to file for Orphan Drug Designation upon review of the Phase 2 proof-of-concept data. February 28 marks the sixth international Rare Disease Day in 24 European countries. We are pleased ViroPharma is collaborating with FARA (Friedreich's Ataxia Research Alliance) to raise awareness about FA and Rare Disease through the media. Intellect helped forge the alliance between ViroPharma and FARA and we are proud of our role in developing OX1 and highlighting its potential for FA.

    Pipeline activities:

    CONJUMAB:

    I am excited about the potential of our CONJUMAB antibody drug conjugate platform and the therapeutic potential of the lead program, CONJUMAB-A, for treatment of age-related macular degeneration (AMD). CONJUMAB is designed to empower chaperone-like monoclonal antibodies with cytoprotective properties for treatment of various forms of amyloidosis and other types of proteinopathies in which irregular accumulation of abnormally folded proteins causes oxidative stress and inflammation, resulting in irreversible damage and death of cells. This relates to many different diseases, including diseases of the eye (AMD, glaucoma, diabetic retinopathy), brain diseases (Alzheimer's disease, Parkinson's disease (PD), Huntington's disease, motor neuron disease (ALS) and Creutzfeld Jacob disease (CJD)) and peripheral diseases (multiple myeloma, systemic amyloidosis, familial serum amyloid neuropathies and isolated atrial amyloidosis). Numerous proteins, including, amyloid beta (Aβ), tau protein, huntingtin protein, superoxide dismutase, prion and transthryetin, become abnormally folded, making them potential targets for the CONJUMAB approach.

    Our lead program, CONJUMAB-A, offers an important advantage to the Aβ antibodies currently in clinical development for both AD and AMD by several large pharmaceutical companies. This is because those antibodies (e.g. solanezumab, bapineuzumab, gantenerumab, crenzeumab, RN6G and GSK33766A) are designed for a single purpose, namely to clear Aβ, while none act on the important secondary neurotoxic mechanisms, such as oxidative stress that causes most of the damage from Aβ. By contrast, CONJUMAB-A is empowered with a potent antioxidant. An important step in establishing proof-of-principle was the initial data generated through our collaboration with iNovacia to evaluate compounds synthesized by Lonza for Intellect. The data demonstrated the conjugation of the antioxidant molecule to an amino acid does not reduce its antioxidant activity. Pending adequate financial resources, these studies, which are almost complete, will allow us to select a drug candidate to take into development, providing the trigger for us to move forward with LONZA into an expanded manufacturing project, bringing us closer to the submission of an Investigational New Drug application.

    In principle, our approach could be applied to improve many different types of antibodies, such as those that previously disappointed in clinical trials. However, currently we are focused on optimizing CONJUMAB-A using our own humanized antibody IN-N01, which targets the N-terminus of Aβ. We believe IN-N01 to be superior to bapineuzumab because of its reduced potential to cause inflammation that results from our reengineering into an IgG4 class antibody.

    Among several potential indications, we have decided to focus on AMD since both AMD and AD share several similarities, while the eye offers less challenge for delivering the drug. Indeed, physicians routinely perform injections into the eye cavity. Moreover, AMD is the leading cause of blindness in people over the age of 55, most of who respond poorly or not at all to existing therapies. While the relatively recent introduction of anti-vascular endothelial growth factor agents, such as intravitreal bevacizumab and ranibizumab, appear to have improved the prognosis for patients with wet AMD, preclinical studies have raised a potential red flag on anti-VEGF therapies, suggesting that increasingly aggressive use in eye disease could trigger side effects and potentially cause long-term damage. Moreover, no one has been able to develop an effective treatment for dry AMD, which is a significantly larger population, as it is the precursor to wet AMD.

    Ample evidence has established oxidative stress as an important contributor in the pathogenesis of AMD and several studies have indicated antioxidant molecules can help reduce damage to the retina. Various Aβ-lowering and Aβ-neuroprotective strategies have demonstrated the ability to protect against damage in various models of retinal degeneration, including Aβ-specific antibodies. Two such antibodies, GSK933766A and RN6Gare being tested in Phase 2 AMD trials having demonstrated an ability to reduce damage to RPE cells in animal models following systemic administration. These data lead us to believe CONJUMAB-A has the potential to become a strong leader in the field based on its combined properties to remove Aβ and reduce oxidative stress when delivered in high concentrations directly to the eye.

    Tau Programs:

    Tau immunotherapy is gaining traction in the Alzheimer's field, and it has potential applications for many orphan indications, such as the many types of frontotemporal dementia, among other tauopathies.

    TauC3 is a monoclonal antibody that uniquely targets a shortened form of tau protein known as ∆ tau that nerve cells produce after exposure to Ass. ∆ tau forms fibrils much faster than full-length tau and has been demonstrated to be a precursor of tangles commonly found in the brains of AD patients, as well as in the spectrum of diseases classified as frontotemporal dementias. The experiments we are conducting with our collaborators at UCI aim to validate ∆ tau as a therapeutic target and establish the potential of TauC3 for the treatment of AD and other tauopathies. As recently announced, we have initiated in vivo studies from which we anticipate data in the third quarter of 2013. If positive, we could develop TauC3 either as a single molecule or antibody-drug conjugate using the CONJUMAB platforms.

    TOC-1 is a monoclonal antibody that selectively targets yet another pretangle form of tau known as oligomeric tau. Oligomeric tau are small aggregates of tau that are thought to be extremely toxic and occur very early in Alzheimer's disease and other tauopathies. We currently are working toward re-engineering TOC-1 to produce a more druggable form of the molecule. This work is being undertaken in collaboration with two separate contract research organizations in Switzerland and China.

    Patent news:

    Tau patents: Intellect has established its position as a leader in tau immunotherapy with the publication of two Tau patent applications, which are accessible on the Internet: Patterson et al. 2011 Antibodies Selective for Pathological Tau Timers and Prefibrillar Tau Oligomers and their use in Treatment, Diagnosis and Monitoring of Tauopathies, published March 3rd 2012 under Publication No. WO 2012/1493653 and Chain, 2011: Treatment of Tauopathies, WO 2012/106363 published November 15, 2012. We have received a Written Report in each case, but we do not generally respond to such reports that are non-binding until there is an action from a foreign patent office during the national phase filings based on the PCT applications. We plan to enter the national phase filings next summer.

    ANTISENILIN patents:

    For reasons that are unclear to us, Johnson & Johnson and Pfizer are continuing in their opposition to our ANTISENILIN patent in Europe, having responded quite aggressively to our appeal notice and submissions even after the bapineuzumab Phase 3 results were announced. We are considering our response and strategy leading up to the Oral Hearings in Munich, which we anticipate will be scheduled for early next year. Meanwhile, we are waiting for an Official Action from the EPO with regard to our pending divisional patent application that aims to overcome the formalistic objections raised in the opposition. If the EOP grants us a patent on this second application, the opposition becomes moot.

    We received a first official action from the USPTO to our continuation-in-part application in which we are seeking additional claims, including to the amino terminus of Ass. We believe the arguments from the Examiner are quite straightforward to address and we are preparing our response. If successful, the issuance of this second patent would trigger another $2 million milestone payment from certain of our global pharmaceutical licensees.

    Increased Public Awareness:

    We continue our efforts to increase public and investor awareness of Intellect through media outreach and other activities, including my participation as presenter at several international industry and investor conferences. These activities also comprise an important component of our business development strategy as it gives us the opportunity to meet potential pharma partners face-to-face. Intellect was selected to give a presentation at BIOEUROPE in Barcelona March 11-13 and I have scheduled several meetings with potential partners. I also am an invited speaker at the Asian Antibody Conference in Singapore, June 17-20.

    Recent articles about Intellect include in the January edition of Merger Markets, part of the Financial Times Group, and the Jerusalem Report carried a profile this week paralleling some of the challenges I have faced in developing treatments for Alzheimer's disease to those experienced by my father, Ernst Chain, who discovered the therapeutic properties of penicillin in 1939. Also in January, Neurotech Insights published my article regarding the highlights of the 2012 Alzheimer's Drug Discovery.

    One of our stakeholders recently told me he thinks Intellect is the cat with nine lives! Indeed, we have overcome quite a few setbacks that may have put an end to many of our peers. However, despite those setbacks - and being chronically underfunded - our pipeline has continued to grow while a myriad of important achievements give us hope for the future. We continue to suffer from an enormously undervalued stock which I believe is the result of a few shareholders who for some reason are not invested in the long-term growth of the company. This single factor -- their lack of support - is the largest hindrance to raising the new capital needed to advance our drug programs to points of value accretion where they can be partnered. My biggest hope for 2013 is for all of our stakeholders to recognize the tremendous inherent value of Intellect's remarkable discovery engine, intellectual property portfolio and pipeline and license agreements that are the envy of many much larger companies. We urge them to help reverse the previous trend and make the good news events really count!

    Thank you for your continued support of Intellect and its important mission to create a world without Alzheimer's disease and other debilitating neurodegenerative diseases.

    Sincerely,

    Daniel Chain, PhD

    Chairman and Chief Executive Officer

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2287968, ~/Articles/ArticleHandler.aspx, 11/26/2014 12:33:53 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement