2012 is shaping up to be a patent nightmare for most of the largest pharmaceutical companies. Nearly $29 billion in annual sales are at risk as patents are set to expire on some of the world's best-selling drugs -- including Pfizer's
Pfizer isn't going to just roll over and die now that its top-selling drug is no longer exclusive; it's also using its clout to bring new drugs to market. On Friday, the FDA approved Inlyta, a second-option twice-a-day pill for those who have kidney cancer that has spread to other parts of the body. Under normal circumstances a new drug approval might be cause for celebration -- in this instance I'm simply going to reserve a golf clap for Pfizer.
First off, kidney cancer is a brutally overcrowded field, with seven drugs having been approved since 2005. Of those seven, five are a primary line of treatment, including Roche's (OTC: RHHBY) Avastin, GlaxoSmithKline's
Secondly, the market for kidney cancer simply isn't that large. That doesn't mean that drug companies shouldn't seek cures -- that would be misconstruing what I'm saying. But according to estimates from the American Cancer Society, 64,770 people in the United States will be diagnosed with kidney cancer. From a sentimental perspective, that's 64,770 more cases than I'd like to see. From an investment perspective, this represents just 0.02% of the entire U.S. population, which seems a ridiculously small slice of pie from which seven companies are expected to eat.
Will Inlyta contribute to the bottom line? It depends on whether Pfizer can get it approved as a first-option treatment (which it is currently working toward). In the meantime, Inlyta's approval isn't likely to move the needle much in regard to Pfizer's profitability -- but feel free to give Pfizer a golf clap nonetheless.
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