Research firm Decision Resources predicts that the rheumatoid arthritis market will modestly grow to $15 billion in the next decade. RA patients already have access to more than enough drugs to find an adequate treatment combination, and cheaper alternatives may become available. But pharma companies continue to treat RA like a growth market. Abbott built spinoff AbbVie (NYSE:ABBV) around the $9 billion Humira, and Pfizer (NYSE:PFE) brought a new class into the mix.
Will the bevy of RA blockbusters run out of steam?
The old guard
Rheumatoid arthritis is a chronic inflammatory condition that primarily affects the joints. Patients work closely with doctors to find an adequate treatment regimen -- which can help manage the disease and prevent potential co-morbidities including heart disease, cancer, and osteoporosis.
Finding the right RA treatments can prove problematic, so once something works, patients usually stick with that drug for an extended period of time. Generic drug methotrexate has long been the first-line treatment in RA. Methotrexate works for the majority of patients with early-stage RA and offers fewer safety risks than other disease-modifying anti-rheumatic drugs.
Methotrexate isn't always enough, especially in later stages of the condition. Patients might take methotrexate with a tumor necrosis factor, or TNF, inhibitor -- the class with the branded blockbusters.
Humira from AbbVie leads the anti-TNF biologic pack because of its effectiveness and comparatively decent safety profile. The drug had tremendous sales of $9.3 billion last year. AbbVie doesn't have to split the costs of this drug with anyone, unlike the deals in place for Enbrel and Remicade. But the newly born spinoff is overly dependent on Humira's continued success.
Remicade has a disadvantage to the other two blockbusters because it's administered intravenously in a clinical setting, whereas patients can self-inject Humira or Enbrel at home with a pen-style device. Despite this inconvenience, Merck (NYSE:MRK) reported net sales of $2.1 billion for Remicade last year, and Johnson & Johnson (NYSE:JNJ)reported $6.1 billion. The companies fought a legal battle over which company would get what when it came to this drug. When the dust settled, Johnson & Johnson stood on the winning side. Merck's looking for any victories it can get now that the blockbuster Singulair fell off patent.
Enbrel had 2012 revenues of $957 million for Pfizer and $4.2 billion for Amgen (NASDAQ:AMGN). Pfizer was marketing the drug outside the U.S. and Canada while receiving a percentage of annual gross profits from Amgen. The North American collaboration agreement expires this fall. Amgen will then pay a declining percentage of profits for three years.
Amgen might celebrate decreased payments, but Pfizer's up to RA plans of its own.
A new hope?
Pfizer's Xeljanz received U.S. approval late last year and became the first in a new class of treatments called JAK inhibitors. Xeljanz treats early-stage patients as either a combination therapy with methotrexate or as a monotherapy in treatment-resistant patients. As an oral medication, Xeljanz has a chance at wooing some patients away from the TNF injections. But the majority of patients will probably stick with what's already working for them.
Several pipeline candidates were trying to join Xeljanz as new drugs to market, but a few have already crashed. Eli Lilly cancelled late-stage tabalumab because of insufficient efficacy. AstraZeneca's fostamatinib proved inferior to Humira in mid-stage trials.
What's still standing? Regeneron and Sanofi have phase 3 sarilumab. This drug is yet another injectable that works best in combination therapy with methotrexate. Johnson & Johnson teams with GlaxoSmithKline on the injection sirukumab, which began phase 3 trials last year.
Xeljanz beats those development drugs in more than dosage route. Pfizer's rookie can be used in patients who haven't tried TNF drugs yet, allowing it to stand out as a second-line treatment.
Foolish final thoughts
We've taken a tour through the basic drugs that currently dominate the RA market, but let's circle back to the Decision Resources prediction of modest RA revenue growth. First, the company might be wrong -- it's an estimate, not a crystal ball.
But now looks like a peak time for the TNF inhibitors, as biosimilars could come to market in the not-too-distant future. Humira's patent expires in 2016, and the arrival of cheaper copycat drugs, paired with the growth of oral options, could serve as a long-term headwind for market growth. This poses a challenge for a number of companies, with AbbVie, the house that Humira built, leading the pack.