Last year global pharmaceutical sales topped the $1 trillion mark for the first time ever. By 2018, the Intellectual Property and Sciences Business of Thomson Reuters predicts sales will rise by another 30% to $1.3 trillion. This is a major growth opportunity for investors, but only if they understand what blockbuster drugs are on their ascent, and which ones could be on the decline.
As it stands now, AbbVie's (ABBV 0.89%) anti-inflammatory drug Humira is the best-selling drug in the world. While it hasn't eclipsed the $13 billion-plus that cholesterol-lowering drug Lipitor brought in during its heyday, Humira generated $12.54 billion in sales in 2014, representing 19% operational growth year-over-year. Through the first two quarters of 2015, Humira's sales totaled $6.65 billion, putting it on pace to log the highest sales total ever for a prescription drug in a calendar year.
Unfortunately for AbbVie and its investors, Humira's time as a protected drug is nearly up. In 2016 Humira will begin to lose exclusivity on certain patents and be exposed to generic competition, with biosimilar competition projected to enter the market by 2018. Long story short, Humira's run as the best-selling drug in the world is likely going to come to an end in the next couple of years.
The world's best-selling drugs by 2020
What drug could wind up taking its place? While it's nothing more than a guess at this point because so many variables can play into the total annual sales of a drug -- including drug development, competition, drug pricing, launch success, and marketing -- I'd keep my eye on a handful of therapies to step up as the best-selling drugs in the world by 2020.
The most logical choice to ascend to the title of "best-selling drug in the world" would be Harvoni, the hepatitis C medication from Gilead Sciences (GILD 1.24%) that's designed to treat genotype 1 patients. Genotype 1 is the hardest to treat, but it's also the most common, comprising about 70% of all HCV cases.
Harvoni is a step up from previous HCV therapies in two big ways. First, it's extremely convenient. It's a once-daily pill that has minimal side effects. Compare this to prior-generation therapies that may have required interferon and a ribavirin, which came with the added side effects of flu-like symptoms and potential anemia.
Secondly, Harvoni dramatically improved SVR rates, or the rate at which no detectable level of hepatitis C virus could be detected after however many weeks of treatment (typically 12). The treatment-naïve group demonstrated a 94% cure rate after just eight weeks (prior treatments could have been 24 weeks to 48 weeks long), while treatment-naïve and treatment-experienced genotype 1 patients, both with liver cirrhosis, demonstrated SVRs of 97% and 94%-99%, respectively, in the three ION trials that led to Harvoni's approval.
With little room left for efficacy improvements, and Gilead willing to go to bat on price, perhaps the only way left to unseat Gilead's dominance in this space is to find a therapy that can be effective in fewer than eight weeks. Until such time, I believe Harvoni could regularly generate $10 billion to $12 billion in annual sales.
Cancer drugs accounted for $100 billion of the $1 trillion in global sales in 2014, and they should arguably grow at a faster pace than other indications in the coming years given the seriousness of most cancers and a rise in the global rate of cancer occurrence. With that in mind, I'd opine that Celgene's (CELG) blood cancer drug Revlimid could make a serious run at the best-selling drug in the world by 2020.
Revlimid's bread and butter is its indication for multiple myeloma in newly diagnosed and relapsed patients. However, Celgene is testing Revlimid in eight additional label indications, which could effectively double its sales potential by 2020 from what it reported in 2014. Revlimid is being studied as a maintenance therapy for multiple myeloma, as a treatment for diffuse large B-cell lymphoma (in first-line therapy for ABC-subtype and as a maintenance therapy), and for first-line follicular lymphoma, to name a few. It has a long patent life, which should help protect it from generic competition for years to come.
What's worth watching here is how other multiple myeloma therapies fare in clinical studies and post-launch. For instance, Kyprolis was recently approved by the FDA for second-line multiple myeloma indications. Revlimid held its market share in second-line multiple myeloma in the early going following the approval, but competition or label expansion in the indication seems inevitable over the next five years.
Even with this added competition, if Revlimid can land another four to eight label indications, it could, along with regular price increases, potentially push to the $10 billion sales mark by 2020. For context, Revlimid is expected to bring in $5.6 billion to $5.7 billion in sales in fiscal 2015.
Lastly, we have the wild card of the bunch, aducanumab, which has the asterisk next to its name because it's still an experimental therapy.
Aducanumab is a potential treatment for Alzheimer's disease being developed by Biogen (BIIB 0.07%). The company gained incredible press late last year after announcing that aducanumab (previously known as BIIB-037) would skip midstage studies and dive right into phase 3 studies after demonstrating surprising efficacy in early-stage Alzheimer's patients in phase 1 studies. Not only did aducanumab lead to a decrease in beta-amyloid, a substance that has been attributed to cognitive decline due to its ability to "stick" to neurons, but it led to cognitive improvement for those in the earlier stages of the disease.
A more thorough analysis emerged from the phase 1b study in 2015, showing that in the 30-point mental acuity test the 3 mg and 10 mg doses of aducanumab led to a reduction of just 0.75 points and 0.58 points, respectively, compared to a 3.14-point decline for the placebo group. Similar efficacy was witnessed in the 18-point Clinical Dementia Rating.
The concern here is that drugs targeting the brain and neurological disorders in general have a very high failure rate. We've witnessed promising therapies succeed in phase 1 and/or phase 2 trials only to fall flat on their faces in phase 3. Thus, there's no guarantee of success for aducanumab in phase 3 trials.
However, in the event that it does succeed, the perfect storm of profitability could await. There are an estimated 600,000 mild cases of Alzheimer's disease within the U.S., and if it can attain 65% of market share at a price of $20,000 per year, according to ISI Group analyst Mark Schoenebaum, it could become an $8 billion per year drug. Note, the $20,000 per year price tag is lower than lesser-effective drugs already on the market -- thus this could be a very conservative estimate. My guess is if aducanumab's data holds consistent in phase 3 studies and is approved, it could possibly push the $10 billion sales mark by 2020.