Total Rx medicine sales inched up 2.3% last year to $307.4 billion, according to IMS Health, less than half the 2009 growth rate of 5.1%. Sales of branded drugs declined 0.7% to $229 billion. The year's overall performance echoed the previous year's, hampered by a shortage of new products and an unprecedented level of patent expiries. The difference was that, even before some dominant products lost exclusivity, their sales began eroding.
“Expiries weren't any worse in 2010 than in 2009—a little bit but not a whole lot,” says Michael Kleinrock, director, research development, IMS Health Institute for Healthcare Informatics. “What we're actually seeing is a base case US market growth in the 3-5% range. So in 2010, a relatively unprecedented group of ‘pre-expiry' impacts on protected brands…created a slowdown in the market from that base case.”
The volume of prescriptions for several brands that treat chronic conditions declined dramatically, as new therapy starts and switches for these brands were filled with generics more often than before. Overall dispensed prescription volume grew by just half the 2009 rate, 1.0% vs. 2.1%, and that, along with an abridged flu season, impacted revenue.
“There are a number of treatment areas where a lot of high-quality generics are available, and patients, providers and insurers were already weighing options more carefully,” choosing those low-cost alternatives when available, notes Kleinrock.
With less revenue to support other areas, promotional spend took a dive. A 4.1% decrease was led by the biggest players.
“Top spenders Pfizer, Merck and GlaxoSmithKline supported their brands with almost $740 million less than they did in 2009,” observes Melissa Leonhauser, strategic marketing director at SDI.
Spate of expiries
The trickle of patients leaving mature brands is set to become a wave, with a spate of patent expiries on blockbuster drugs worth $25.4 billion this year and $26.1 billion in 2012. Most of pharma gets a reprieve in 2013 before being deluged again in 2014 and 2015, when another $36 billion in branded drugs falls prey to generics.
Newer brands can't keep pace. “We don't forecast a lot of new drugs coming on to offset revenue loss,” says Les Funtleyder, healthcare strategist and portfolio manager at Miller Tabak + Co. “Because there's so much going generic, it would require a lot to offset that completely.”
Case in point: Bristol-Myers Squibb's Yervoy (ipilimumab) for treating late-stage melanoma is launching this year, but in 2012 BMS is going to lose Plavix, a $5-6 billion product. “Even with ipilimumab, which we think is a blockbuster, and a couple other blockbusters like dapagliflozin [diabetes] and apixiban [stroke/atrial fibrillation], that's still not enough to offset Plavix, at least in the year, maybe in a couple years,” says Funtleyder.
The pipeline is, nevertheless, producing interesting and innovative products—21 last year in areas of unmet need like multiple sclerosis (Gilenya) and AFib/stroke (Pradaxa). Says Kleinrock: “The headwinds are this increasing generic share, so new products that come to market are in more competitive and essentially smaller market spaces and thus have less contribution to overall market growth.”