As pharmaceutical patents expire, big companies must fill pipelines

7/17/2008

LONDON The pharmaceutical market could see major changes, said an analyst, due to upcoming patent expiry on leading medications and the effect on the big drug companies.

Research and analysis company Informa Pharma has released a report from analyst Peter Charlish about the issues facing the pharmaceutical industry right now and also explains how the next couple of years will be huge in determining the fate of major drug companies.

According to Charlish, “One of the biggest of these headaches is the fact that the patents on many top-selling products will expire in the next few years, leaving the market vulnerable to generic competition. The general dearth of significant new products to replace these big earners is a real problem,” he explains. “The market also faces a slowing economy and low share prices—which make it difficult for companies to raise cash, and render them targets for takeovers.”

Some of the major companies Charlish believes should be watched closely are Pfizer and AstraZeneca, both of whom saw a generic rival trying to apply for a generic version of each of their blockbuster drugs like Pfizer’s cholesterol drug Lipitor and AstraZeneca’s stomach medication Nexium, both of which were challenged by Ranbaxy Laboratories.

Roche is also another company to watch, as are Merck and Schering-Plough. Roche faced a huge loss when it reported that its’ anti-influenza drug Tamiflu had a decrease in sales of 68 percent due to stockpiling by governments and corporations last year. The good news for Roche though, is its biotech business especially with the Food and Drug Administration approving its cancer drug Avastin for metastatic breast cancer. Merck and Schering-Plough have been feeling the most pain recently due to the results of the ENHANCE study which showed that their joint cholesterol drug Vytorin was no better than one of its ingredients, Zocor, at treating atherosclerosis. Sales of course dropped for the drug immediately, but recently the decline has slowed, which has made the second quarter results for these two companies heavily awaited.

From a broader perspective, observers will be watching for any signs of a solution to the recurring problem of empty pipelines.

“A number of early-stage deals have been made recently, but they still leave the problem of how to repopulate empty pipelines in the medium term, and what new products Big Pharma will be launching four or five years from now,” explains Charlish. “Clearly, innovative solutions to this problem are needed and observers will be looking for answers as companies announce their second-half round of results.”

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