The Outlook for New Molecular Entities

As custom manufacturers and pharmaceutical ingredient suppliers gather for CPhI Worldwide in Paris, Oct. 3–Oct. 5, industry observers point to a mixed outlook for pharmaceutical custom synthesis. While industry performance for 2006 is better than 2005, the critical question remains the improvement in drug output. The slow rate of approvals of new molecular entities (NMEs) continues in 2006 as Big Pharma seeks to build pipelines of active pharmaceutical ingredients (APIs) through acquisitions, including capabilities in biologics.

Uptick in custom synthesis

"We see the market for pharmaceutical custom manufacturing in 2006 to be better compared with 2005, primarily due to the 'Tamiflu' effect, and depending on the execution of those Tamiflu contracts, we would anticipate improvement for 2007," says Enrico Polastro, vice-president and industry specialist for the consultancy Arthur D. Little (ADL, Brussels, Belgium).

Overall, the market for pharmaceutical custom synthesis is estimated at $6–7 billion, with growth of 6–7% in 2006 over 2005. Approximately 5% of that growth would be attributed to the higher levels of outsourcing relating to Roche's (Basel, Switzerland) decision to increase production capacity for its antiviral drug "Tamiflu" (oseltamivir) according to ADL. On a value basis, ADL estimates that the increase in external manufacturing for Tamiflu adds roughly $200–300 million to the pharmaceutical custom synthesis market.

Roche reported in March 2006 plans for increasing production capacity for Tamiflu by expanding its internal and external manufacturing. It added external manufacturers (see sidebar, "Roche's external manufacturing partners for Tamiflu production") to its global manufacturing network. The expansion is part of Roche's plan to increase its production capacity for Tamiflu by 100 million treatments to bring its total capacity to 400 million treatments by the end of 2006.

Roche´s external manufacturing partners for "Tamiflu" production.

Slowdown in NMEs continues

Although select projects may positively affect the market for pharmaceutical custom manufacturing, drug output, as measured by the number of NMEs, is an important barometer for the overall health of the market. Continuing a trend over the past several years, the number of NMEs, and those specifically from Big Pharma, is modest.

Through the first eight months of 2006, only 10 NMEs had been approved by the US Food and Drug Administration (see Table I), with five APIs from Big Pharma. These products include: Pfizer, Inc.'s (New York, NY) "Sutent" (sunitinib), "Chantix" (varenicline), and "Eraxis" (anidulafungin) from Vicuron Pharmaceuticals, Inc. (New Prussia, PA), which Pfizer acquired in 2005; "Prezista" (darunavir) from Tibotec, a subsidiary of Johnson & Johnson (New Brunswick, NJ); and "Sprycel" (dasatinib) from Bristol-Myers Squibb Company (New York, NY).

Table I: Approvals of new molecular entities in calendar year 2006.*

One more NME was approved in September 2006: Schering-Plough's Corporation's (Kenilworth, NJ) "Noxafil" (posaconazole), a triazole antifungual. The number of NMEs approved thus far in 2006 is on par with the performance in 2005, when only 20 NMEs were approved by FDA. Also, three new biologic license applications were approved through Aug. 31, 2006 (see Table II).

Table II: Approvals of new biologic license applications in calendar year 2006*

Promising APIs

Industry observers point to several NMEs, currently in late-stage development, which bode well for Big Pharma and the large biotechnology companies. Sales estimates for this products range from $500 million to blockbuster status, representing $1 billion or more in sales.

Pfizer's torcetrapib. A key product for Pfizer is torcetrapib, a new hypolipidemic, which Pfizer is attempting to position as both a monotherapy and a combination therapy with its top-selling drug "Lipitor" (atorvastatin). Sales estimates for torcetrapib are $3.08 billion in 2010, according to the consultancy and research firm Wood Mackenzie, Inc. (Boston, MA).

Pfizer reported in 2005 that it had begun production of torcetrapib at a $90-million plant expansion at its facility in Loughpeg, Ireland. Pfizer also developed a new dosage-form technology, spray-dried dispersion (SDD), in collaboration with Bend Research, Inc. (Bend, Ore) to be used at the Loughbeg facility to manufacture the SDD component that would be combined with atorvastatin to formulate the torcetrapib and atorvastatin combination.The torcetrapib and atorvastatin combination is in Phase III trials, and Pfizer hopes to file a new drug application (NDA) for the combination therapy in 2007.

Eli Lilly and Daiichi-Sankyo's prasugrel. Another key API in late-stage development is prasugrel, a second-generation P2Y receptor antagonist being developed by Eli Lilly and Company (Indianapolis, IN) and Daiichi-Sankyo Company (Tokyo, Japan), which is now in Phase III clinical trials. Sales of the drug are expected to reach $2.19 billion in 2010, according to estimates by Wood Mackenzie.

Johnson & Johnson's paliperidone. Paliperidone, a follow-up product to Johnson & Johnson's "Risperdal" (risperidone) is another promising API. "The drug is being developed as an extended-release formulation and has demonstrated a good safety and efficacy profile compared to existing products, which should allow a company such as J&J, with its expertise in the market, to compete effectively and switch patients from Risperdal to paliperidone. In addition, the company also is developing an intramuscular (IM) formulation in order to reach a wider patient population," says Wood Mackenzie, which estimates sales of nearly $1.7 billion by 2010. Johnson & Johnson submitted an NDA for the once-daily oral form of paliperidone in November 2005, and to European regulatory authorities in May 2006. The oral formulation of paliperidone uses the "Oros" extended-release technology developed by Alza Corporation, a Johnson & Johnson subsidiary.

Roche's CERA. CERA (continuous erythropoietin receptor activator) is a second-generation erythropoietin product by Roche that also is projected by analysts to be a strong performer. "The long half-life (once-monthly) provides a dosing advantage over existing products in certain treatment settings and is expected to drive strong uptake," says Wood Mackenzie, which estimates sales of the drug at nearly $1.1 billion in 2010. In 2005, Roche commissioned a new production facility in Penzberg, Germany for the production of epoetin and CERA.

Merck's sitagliptin, MK-0524B, and vorinostat. Merck & Co, Inc. (Whitehouse Station, NJ) has three promising APIs either under FDA review or in late-stage development. They are: "Januvia" (sitagliptin), an oral, once-daily drug for treating Type II diabetes; "MK-0542B" (extended-release niacin, "MK-0524", and simvastatin), a follow-on combination product to Merck's "Zocor" (simvastatin), which came off patent in 2006; and "Zolinza" (vorinostat), an investigational histone deacetylase inhibitor for treating advanced cutaneous T-cell-lymphoma.

If approved, Wood Mackenzie estimates 2010 sales of $890 million for Januvia, $780 million for MK-0524B, and $560 million for Zolinza. Zolinza received priority review by FDA in June 2006, and Merck excepts FDA action on its NDA in October 2006. Merck's NDA for Januvia also is under FDA review, and Merck expects a decision by FDA in October 2006. Januvia also is being investigated as part of a single-tablet combination with metformin. "MK-0431A" (sitagliptin and metformin) has been accepted for standard review by FDA, and Merck expects FDA action by March 2007. MK-0524B is in Phase III trials, and Merck hopes to file an NDA in 2007. Merck is positioning MK-0524B as a follow-on combination product to Zocor and is positioning the product alongside "Vytorin" (ezetimibe and simvastatin), the cholesterol-lowering combination therapy from Merck and Schering-Plough.

Sanofi-Aventis's rimonabant. Sanofi-Aventis (Paris, France) has a promising API, "Acomplia" (rimonabant), an antiobesity agent that was approved by European regulatory authorities in June 2006. US regulatory approval is pending. Wood Mackenzie estimates near blockbluster status for the drug, with 2010 sales projections of $907 million.

Amgen's panitumumab and denosumab. Panitumumab and denosumab, two APIs by Amgen, Inc., (Thousand Oaks, CA) also make the list for promising late-stage drugs, with 2010 sales estimates of $919 million and $520 million, respectively, according to Wood Mackenzie.

Amgen acquired panitumumab and denosumab, two fully human antibodies, from a $2.2-billion acquisition of Abgenix, Inc. in 2006. With the acquisition of Abgenix, Amgen gained a 100,000-ft² manufacturing plant in Fremont, California, which will produce panitumumab.

Building pipelines via acquisitions

Big Pharma continues to build its pipeline via acquisitions, including biologics.

Bayer Schering Pharma AG. The 16.9 billion euros ($21.4 billion) acquisition of Schering AG (Berlin, Germany) by Bayer Healthcare (Leverkusen, Germany) is the largest deal thus far in 2006. It builds Bayer's position in specialty care with the combined company having 70% of its product portfolio in specialty care.

The new company, which will be named Bayer Schering Pharma AG, will have several key APIs with projected double-digit growth as estimated by Bayer. They include: "Betaseron" (interferon beta 1-b), "Kogenate" (antihemophilic factor, recombinant), "Yasmin" (drospirenone), "Avelox" (moxifloxacin), "Levitra" (vardenafil), "Mirena" (levonorgestrel), and "Trasylol" (aprotinin).

Novartis. Following its $5.4-billion acquisition of Chiron Corporation earlier this year, Novartis (Basel, Switzerland) created a new vaccines and diagnostics division. "Novartis bought Chiron to diversify its interests into diagnostics, gaining access to another source of revenue and growth," says Wood Mackenzie. "Chiron's vaccine portfolio and pipeline provides a robust strategic fit with Novartis's recent efforts to build an anti-infectives franchise, virtually from scratch," adds Wood Mackenzie.

As an example, Novartis followed that acquisition by agreeing to buy NeuTec Pharma (Manchester, UK) for GBP 305 million ($569 million). "NeuTec brings expertise in the development of recombinant antibodies as well as two hospital anti-infective candidates in late-stage development: Mycograb for systemic fungal infections and Aurograb, for drug-resistant bacterial infections," says Wood Mackenzie.

AstraZeneca,Merck & Co, and Merck KGaA. Reflecting Big Pharma's strategy to build product and development skills in biologics, key deals include AstraZeneca's (London, England) $1 billion acquisition of Cambridge Antibody Technology (CAT), Merck & Co.'s combined $480 million for acquiring GlycoFi and Abmaxis, and Merck KGaA's (Darmstadt, Germany) proposed CHF 16.6 billion ($13.3 billion) acquisition of the European biotechnology company Serono.

"There is a concern that AstraZeneca's current growth will not be sustainable after 2007, when sales of key existing products start falling with no new obvious candidates to replace them," says Wood Mackenzie."Replenishing the drug pipeline has been cited as a top priority for the new CEO David Brennan. In addition, the company is making a concerted effort to move toward biologics with the aim of 25% of its R&D pipeline to be made up of biologic therapeutics by 2010. The acquisition of CAT represents a major step toward meeting this goal."

Merck also is applying a strategy of building its position in biologics. "Like other Big Pharma, Merck is looking to reduce its dependence on small molecules and gain more expertise in developing high-value biological treatments," says Wood Mackenzie. "The acquisitions of GlycoFi and Abmaxis now give Merck in-house expertise in the development, optimization, and manufacturing of humanized monoclonal antibody products."

Pfizer. Big Pharma also recently has turned to bolt-on acquisitions to build pipelines as shown by Pfizer. Key deals from Pfizer include the 2006 acquisition of Rinat Neuroscience and four bolt-on acquisitions in 2005: Angiosyn, Inc, Bioren, Inc., Idun Pharmaceuticals, Inc., and Vicuron Pharmaceuticals, Inc.

"Rinat, a specialist in neurological disorders, provides Pfizer with in-house expertise and biological approaches to treating Alzheimer's disease, where it is presently reliant on the Eisai-derived Aricept (donepezil). Other promising candidates include a monoclonal antibody (RN 624) against nerve growth factor in Phase II development for chronic pain," says Wood Mackenzie.

"Angiosyn provides Pfizer with a preclinical treatment for macular degeneration, giving it a follow-up to Macugen (pegaptanib)," says Wood Mackenzie. "Bioren provides additional expertise in antibody discovery and optimization, and Idun Pharmaceuticals gives Pfizer compounds that modulate caspases, cysteine proteases involved in both apoptosis and inflammation. A key product is IDN-6556, a broad-spectrum caspase inhibitor." With Vicuron, Pfizer gained two key APIs: anidulafungin, FDA approved in 2006 for treating fungal infections, and dalbavancin under FDA review for treating gram-positive infections.