Shifting Fortunes in API Market Growth

The year 2008 marked another period of slowing growth in the global and US markets for prescription drugs. Increased market penetration of generic drugs, fewer new product launches from recent highs, and deteriorating macroeconomic conditions contributed to a sluggish performance in 2008 and bodes ominously for the near term. Biologics increased their position among the top-selling prescription drugs in 2008, and strong growth is expected for 2009 and beyond.

Patricia Van Arnum

Crunching the numbers

Global market. The global market (on a value basis) for prescription drugs increased 4.8% to $773 billion (see Figures 1 and 2), according to IMS Health. Although global pharmaceutical sales again increased in 2008, the rate of growth has slowed from a recent high of 10.2% in 2003 to only 4.8% in 2008 (see Figure 1). This trend reflects the sixth-consecutive year in which the rate of growth has declined (see Figure 1).

(ILLUSTRATION BY S. STEWART. IMAGES: PAUL TEARLE, THOMAS NORTHCUT/GETTY IMAGES)

For 2009, IMS projects that the value of the global pharmaceutical market will increase only 2.5–3.5% on a constant dollar basis in 2009 to $750 billion (in current market dollars), based on estimates as of April 2009. IMS is forecasting a $70-billion reduction in global pharmaceutical sales from 2008 to 2009, driven by the lower growth rate and fluctuations in currency exchange rates. Of the $70-billion reduction, $15 billion is due to the economy and lowering of the growth rate; the remaining $55 billion is a result of currency exchange rates based on data from the Economist Intelligence Unit which tracks and forecasts exchange rates and macroeconomic indices. The near-term outlook is somewhat better as the global compound annual growth rate (CAGR) is projected at 3–6% through 2013.

Figure 1: Annual percentage growth in global prescription pharmaceutical sales. (DATA FOR FIGURE 1 IS COURTESY OF IMS HEALTH)

US market. A key reason for the subdued global outlook is declining growth in the US pharmaceutical market, which was the largest national market in 2008. US sales of prescription drugs increased only 1.3% to $291 billion in 2008, according to IMS Health. For 2009, IMS projects that prescription drug sales in the US will decline by 1–2%, a historic low, based on estimates as of April 2009, and the overall five-year CAGR is expected to be flat. The expiration of several blockbusters in 2011 will curtail growth through the end of 2013.

Figure 2: Global market for prescription pharmacetical sales. (DATA FOR FIGURE 2 IS COURTESY OF IMS HEALTH)

Generic drugs. Increased market penetration of generic drugs and the resulting devaluation in drug sales is a key cause for declining value growth in the US market. The US generic-drug market was valued at $33 billion (for the 12-month period ending September 2008) and accounted for 63.7% of total US prescription pharmaceutical sales, according to IMS. Because of strong competition, pricing pressures, and fewer blockbusters losing patent protection in 2008, growth in the US generic-drug market declined 2.7% in the 12-months ending September 2008, although volume increased 5.4%. The rate of growth for the global prescription generic-drug market also slowed in 2008. Global sales increased 3.6% to $78 billion in the 12-month period ending September 2008, which was down from growth of 11.4% in 2007 for the same period, according to IMS.

Shifting product mix. Reflecting increased generic incursion, fewer new chemical entities (NCEs) and smaller returns on NCEs, the CAGR of prescription drug sales from Big Pharma is expected to be only 1.8% through 2013, increasing from $366.6 billion in 2007 to a projected $407 billion in 2013, according to the research and consulting firm Datamonitor (1). As small-molecule drug sales are pressured, sales of biologics from Big Pharma are expected to rise, with biologics expected to account for 20% of Big Pharma's prescription drug sales by 2013. At the same time, sales from its core products are expected to fall by nearly 50% to $47 billion by 2013 (1).

In contrast, although representing a much smaller base, the CAGR of prescription drug sales from mid-sized pharmaceutical companies and biotechnology companies are expected to be relatively strong. The CAGR from mid-sized drug companies is projected at 6.1% through 2013, increasing from $44.0 billion in 2007 to $62.9 billion in 2013. Small molecules will continue to dominate mid-sized pharmaceutical companies' revenues, accounting for 92% of their prescription drug sales by 2013, according to Datamonitor (1).

The CAGR from biotechnology companies is projected to increase 5.6%, from $34.6 billion in 2007 to $48 billion in 2013, according to Datamonitor. Biologics accounted for more than 50% of biotechnology companies' 2007 sales, and therapeutic proteins are projected to be nearly 70% of sales by 2013 (1).

Aiming for the top

The 15 top-selling products accounted for $89.0 billion or 12% of the global pharmaceutical market in 2008. As in 2007, Pfizer's (New York) Lipitor (atorvastatin) was the top-selling prescription drug in 2008 with sales of nearly $13.7 billion, according to IMS Health (see Table I). Lipitor also topped the US market with sales of $7.8 billion (see Table II). A major change, however, is in the offing with the US patent expiration of Lipitor in 2011 and resulting generic incursion for this top-selling product. Pfizer's pending $68-billion merger with Wyeth (Madison, NJ) is in part seen as a move to address the anticipated revenue fall when the drug comes off patent (2). Lipitor accounted for more than 28% of Pfizer's total prescription pharmaceutical sales in 2007 and 2008, according to the research and consulting firm Datamonitor (2).

Table I: Top prescription drugs by 2008 global sales.

Two drugs were new entries to the top 10 global rankings in 2008, and two products fell out of the top 10. Johnson & Johnson's (J&J, New Brunswick, NJ) Risperdal (risperidone), ranked seventh in 2007, and Amgen's (Thousand Oaks, CA) Arnasep (darbepoetin alfa), ranked tenth in 2007, did not make the list of the global 10 top-selling prescription drugs in 2008 (see Table 1) (3). Two newcomers to the top 10 in 2008 were sanofi aventis's (Paris) Lovenox (enoxaparin), ranked tenth, and Remicade (infliximab), ranked eighth. Remicade is from J&J, Schering-Plough (Kenilworth, NJ), and Mitsubishi Tanabe Pharma (Osaka, Japan).

Table II: Top prescription drugs by 2008 US sales.

Nine products scored a among the 15 top-selling drugs globally and in the United States although their exact ranking may have differed between the two markets. These products were: Effexor (venlafaxine) from Wyeth (Madison, NJ); Enbrel (etanercept) from Amgen, Wyeth, and Takeda Pharmaceutical (Osaka, Japan); Lipitor; Nexium (esomprazole) from AstraZeneca (London); Plavix (clopidogrel) from Bristol-Myers Squibb (New York) and sanofi aventis; Remicade; Seretide/Advair Diskus from GlaxoSmithKline (London); Seroquel (quetiapine) from AstraZeneca; Singulair (montelukast) from Merck & Co. (Whitehouse Station, NJ); and Takepron/Prevacid (lansoprazole) from Takeda (see Tables I and II).

Five products earned a spot in the 15 top-selling drugs globally but not in the top US rankings (see Tables I and II). These products were: Avastin (bevacizumab) from Genentech (South San Francisco, CA) and Roche (Basel, Switzerland); Humira (adalimumab) from Abbott (Abbott Park, IL) and Eisai (Tokyo); Lovenox (enoxaparin) from sanofi aventis; MabThera/Rituxan (rituximab) from Genentech, Roche, and Takeda; and Zyprexa (olanzapine) from Eli Lilly (Indianapolis, IN).

Five drugs were among the 15 top-selling products in the US but did not earn top billing globally in 2008 (see Tables I and II). These products were: Abilify (aripiprazole) from Bristol-Myers Squibb; Actos (pioglitzone) from Takeda; Epogen (epoetin alfa) from Amgen; Lexapro (escitalopram) from Forest Laboratories (New York); and Neulasta (pegfilgrastim) from Amgen.

Product innovation

The level of product innovation, as measured by the number of approvals of new molecular entities (NMEs) and new biologics license applications (BLAs) by the US Food and Drug Administration's Center for Drug Research and Evaluation (2008), improved in 2008 compared with 2007. In 2008, CDER approved 24 new drugs: 21 NMEs and 3 BLAs. The 24 drug approvals in 2008 represent a recent high. In 2007, CDER approved 19 new drugs (17 NMEs and 2 BLAs), 22 drugs in 2006 (18 NMEs and 4 BLAs), and 20 new drugs in 2005 (18 NMEs and 2 BLAs). The recent high for drug approvals was in 2004, when CDER approved 36 new drugs (31 NMEs and 5 BLAs), according to FDA data (3).

Through the first six months of 2009, CDER approved 12 new drugs (8 NMEs and 4 BLAs). The NMEs are: Afinitor (everolimus) from Novartis (Basel); Besivance (besifloxacin) from Bausch and Lomb (Rochester, NY); Coartem (artemether and lumefantrine) from Novartis; Fanapt (iloperidone) from Vanda Pharmaceuticals (Rockville, MD); Samsca (tolvaptan) from Otsuka America Pharmaceutical (Rockville, MD); Savella (milnacipran) from Cypress Bioscience (San Diego, CA) and Forest Laboratories; Ulesfia (benzyl alcohol) by Scielle Pharma (Atlanta, GA); and Uloric (febuxostat) from Takeda. The BLAs are Dysport (abobotulinumtoxinA) from Ispen (Boulogne-Billancourt, France); Ilaris (canakinumbab) from Novartis (Basel); and Simponi (golimumab) from J&J's Centocor Ortho Biotech.

Biologics on the rise

The rise of biologics among the top-selling prescription drugs is a key change in the market. In 2000, Amgen's Epogen and J&J's Procrit (epoetin alfa) were the only biotech products to be among the 10 top-selling drugs in the global market, according to a market compilation by the research firm EvaluatePharma. In 2008, five biotech products (Avastin, Enbrel, Epogen/Procrit, Remicade, and Rituxan) made Evaluate Pharma's top 10 list . The firm projects that by 2014 the six top-selling products will be biologics: Avastin, Enbrel, Humira, Rituxan, sanofi aventis's Lantus (insulin glargine), and Roche's Herceptin trastuzumab), and Remicade, will occupy the ninth spot, meaning that seven out of the 10 top-selling drugs will be biologics. EvaluatePharma projects that biologics will account for 50% of the top 100 drugs in 2014, compared with 28% in 2008, and 11% in 2000.

Patricia Van Arnum is a senior editor at Pharmaceutical Technology, 485 Route One South, Bldg F, First Floor, Iselin, NJ 08830 tel. 732.346.3072, pvanarnum@advanstar.com

References

1. P. Van Arnum, "A Sobering PharmChem Outlook," Pharm. Technol. Sourcing and Management, April 2009, www.PharmTech.com/ptsm.

2. P. Van Arnum, "Implications of the Pending Pfizer–Wyeth Mega Merger," Pharm. Technol. Sourcing and Management, Feb. 2009, www.PharmTech.com/ptsm.

3. P. Van Arnum, "Charting API Market Growth and Opportunity," Pharm. Technol. 32 (7), 58–61 (2008).