Novartis AG said Thursday it will halt studies on an experimental lung-cancer drug in favor of developing other cancer treatments, a blow to the Swiss drug maker's efforts to offset patent losses which threaten sales and profits in coming years.
Novartis said it will halt studies on an experimental lung-cance drug.
The Basel-based company said it will charge $120 million against fourth-quarter earnings to halt ASA404, after study results indicated the drug had little or no prospect of improving survival rates of patients with non-small cell lung cancer.
The halt comes after another setback for the treatment, developed by Antisoma PLC, in March, and is a blow because Novartis needs to bolster its pipeline to avoid the "patent cliff."
Like many large drug makers, Novartis face patent expiration of key drugs which has hampered its share price. Since the start of the year, the stock has slipped 2.7%. The Stoxx Europe health-care index, meanwhile, has added about 3.9% during this period.
Novartis's best-selling heart drug Diovan, which generated around $6 billion in sales in 2009, faces patent expiration in 2011 and 2012. Cancer drug Gleevec, its other super-seller that had sales of nearly $4 billion, will start losing patent protection in 2015. Both drugs make up more than 20% of Novartis's annual sales, which reached $44.3 billion last year.
A loss of patent often means that annual sales can drop by more than 30% as cheaper copycat versions of the drug are administered to patients. Governments around the world are pushing for the use of generic medicines—which are cheaper to produce as companies can avoid costly research—to curb ballooning public health-care costs.
Last month, Novartis posted a 10% rise in third-quarter net profit, but cautioned that health-care reforms around the world are going to eat into prices drug makers can command for treatments.
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