Replies to post #59496 on Biotech Values

[DewDiligence]

2007 was a bad year for US generics in dollar
sales growth (as opposed to Rx growth) because
the average price of a generic Rx fell by 3%.

http://www.reuters.com/article/marketsNews/idUKN2860341120080229

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Generics Damp 2007 Drug Costs

Fri Feb 29, 2008 12:26am EST
By Lewis Krauskopf

NEW YORK (Reuters) - Use of less-expensive generic medicines for high cholesterol and other conditions slowed growth of U.S. prescription drug costs [branded+generic] last year to its lowest level since at least 1996, pharmacy benefit manager Express Scripts Inc said on Friday.

Total spending on prescription drugs in 2007 grew 4.7 percent [see #msg-27074833 for the reasons] according to Express Scripts, one of the largest U.S. managers of prescription benefits.

But the average price of a generic drug -- which are copies of brand-name medicines that have lost patent protection -- fell 3.1 percent last year.

That compared with a 7.4 percent increase in the average price of a brand-name drug, according to data Express Scripts compiled from a random sampling of 3 million of its members.

Meanwhile, generics amounted to 63.7 percent of prescriptions as of the end of last year, compared with 59.7 percent a year ago.

"You hear nothing but bad news about healthcare expenses going up. This is the lowest this has been in 12 years that we've tracked this," said Steve Miller, chief medical officer for Express Scripts. "Greater use of generics is clearly the single most important aspect of why it's coming down."

Some of the biggest-selling drugs in the world have seen their patents lapse and become available as generics in recent years, including Merck & Co's cholesterol treatment Zocor, as well as the Norvasc blood-pressure drug and Zoloft antidepressant, both sold as brands by Pfizer Inc.

In addition to being cost savers for consumers, generic drugs also are a boon to the bottom lines of Express Scripts and other benefit managers that can leverage large discounts on generics to sell through their mail-order pharmacies.

Overall last year, the average price of a prescription rose 2 percent to $54.34, according to the study.

One major area for savings was in the category of cholesterol-lowering medicines, one of the world's biggest-selling therapy groups. Last year marked the first full year for sales of generic versions of Zocor and Bristol-Myers Squibb's Pravachol.

Spending on cholesterol-lowering drugs fell 9 percent in 2007, as the average price of such medicines dropped 15.5 percent to $67.32 per prescription.

Express Scripts credited a type of program that requires patients to use a generic before trying a brand as being particularly effective at controlling drug spending.

Employers and health plans which used these programs cut spending for cholesterol-lowering drugs by 13 percent compared with 4 percent that did not use the program. For insomnia medicines, those using such a generics program cut spending by 17 percent against 4 percent for those that did not use the program.
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[DewDiligence]

2007 US Drug Sales Grew at Slowest Rate Since 1961

[The black box in #msg-27074833 encapsulates the main reasons for the slowdown.]

http://www.reuters.com/article/marketsNews/idUKN1126005820080312

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Wed Mar 12, 2008 12:01am EDT

NEW YORK, March 12 (Reuters) - Sales of prescription drugs in the United States grew by just 3.8 percent in 2007, marking the lowest growth rate since 1961, according to data compiled by IMS Health.

Total U.S. prescription drug sales reached $286.5 billion last year with slowing growth blamed on factors including patent expirations of lucrative medicines that opened the door to cheaper generic versions.

Other reasons cited by IMS in its annual U.S. Pharmaceutical Market Performance Review were fewer new product approvals, safety concerns, and the leveling of year-over-year growth from the Medicare Part D program.

The 3.8 percent growth rate compares to 8 percent growth seen in 2006.

"The moderating growth trend that began in 2001 resumed last year following the one-time impact on market growth in 2006 from the implementation of Medicare Part D," Murray Aitken, IMS's senior vice president for healthcare insight, said in a statement.

Cholesterol drugs, such as Pfizer Inc's Lipitor, once again led all therapy groups with prescription sales of $18.4 billion in 2007 despite a 15.4 percent decline in sales, primarily due to the availability of cheaper generics.

Acid reflux medicines known as proton pump inhibitors, including AstraZeneca's Nexium, ranked second with prescription sales of $14.1 billion and 2.8 percent growth.

Antipsychotics, such as Eli Lilly and Co's Zyprexa, overtook antidepressants as the third largest therapeutic class with $13.1 billion in sales and a 12.1 percent growth rate, according to IMS, which provides industry data on drug prescriptions and sales.

Brand name drugs with some $17 billion in sales lost patent protection in 2007, helping drive prescription volume growth of 10 percent for generic medicines. [However, the growth of US generics in dollar sales was only 5% because the average price of a generic prescription declined by 3%.]

Generic drugs claimed 67.3 percent of U.S. prescriptions dispensed in 2007 [this was an all-time high], IMS found.

IMS is forecasting compound annual U.S. pharmaceutical sales growth of 3 percent to 6 percent through 2012, noting that new biotech medicines and vaccines as well as the expected launch of a handful of drugs with at least $1 billion a year potential will partially offset major patent expirations.

Some $13 billion in branded products are likely to start facing generic competition this year, IMS said.

"The U.S. pharmaceutical market has entered a new era -- one characterized by more modest growth due to the continuing impact of new generics products, fewer and more narrowly indicated novel medications and closer scrutiny of safety issues," Aitken said.
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[DewDiligence]

Global Biopharmaceutical Sales Grew 12.5% in 2007 to $75B

[This is good growth rate compared to small-molecule drugs, but it’s down from the 18% growth of biopharmaceuticals from 2005 to 2006. IMS expects the growth rate to slow even more in the coming years for the reasons cited below. Biopharmaceuticals accounted for about 11% of total proprietary and generic worldwide drug sales in 2007. 56% of biopharmaceutical sales were in the US, which is a much higher proportion than the US’s share of the small-molecule drug market.]

http://biz.yahoo.com/bw/080617/20080617005319.html

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Tuesday June 17, 8:00 am ET

NORWALK, Conn.--(BUSINESS WIRE)--Global prescription sales of biotech drugs increased 12.5 percent in 2007 to more than $75 billion, according to a new report by IMS Health (NYSE: RX), the world’s leading provider of market intelligence to the pharmaceutical and healthcare industries. The global biotech market grew at nearly double the rate of the global pharmaceutical market, which increased 6.4 percent in 2007.

“The biotech market has expanded dramatically during the past five years, consistently exceeding overall pharmaceutical market growth two-to-three fold,” said Murray Aitken, senior vice president, Healthcare Insight, IMS. “Recent innovations, the continued expansion of approved indications for existing products, and the gradual uptake of biotech products outside the U.S. have fueled that growth, and improved the quality of life for millions of patients across a growing number of disease areas.”

During the past five years, the range of biotech products and their use in multiple therapy areas have steadily increased, creating a major source of market growth. Twenty-two biotech products generated sales exceeding $1 billion in 2007, compared with just six products in 2002. Last year, targeted oncology therapies, auto-immune agents, anti-diabetic agents, and pure vaccines represented both the majority of the market and majority of growth. The U.S. remains the largest market for biotech products, representing 56 percent of total sales last year. The five major European countries have steadily increased their share of this market over the past five years, to 24 percent in 2007. Japan’s share of the market has declined slightly and now represents 5 percent of global biotech sales.

New Reality for Biotech Products

IMS expects that, during the next five years, the global biotech market will more closely parallel the traditional pharmaceutical marketplace, reflecting changing industry dynamics.

“After 20 years of what some would call a ‘charmed life,’ biotech is now facing a new reality,” said Aitken, who noted that biotech market growth last year moderated from the 18.2 percent rate experienced in 2006. “Loss of exclusivity and competition from biosimilars, crowded therapy areas with weaker sales growth, payers showing more reluctance to fund innovative drugs without compelling value propositions, and safety concerns for some therapies will all contribute to a more moderate growth environment through 2012. Yet, we expect the biotech sector to remain one of the most robust segments of the marketplace with a continued strong flow of innovative products to the market.”

The IMS 2008 Global Biotech Perspective report identifies the following key market dynamics influencing future market growth:

Continued strong flow of innovative products. The depth and breadth of the biotech R&D pipeline has never been stronger. Biotech products currently represent 25 percent of the total pharmaceutical pipeline. Although only three new biotech products were launched in 2007, a sharp reduction from 2006, the near-term pipeline is robust and includes six products that are expected to be launched by the end of 2009 that will potentially reach $1 billion in sales. These include innovative treatments for respiratory synctial virus, melanoma and osteoporosis.

Intensifying scrutiny by payers to demonstrate the effectiveness and value of biotech products. As new innovative biotech therapies are introduced, the level of scrutiny by payers around the world regarding their value will continue to intensify. Health technology assessment agencies are increasingly being used to assess the value of all biopharmaceutical products and recommend their inclusion on reimbursement lists at both the national and regional levels in countries that include the U.K., Spain, Italy, Canada and Germany. In the U.S., health plans also are more rigorously assessing both the clinical efficacy and economic rationale for using new products relative to existing, less expensive treatments.

Greater impact from product safety issues. The challenge of balancing patient safety with efficacy of treatment is particularly acute in many of the therapy areas where biotech products have become an important part of treatment protocols. The impact of last year’s regulatory reviews and a labeling change by the FDA for erythropoeisis stimulating agents (ESAs) led to fewer patients using ESAs, as well as an adjustment in reimbursement guidelines by the Centers for Medicare and Medicaid Services. ESA sales growth declined 9 percent in 2007, compared with a 12 percent increase in sales in 2006. And this month, the FDA released an early safety communication indicating that it is evaluating anti-TNF treatments as a potential cause of lymphoma and other cancers in children taking the drugs to treat juvenile idiopathic arthritis or Crohn's disease.

Growing competition among biotech products. In several key therapy areas, there is a growing level of competition between biotech products and alternative treatments, as well as among biotech products. Market expansion increasingly will be predicated on the ability of companies that bring biotech products to market to use biomarkers or other means of differentiating treatment response in patient segments.

Emerging competition from biosimilars. Biosimilars, or follow-on biologics produced by companies other than the originator, are expected to have only a modest impact on the market over the next 5-10 years. The introduction of biosimilar epoeitin alfa in European markets in 2007, for example, has had a negligible impact in the market to date. And biosimilar omnitrope, introduced in 2006, has captured less than 1 percent of the somatropic human growth hormone market. Yet, they represent a shift in the biotech marketplace that over time will bring emerging competition from biosimilars following the loss of exclusivity of original products. The regulatory approval process for biosimilars in the U.S. remains subject to legislative action and implementation by the Food and Drug Administration, and is expected to be resolved in the near-term.

Added Aitken, “In today’s market environment and for the foreseeable future, companies with biotech products in their portfolios will succeed only if they meet increasingly demanding regulatory standards, deploy effective commercial models that are accompanied by compelling evidence of their products’ value, and develop pricing and market access strategies that ensure that patients have access to the benefits that these new products deliver.”

Top-Line Market Statistics and Summaries

IMS charts detailing biotech market performance by categories that include geography, therapy classes and top blockbuster products can be viewed on the IMS website at http://imshealth.com/biotechmarket.
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