Invest in the disruptors.
Those are words that were spoken by Wall Street, as powerhouse biotech companies and the incumbents of Big Pharma are preparing to get crushed by more innovative — and less expensive — new drugs.
What began in 2017 will resume in 2018, analysts say. Generic drug support is increasing and exciting new medicines are starting to take market share from the legacy makers of medications that consumers use often, including both Big Pharma and biotech companies.
Blockbuster medications representing an estimated $17 billion in yearly sales are expected to lose patent security over the next 10 years, analysts say. Disruption will come as generic drugs and innovative new biologic alternatives debut on the market.
“It will be brutal,” JMP Securities analyst Mike King told Investor’s Business Daily. “It will be a knife fight.”
In the market for cholesterol-lowering drugs, King anticipates Amgen (AMGN), Regeneron Pharmaceuticals (REGN) and Sanofi (SNY) to feel the fire from the likes of Esperion Therapeutics (ESPR), The Medicines Co. (MDCO) and Alnylam Pharmaceuticals (ALNY).
Meanwhile, in anti-inflammatory therapies, Celgene’s (CELG) Otezla, which achieved blockbuster status back in 2016, missed sales forecasts by a wide portion in the third quarter. Analysts say newly approved drugs to treat the same conditions from Eli Lilly (LLY) and Novartis (NVS) are taking market share.
Gilead Sciences (GILD) is still feeling the burn from the maturing of its hepatitis C drug unit in the U.S. and Europe. The accelerated pace of Gilead’s hepatitis C sales decline is expected to slow down to a degree, though more modern medicines like AbbVie’s (ABBV) Mavyret are likely to swipe some of its sales.
Big Pharma isn’t getting any assistance from regulators either. Food and Drug Administration head Scott Gottlieb will proceed to increase approvals for copycat drugs, stoking competition for both branded and generic drugs facing new competitors as firms try to undercut one another in price.
Big Pharma Feels The Sting
Among the Big Pharma companies, Pfizer (PFE) will be on the front lines feeling the pain of generics taking sales. Earlier this month, Teva Pharmaceutical (TEVA) was allowed to launch a generic copy of the blockbuster erectile dysfunction drug Viagra.
Generic drugs tend to be cheaper than their branded counterparts and Viagra is a pricey drug at about $70 per tablet, according to AccessRX. In 2013, after Pfizer lost exclusivity for Viagra in Canada and Europe, worldwide sales fell 8% to $1.88 billion.
Currently, generics in Europe have cut the price of drugs containing the same active components as Viagra by about 90%. Alternative versions of Viagra cost about a third of the price in Canada. U.S. Viagra prices could also fall if the trend repeats itself with a generic on the market.
Teva, meanwhile, is struggling with $34.7 billion in debt as of the end of the third quarter. On Thursday, December 14th, Teva announced a plan to cut its workforce by more than a quarter, close several manufacturing facilities and suspend its dividend on ordinary shares.
The firm is also planning to review its generic drug portfolio, most specifically in the U.S., to change prices or discontinue products.