One trend that generic companies and pharmacy retailers alike should keep an eye on is the patent cliff. One of the reasons why generic prescriptions will likely peak at 86% to 87%, Long said, is that after the patent on Crestor expires In 2016, there simply won't be a lot of top-selling branded drugs.
Typically, when a generic drug maker is the first to file an abbreviated new drug application with the Food and Drug Administration to market a generic drug, it is entitled to 180 days of market exclusivity upon FDA approval in which to compete directly with the branded version. For generic companies, opportunities like this are what gold veins are to mining companies. As soon as a cheaper generic becomes available for a drug, many payers will automatically switch from the branded to the generic, and a generic drug maker could stand to rake in billions.
Take India-based Ranbaxy Labs, for example. In November 2011, Pfizer's patent for the cholesterol treatment Lipitor (atorvastatin) expired, and Ranbaxy launched its generic version. At the time, according to Ranbaxy financial reports, Lipitor had sales in the United States of $7.9 billion. But at the peak of its 180-day exclusivity period, Ranbaxy captured 50% of market share in the United States. Generic atorvastatin ranked 21st on the list of the top 25 drugs for 2012, with $2.3 billion in sales, while branded Lipitor had disappeared. Pfizer's Alzheimer's disease drug Arlcept (donepezil) is another example. Ranbaxy launched the first generic version in 2010, capturing 36% of Aricept's $2.6 billion market share. In 2012, its generic captured 30% of the market share for Takeda's $2.7 billion diabetes drug Actos (pioglitazone).
About $13 billion in drugs will lose patent protection in 2013, Including Purdue Pharma's Oxycontin (oxycodone); Eisai and Johnson & Johnson's Aciphex (rabeprazole sodium); Novartis' Zometa (zoledronic acid); Genentech's Xeloda (capeticabine); Endo's Opana ER (oxymorphone); and Warner Chilcott's Asacol (mesalamine), according to IMS. Drugs that will lose protection next year include AstraZeneca's Nexium (esomeprazole); Eli Lilly's Cymbalta (duloxetine); Pfizer's Celebrex (celecoxlb); AstraZeneca's Symbicort (budesonide; formoterol fumarate dihydrate); Sunovion's Lunesta (eszopiclone); Allergan's Restasis (cyclosporine); E11 Lilly's Evista (raloxifene); Novartis' Sandostatin LAR (octreotide acetate); and Warner Chilcott's Actonel (risedronate sodium).
According to IMS, drugs losing patent protection between 2008 and 2012 had total pre-expiration sales of about $101 billion. But between 2013 and 2017, that total will drop to $86 billion. That's still a significant figure, but the Lipitor-sized opportunities won't be appearing again for a while, at least until generic drug makers master the art of manufacturing biosimilars, particularly versions of the biotech drugs with the highest sales.
The opportunity there could be enormous. According to IMS, of the top 25 drugs in the United States as measured by sales, seven are biotech drugs. AbbVie's autoimmune disease treatment Humira (adalimumab) is in sixth place, with $4.6 billion in sales in 2012, followed by Pfizer's and Amgen's Enbrel (etanercept), also used for autoimmune diseases, with $4.3 billion. Remicade (Infliximab), another autoimmune disease drug made by Johnson & Johnson, ranks eighth with sales of $3.9 billion, followed by Teva Pharmaceutical Industries' multiple sclerosis treatment Copaxone (glatiramer acetate) — officially a pharmaceutical drug, but sometimes considered a biologic due to Its molecular complexity — and Amgen's Neulasta (pegfilgrastim), used to improve immune system function in patients on chemotherapy.
But there's a potential threat to biosimilars in the form of state-level, carve-out laws supported by biotech companies whose products are at risk from biosimilar competition. The laws generally require pharmacists to inform physicians and patients if they swap out a branded biotech drug for a biosimilar, and also allow the physician to present substitution by writing "Do not substitute" on the prescription. As of last month, California's state legislature had passed such a bill, which was awaiting a decision by the governor. (For more on biosimilars, see page 20.)