Let's start with the good news.
In 2015, the FDA by its own
account approved 45 new drugs, the largest one-year tally since 1996, which
wrapped up with a record 53 regulatory OKs.
The new generational high,
easily lapping last year's list of 41 approvals, marks a new peak following a
surge by the R&D side of the business, which continues to recover from a
lengthy period of marked weakness. The FDA has helped, proving more than
willing to come through with faster approvals, particularly in oncology. And
the science around drug development has improved markedly as our understanding
of the genetic drivers of disease continues to make real progress.
But here's the catch: Higher
approval numbers don't necessarily translate into market-moving opportunities.
Throw another me-too drug into a pack of rivals and even the best sales force
can't do much with it, particularly if cheap generics dominate a disease. And
in the patent cliff environment that has persisted for several years now, it
takes blockbuster gains to make a big difference for the Big Pharma companies
that dominate the industry.
So who came out of 2015 a big
winner?
Novartis ($NVS) walked away with that crown. Not only did Novartis score a chart-topping
four new approvals, but two of its new drugs--Entresto (LCZ696, peak sales
estimate $5 billion-plus) and Cosentyx (a potential franchise dominator in
psoriasis)--could have the kind of market impact needed to move the revenue
dial in its favor.
Novartis has a big pipeline
and can be incredibly focused for a Big Pharma, so it's no huge surprise to see
them dominate on that score. What was remarkable was the presence of Pfizer ($PFE), Sanofi ($SNY), AstraZeneca ($AZN) and Amgen ($AMGN) among the list of top winners for the year.
Sanofi finally made the list
of winners at the FDA thanks to a prescient decision to invest heavily in
Regeneron ($REGN)--a key Big Biotech with one of the top reputations in drug R&D--while
the pharma's in-house pipeline shows little sign of life. That strategic
partnership gave Sanofi an approval for Praluent (alirocumab), which is now
battling Repatha for market share in the new, multibillion-dollar PCSK9 arena.
The approvals leave Amgen in the winner's circle as well, with two approvals
for the year, though few have high hopes for its second win, for Corlanor, in
the heart market.
AstraZeneca, long absent from
the winner's circle, scored two green lights. The significant one was Tagrisso
(AZD9291), which beat its troubled rival at Clovis to the market and gave CEO
Pascal Soriot something to really cheer about as he continues to make the case
that the pharma giant has truly turned the corner.
That jury is still out,
particularly as its PD-L1 program has been falling further and further behind
the leaders on the checkpoint pack. But a win is a win, and this one was big.
Then there was Pfizer,
practically notorious for executing megamergers that never paid off. Pfizer not
only gained an approval for the cancer drug Ibrance (palbociclib), it also won
the accelerated approval on Phase II data. And Pfizer's been clear that even as
it pursues its latest Moby Dick in the Allergan (three new drug approvals,
though none of major proportions) acquisition, it expects to follow up with
more fast-paced programs in cancer.
We'll see how that works out.
Rounding out the big winners
are J&J ($JNJ), with Darzalex (the multiple myeloma "breakthrough"
daratumumab, also under an accelerated approval), and Novo Nordisk's
long-delayed diabetes drug Tresiba, both of which have major league potential.
So who came out a loser?
Once again, Eli Lilly ($LLY) found itself at the end of the line, which wasn't unexpected. Its
approval for Portrazza, another marginal cancer drug priced high, didn't impress
many analysts. Lilly primarily found itself defending the wholesale cost of the
drug against physicians who are growing weary of prescribing therapies with
little ability to significantly help patients. What passes muster at the FDA's
cancer group, dominated by Richard Pazdur, does not always incite enthusiasm in
medicine.
Lilly, by the way, has
promised to provide multiple product launches every year for the foreseeable
future and leaned on a biosimilar OK to keep its promise in 2015. (Lilly execs
never did say the new approvals would be big.) Meanwhile, a failure for the
CETP drug evacetrapib continued to raise doubts about Lilly's ability to
deliver a market-moving drug. The stakes on solanezumab, now going through its
second Phase III Alzheimer's program, keep rising higher and higher.
Merck ($MRK) didn't have much to boast about in the NDA arena for 2015, gaining an
approval for Bridion after a 7-year odyssey at the FDA that included three
rejections. Merck, though, is still working furiously on Keytruda, its big
breakthrough in 2014, which will continue to gain plaudits as the pharma giant
works on its late-stage pipeline.
GlaxoSmithKline ($GSK), meanwhile, managed one new drug OK: Nucala. That drug, like others at
GSK, also enters a crowded field, which has tripped up other drugs at the
pharma giant that were meant to fill the revenue gap created as Advair loses
ground to generics.
Overall, new drug approvals
present a puzzle to the industry that will be hard to work out in favor of the
biggest players. The cost of drug development has been reaching higher and
higher for Big Pharma while peak sales estimates sink lower and lower, as Deloitte recently
noted.
About 6 years ago, the
industry was doing considerable soul-searching about R&D, vowing to tear
down the research silos and connect with the broader biotech/academic
ecosystem. Many of the Top 10 pharmas came up with new strategies, like GSK's
Discovery Performance Units, which are all but forgotten now as analysts shake
their heads over the prospects of near-term catalysts. The industry is left
looking to find ways to imitate the more nimble Big Biotechs like Gilead ($GILD) and Celgene ($CELG), which look for fewer late-stage shots on goal, but a higher percentage
of scores.
That takes focus, discipline
and plenty of cash. So look for a lot more deals in the year ahead as bigger
companies compete for the top prospects at the end of Phase II.