Blockbusters and other strategies
While blockbuster molecules have driven the growth of the Pharmaceutical Industry, the last decade has been a rough path for Innovator Pharmaceutical Companies due to low success rates in developing new drug products, increasing costs and clinical research times lines, shrinking research pipeline, increasing generic competition, Regulatory Compliance etc. With Drugs worth about $60 billion going off patent and the absence of any new blockbuster drugs, the innovator companies have been suffering a constant revenue loss.
As a result, the companies have constantly adopted new strategies to maintain a reasonable growth rate. For instance, the $68bn acquisition of Wyeth was driven by Pfizer’s need to sustain a product pipeline ahead of the expiry of patent protection on its blockbuster cholesterol drug Lipitor in 2011. Another example is Merck’s authorized generic deal with Dr. Reddy’s and it’s negotiations with health insurers to sell its Simvastatin (Zocor) on par with the generic.
The most recent of all, is the Bristol Myers-Otsuka’s extension of Abilify (Aripiprazole) sales agreement upto 2015. As per the deal, Bristol Myer will pay Otsuka $400 million initially for the extension and an increasing portion of product sales. Bristol-Myer’s share of U.S. sales will constantly decrease from 65% to 50% staring from 2010 through 2013. Otsuka will also take on some 30% of development cost from 2010 through 2012 and 50% of the costs from 2013 through April 2015. Also as part of the agreement, the companies will collaborate on co-marketing of Bristol-Myers’s anticancer drug Sprycel and development planning of it’s anticancer Drug Lxempra. The deal is expected to take care of at least the Abilify revenue stream.
While innovator companies are definitely transforming their strategies to take care of the potential losses due to patent expiration, alternate growth strategies will increasingly be a part of the way forward.
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