Trends for 2018 Pharmaceutical Industry
The pharmaceutical industry enters 2018 with an optimistic mood: new drugs enter the market faster than ever before. In the past few years, large and small drug developers have been successfully researching their products in a number of therapeutic areas, investors are actively supporting companies in the field of health care. However, will these trends continue over time or will pharmaceutical market players have to experience turbulence in their operations? Analysts point to both statements.
It is unlikely that the Food and Drug Administration (FDA) will take a more conservative position. Over the past few years, a number of measures have been taken to accelerate the launch of new drugs, including low-cost generics.
For EU countries, the situation is more uncertain due to the relocation of the European Medicines Agency (EMA) as part of Brexit. However, the EMA states that a number of steps have been taken to increase transparency and improve the performance of the regulator. Over the past few years, regulatory agencies in the US and the EU have released innovative drugs that promise to change the prospects for patients with various chronic and acute diseases. Many of these developments are expected to quickly become commercially successful. As for mergers and acquisitions (M&A), a surge in the activity of large pharmaceutical and biotechnological companies is also forecasted in this direction in 2018.
Focus on the latest pharmaceuticals
Before speaking about the future, we will summarize the preliminary results of 2017 regarding the R&D activity of pharmaceutical companies in order to understand what baggage companies came to the beginning of 2018. Evaluating the preliminary results of the FDA’s efforts to bring innovative drugs to the US market based on the results 2017, we can argue that the field of biopharmacy is at its peak. It is expected that by the end of 2017, the FDA will approve 43 new drugs that will bring their developers 31.6 billion dollars within 5 years after the launch.
Oncopathology is among the most promising areas for the development of innovative drugs. Nevertheless, it is expected that in 2018 the world pharmaceutical market will also be replenished with promising new pharmaceuticals for the treatment of HIV infection, diabetes mellitus, multiple sclerosis, orphan diseases, etc.
Top 10 most promising products that will be launched in 2018
- Biktegravir / Emtricitabine / Tenofovir (manufactured by Alafemide Gilead Sciences, for treatment of HIV)
- Semaglutide (manufactured by Novo Nordisk, for treatment of diabetes)
- Epacadostat (manufactured by Incyte Corporation, for treatment of melanoma)
- Rova-T (Rovalpituzumab Tesirin) (manufactured by Abbvie, for treatment of lung cancer)
- Ozanimod (manufactured by Celgene Corporation, for treatment of multiple sclerosis)
- Apalutamide (manufactured by Johnson & Johnson, for treatment of prostate cancer)
- Elagolix (manufactured by Abbvie, for treatment of endometriosis)
- AVXS-101 (manufactured by AveXis, for treatment of spinal muscular atrophy)
- Lanadelumab (manufactured by Shire, for treatment of hereditary angioedema)
- Epidiolex (cannabidiol) (manufactured by GW Pharmaceuticals, plc., for treatment of Lennox syndrome)
It is important to note that in the coming year the US expects patent protection for a number of drugs of biological origin to expire, which will potentially open the door to the market for their biosimilars.
M&A deals: will the temporary respite end?
The mergers and acquisitions sector in the healthcare sector was paused in 2016 due to the election of the US president. With the presidency of Donald Trump, analysts predicted some surge in M&A transactions in early 2017. However, assessing the quarterly activity of pharmaceutical and biotechnological companies in this direction, the expected surge did not occur. In general, 2017 was not very fruitful both in terms of the number of transactions and the volume of investments in them. However, a number of major agreements were concluded, including the agreement on the acquisition of the American pharmaceutical company Gilead Sciences, Inc. Kite Pharma, Inc. for 11.9 billion dollars ($ 180 per share in cash).
Many explain the lull in M&A as a lack of clarity regarding tax reform in the United States. In addition, potential buyers indicate the overvaluation of shares of companies that are willing to sell their assets. Analysts suggest a break in M&A in 2016–2017 may become a trigger for increasing the activity of pharmaceutical companies in this direction in 2018. The focus is supposed to be on companies that maufacture drugs for the treatment of cardiovascular diseases and diabetes. Pfizer is the greatest enthusiast in terms of willingness to conclude deals. In turn, Bristol-Myers Squibb and Biogen are likely to be the most sought-after shopping goals. Other major companies are Merck & Co and Gilead Sciences, Inc. They’ll also look around for suitable assets, analysts say.
Who will get “the laurel wreath”?
According to forecasts, the sales volume of each of the top 10 best-selling drugs in monetary terms on the world market in 2018 will exceed $6 billion. The laurels of the winner in this rating are likely to traditionally go to the AbbVie company Humira (adalimumab) with a projected sales volume of more than $20 billion. Thus, the gap in the income from sales of Humira (adalimumab) from the next drug in the top 10 – the drug Revlimid (lenalidomide) by Celgene – will exceed 10 billion dollars.
In general, the top 10 best-selling drugs on the world market in 2018 are projected to be able to accumulate sales revenue of $80.9 billion. The drugs of the Roche company – Avastin (bevacizumab), Rituxan (rituximab), Herceptin (trastuzumab) – will be able to immediately take 5th, 6th and 7th places in this list, respectively. By tradition, the main “cream” in the global pharmaceutical market will be collected by drugs that have long been familiar to patients. The relative newcomers to the potential top 10 best-selling drugs will be only the Merck & Co antitumor drug Keytruda (pembrolizumab), approved by the FDA in 2014.
As for the most profitable companies in the world market, in 2018 it is expected that the top three leaders from the list of top 10 will not undergo changes compared to previous years – Pfizer will remain the winner with sales revenue (prescription and over-the-counter drugs) at the level of 47.6 billion dollars. Novartis will take the second place with an indicator of 42.8 billion dollars, Roche will take the third place with an indicator of 42.4 billion dollars.
Predicting the situation on the global pharmaceutical market for 2018, analysts believe that not only US financial markets will influence the “climate” for biopharmaceutical companies – tightening control over drug pricing in the United States (the most profitable drug market in the world) will also remain a pressing issue. However, most likely, the debate regarding the strengthening of this control by the government will not go into action since even US President D. Trump, who previously made high-profile statements on this topic on Twitter, seems to have lost interest in this. In turn, the appointment of Alex Azar, the former top manager of the pharmaceutical company Elli Lilly, to the post of secretary of the administration (minister) for health and social services, is certainly a positive sign for the players of Big Pharma.
Along with pharmaceutical industry concerns over US government intervention in drug pricing, there is ongoing talk of a new strong player entering the market – the online giant Amazon. The company’s silence about its plans to enter the pharmaceutical market stimulated a lot of speculation around this topic, and analysts suggest that Amazon can expect different scenarios for participating in the drug supply chain: from launching an online pharmacy to pharmacy management. Nevertheless, this is more of a concern to the retail and wholesale segments of the pharmaceutical market than pharmaceutical manufacturers since Amazon is likely to become their client, rather than a competitor. The way the situation around the online giant will develop in 2018 is of great interest to the pharmaceutical industry.
As for the pace of research and development of new drugs, probably 2018 will be quite successful in this field. If we add here the expectation of concluding several major transactions and the absence of aggressive rhetoric regarding drug pricing policies, the prospects for the development of the global pharmaceutical market will seem even more cloudless.