Breo’s watershed moment unlikely to rescue Glaxo

US development of LABA/steroid combinations for asthma virtually stopped with the FDA’s introduction of a stringent safety clampdown in 2010, so yesterday’s approval of GlaxoSmithKline’s Breo Ellipta must mark something of a watershed.

Breo has become the first such combination to get the US blessing for asthma since Merck & Co’s Dulera sneaked past the finishing line five years ago. That said, attendees at next week’s investor day will seek more answers from Glaxo, knowing that Breo alone will not cure the group’s R&D productivity problems (see table below).

Five years ago the UK company’s lifecycle management plan was perfectly placed to counteract the expiry of Advair’s US patents, but an intervening pricing assault has meant that nothing in this space can be taken for granted any more (Glaxo drops the ball in fierce US respiratory pricing climate, August 4, 2014).

Newly developed combinations might represent improvements over the old, but pricing is hitting all respiratory players, as the lacklustre performance in COPD of both Breo and Glaxo’s other recent newcomer, the LAMA/LABA Anoro, can attest.

And Boehringer Ingelheim’s surprising resistance to develop either a triple combination or a MABA gives pause, too. Either the German group or its competitors Glaxo and AstraZeneca will be proved right sooner rather than later.

Asthma advice

Broad respiratory market considerations aside, US approval for Breo basically follows the advice of a US adcom last month; this recommended that Breo be approved for asthma in adults but not in adolescents (those 12 to 17 years of age).

The panel also recommended a large safety trial, similar to those ongoing for LABA-containing asthma treatments under the FDA’s 2011 requirements, in adults and adolescents. Morgan Stanley analysts wrote that adults likely made up 75% of the market, and opined that asthma could account for half of Breo’s revenue, which in 2020 is expected to reach $1.1bn, according to EvaluatePharma consensus.

Still, this is a paltry amount compared against the glory days of asthma/COPD products like Advair, Symbicort and Spiriva. The collapse of US respiratory drug pricing is not helped by Glaxo’s general lack of involvement in highly lucrative areas like oncology, which makes the group a big pharma laggard; assets currently in its pipeline account for just 4% of expected 2020 sales.

Having it all to do: Glaxo vs its big pharma peer group
2020e sales ($bn) 
CAGR 2014-20 Total Derived from curr R&D R&D contribution*
Eli Lilly 2.7% 19.2 4.6 24%
AstraZeneca 1.6% 28.3 6.3 22%
AbbVie 4.7% 26.2 4.3 16%
Merck & Co 1.7% 41.0 6.0 15%
Sanofi 1.4% 46.3 5.9 13%
Novartis 1.5% 54.1 6.4 12%
Roche 2.3% 45.8 4.3 9%
Pfizer 0.1% 46.8 3.2 7%
GlaxoSmithKline 2.8% 38.8 1.7 4%
Bristol-Myers Squibb 10.7% 22.0 0.9 4%
Johnson & Johnson 1.5% 36.3 1.0 3%
*percentage of 2020e sales derived from projects currently in R&D. Source: EvaluatePharma.

Of course, the above analysis is unfair to companies that have only recently launched drugs that are set to become huge sellers – most notably Bristol-Myers Squibb with Opdivo. But the difference between Bristol and Glaxo lies in their growth rates: 11% for the former versus just 3% for the latter.

And true, those at the top of the ranking have yet to prove the value of their pipelines in the market – step forward AstraZeneca – but at least they do have significant R&D efforts.

How Glaxo intends to deal with this problem should be one of the key topics of its investor day on May 6. A parallel can be drawn between Glaxo and another clear laggard, Pfizer – though in Pfizer’s case the answer is M&A.

Buying in growth would also be an obvious solution for Glaxo were it not for its chief executive basing his tenure around organic growth and the rejection of large acquisitions. A big deal could still happen at Glaxo, though possibly not before a management change.

To contact the writer of this story email Jacob Plieth in London at jacobp@epvantage.com or follow @JacobPlieth on Twitter

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