R&D productivity - focus on quality not just quantity

Analysis

The tally of new drugs approved each year in the US is often used as a measure of R&D productivity in the industry. However, a look at the sales performance of each year’s cohort five years after launch paints another picture and suggests the measure for R&D success should focus on the quality of products approved, rather than just the quantity.

As the table below shows, collated from actual and forecast data by EvaluatePharma, the picture is not as gloomy as the downward trend seen in approvals, with 2008 promising a significant return to quality and quantity. It does confirm, however, that 2007, when only 22 NMEs and new biologics were approved, the lowest for two decades, was not one of the sector’s best attempts in terms of volumes or sales potential.
 

Year No. of NMEs Approved  No. of Biologicals Approved    Total NMEs + Biologicals   % Chg.   USA Sales 5th Post launch ($bn)    % Chg.
2008 (projected)  31  4  35  +59%  9.8  +28%
 2007  16  6  22  -24%  7.6  -41%
 2006  18  11  29  +4%  12.8  +77%
 2005  18  10  28  -26%  7.3  -50%
 2004  31  7  38  +9%  14.6  +75%
 2003  21  14  35  +35%  8.3  -35%
 2002  17  9  26  -19%  12.8  +51%
 2001  24  8  32  -3%  8.5  +15%
 2000  27  6  33  -18%  7.4  +4%
 1999  35  5  40  +3%  7.1  -48%
 1998  30  9  39  -20%  13.5  +82%
 1997  39  10  49  -21%  7.4  -52%
 1996  53  9  62    15.5  

Last year the most notable approvals, according to consensus forecasts, are Tekturna, the Novartis and Speedel treatment for pulmonary hypertension, and Shire’s ADHD drug Vyvanse. The two products are respectively forecast to be generating US sales of $1.31bn and $998m in 2012, five years down the line. However both have been subjected to significant downgrades since they were launched, and doubts remain over even these lowered expectations. The class of 2007 could therefore turn out to be even more of an underachiever.

Top 10 New Molecular Entities in 2007: ranked on 2012 US sales
Rank Product Company Approved 2007 US Sales ($m) 2012 US Sales ($m)
1 Tekturna/Rasilez Novartis Mar 2007 34 1312
2 Vyvanse Shire Feb 2007 77 998
3 Letairis/Volibris Gilead Sciences Jun 2007 20 791
4 Tykerb GlaxoSmithKline Mar 2007 72 724
5 Bystolic Forest Laboratories Dec 2007 - 590
6 Isentress Merck & Co Oct 2007 29 506
7 Ixempra Bristol-Myers Squibb Oct 2007 15 404
8 Kuvan BioMarin Pharmaceutical Dec 2007 0 373
9 Torisel Wyeth May 2007 - 368
10 Soliris Alexion Pharmaceuticals Mar 2007 46 308
  Other     79 1261
  Total      373 7634

In the last decade 1999 was definitely bottom of the class in terms of value added, despite bringing a healthy-looking 40 new drugs to the market. That year Vioxx, Actos and Avandia were launched, contributing to a relatively paltry total of $7.1bn five years post launch, impacted by the withdrawal of Vioxx in 2004 which lost about $700m in revenue that year.

In 1996, the bumper year of the last decade, saw the approval of Lipitor, Zyprexa and Allegra, while another lucrative 12 months was 2004, which saw Avastin, Cymbalta, Lyrica and Spiriva get the green light.

For all the criticisms of the last couple of years, which has seen a steady decline in approval numbers, 2006 stands out for its relatively low approval rate but high sales success.

Merck & Co’s Januvia and Gardasil shine in that class, and probably help explain the 39 % appreciation in the company’s share price since, even considering the recent fall out from Vytorin.

So far 2008 is showing encouraging signs of a significant improvement on 2007 both in terms of quantity and quality. Five year sales forecasts for the class of 2008 are expected to grow by 28% to $9.8bn, with a potential 35 new approvals. This however assumes that all new products currently filed with the FDA get the go-ahead, an unlikely scenario. Even risk-adjusting these figures by the industry standard of 5%, the industry's R&D productivity appears to have improved on last year, and could rank as the sixth most productive year in the last 13 years.

Top 10 New Molecular Entities in 2008: ranked on 2013 US sales
Rank  Product Company Approved / Approval by 2008 US Sales ($m)    2013 US Sales ($m)   
 1  Actemra  Roche  19 Sep 08  21  809
 2  Pristiq  Wyeth  29 Feb 08  44  727
 3  Effient  Eli Lilly  26 Jun 08  16  642
 4  Cordaptive  Merck & Co  30 Apr 08  77  636
 5  Milnacipran  Forest Laboratories  31 Oct 08  3  625
 6  Promacta/Revolade    GlaxoSmithKline    01 Jul 08  3  621
 7  Cimzia  UCB  22 Apr 08  9  447
 8  Fiapta  Vanda Pharmaceuticals  25 Jul 08  -  398
 9  Bridion  Schering-Plough  02 Jul 08  24  359
 10  Recothrom  ZymoGenetics  17 Jan 08  40  346
   Other      288  4166
  Total      526 9775

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