Therapeutic focus - Eye care products in demand in market dominated by few

Analysis

From NicOx and ThromboGenics to Novartis and Sanofi, there is no shortage of companies, of all sizes, seeking a presence in the eye care market. Industry’s interest in the space is not surprising given that many vision problems are a complaint of the elderly, with the West’s ageing populations only increasing demand for ophthalmology treatments.

Novartis’ consolidation of Alcon last year – the takeover cost a huge $48bn in total – means the Swiss drug maker is by far the biggest presence; beyond the top five players the market is very fragmented. Ripe for consolidation perhaps but a look at the most valuable pipeline products shows most are already in big pharma hands, EvaluatePharma data show (see tables). Carving out a substantial share in this space will take time, and will not come cheap.

Top 5 companies: Eyecare
Company WW Rx & OTC Sales ($m) Market Share Market Rank
2010 2016 CAGR 2010 2016 2010 2016
Novartis 2,365 5,356 +15% 18.3% 28.4% 1 1
Allergan 2,280 3,368 +7% 17.6% 17.9% 2 2
Roche 1,402 1,970 +6% 10.8% 10.5% 5 3
Santen Pharmaceutical 1,117 1,624 +6% 8.6% 8.6% 6 4
Bausch + Lomb 919 1,321 +6% 7.1% 7.0% 7 5

The table above shows the top five eye care players; Novartis is enjoying clear blue water between itself and the nearest competitor, Allergan. With strong growth predicted for the Alcon products, it is interesting to see that little market share gain is forecast for the runners up in this market over the next four years.

Behind this five sit a group of companies with sub $1bn franchises - for example ISTA Pharmaceuticals, QLT and Laboratoires Théa, a private French eye care specialist. Merck & Co’s takeout of Inspire Pharmaceuticals for $430m last year removed one of the remaining mid-sized standalone ophthalmology businesses (Merck building ophthalmology business with Inspire deal, April 6, 2011).

The space has been active in terms of deal making in the last few years, and promising products have gone for sizeable prices. The Allergan deal over age-related macular degeneration product MP0112 in particular saw a healthy $45m being paid out for a phase II product that the companies believe could out-do Lucentis and new kid on the block Eylea in terms of number of injections (Allergan sees dosing potential in Molecular Partners' AMD candidate, May 5, 2011).The product is likely to be a key focus at the company’s R&D day on March 28.

Top 10 opthalmology deals over the last 5 years
Rank Company Product Pharmacological Class Deal Partner/ Product Source Status on Deal Date Deal Date Deal Value ($m) Upfront Payment ($m)
1 Pfizer iSONEP Anti-sphingosine-1-phosphate (S1P) MAb Lpath Phase I Dec 2010 512 14
2 Allergan MP0112 VEGF-A antagonist Molecular Partners Phase II May 2011 420 45
3 Otsuka Holdings ACU-4429 Non-retinoid visual cycle modulator Acucela Phase I Sep 2008 263 5
4 Bausch + Lomb BOL-303259-X Nitric oxide-releasing prostaglandin F2 analogue NicOx Phase II Mar 2010 180 10
5 Allergan Ophthalmic Research Project Eye preparation Polyphor Research project Oct 2008 68 7
6 Allergan R99 compounds Prostaglandin receptor agonist Asterand Pre-clinical Sep 2008 62 6
7 Otsuka Holdings Kinase Inhibitors Research Project Kinase inhibitor MethylGene Research project Mar 2008 62 8
8 Santen Pharmaceutical* DE-109 Rapamycin analogue (mTOR inhibitor) MacuSight Phase II Jun 2010 50 50
9 Allergan Lastacaft Anti-histamine Johnson & Johnson Approved Sep 2010 35 23
10 Immune Pharmaceuticals iCo-008 Anti-eotaxin-1 MAb iCo Therapeutics Phase I Dec 2010 33 1
* Product acquisition Total 1,684 170

Given the stated aim of many companies to grow in this space, further deals are likely. Bausch + Lomb, the private US company better known for glasses and contact lenses, has made no secret of its wish to expand its therapeutic product portfolio. The company and partner NicOx announced positive data on glaucoma product BOL-303259-X last week.This was followed by an acquisition by NicOx of a small private UK company, and the proclaimation of its own move to establish an ophthalmology franchise (EP Vantage Interview - NicOx strategy becoming clearer as its gaze shifts to eye care, March 22, 2012).

Similar noises were heard from ThromboGenics, which snared Novartis, in the shape of Alcon, as partner for its product ocriplasmin, a treatment for vitreomacular adhesion (ThromboGenics scores Novartis and sets US in its sights, March 16, 2012).

The table below shows the most valuable eye treatments in development, based on net present value. This will exclude products being developed by private companies, for which sales forecasts do not exist. However it reveals that the majority of the products considered most valuable commercially, to be already owned by the big players in this market.

Exceptions include Omeros' OMS302; encouraging results from the anti-inflammatory agent were announced earlier this month and many analysts have high hopes for the product (Omeros eyeing deals as ophthalmology drug succeeds, March 14, 2012). And should QLT’s lataprost delivery system, which delivers the former Pfizer blockbuster glaucoma treatment in the form of an internal plug in the eye, generate interesting data, the company could attract some interest.

Most valuable ophthalmology products in development 
Rank Company Product Pharmacological Class Current phase  Today's NPV ($m)
1 ThromboGenics Ocriplasmin Plasmin Filed +787
2 QLT Latanoprost Punctal Plug Prostaglandin F2 analogue Phase II +562
3 Omeros OMS302 Anti-inflammatory agent & anti-cholinergic Phase III +126
4 Sanofi FOV2304 Bradykinin B1 receptor antagonist Phase II +104
5 Santen Pharmaceutical DE-111 Beta adrenoreceptor antagonist & prostaglandin F2 analogue Phase III +100
6 Santen Pharmaceutical DE-109 Rapamycin analogue (mTOR inhibitor) Phase III +73
7 Novartis ESBA105 Anti-tumour necrosis factor alpha (TNFa) MAb Phase II +68
8 NovaBay Pharmaceuticals NVC-422 Aganocide Phase II +63
9 Sanofi FOV1101 Selective steroid amplifier Phase II +62
10 Santen Pharmaceutical DE-102 Corticosteroid Phase III +27

In the meatime, however, the table below shows that the biggest ophthalmology products - as in most sectors - remain in the hands of big companies, with Novartis' domination clear.Small products can and will be found by companies seeking to build a presence. But the creation of even a mid-tier in this market is a long way away.

Most valuable marketed opthalmology products
Annual Sales WW - Sales ($m)
Rank Product Company Pharmacological Class Indication 2010 2016
1 Lucentis Novartis/Roche Anti-VEGF MAb AMD 2,935 4,794
2 Eylea Regeneron Pharmaceuticals/Bayer VEGFr kinase inhibitor AMD - 1,648
3 Restasis Allergan Tear secretion enhancer Dry eye 621 978
4 Patanol Novartis/Kyowa Hakko Kirin Anti-histamine Ocular inflammation 263 742
5 Lumigan Allergan Prostaglandin F2 analogue Glaucoma 527 713
6 Refresh Allergan Eye preparation Dry eye 350 553
7 Xalatan Pfizer Prostaglandin F2 analogue Glaucoma 1,749 530
8 Vigamox Novartis Quinolone Ocular infections 116 460
9 Travatan Novartis Prostaglandin F2 analogue Glaucoma 211 455
10 Combigan Allergan Alpha 2 adrenoreceptor agonist & beta adrenoreceptor antagonist Glaucoma 172 313
Total 6,943 11,185

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