The patent winter is coming

Biopharma is approaching the most painful period of patent loss for at least 30 years. Is M&A an answer?

The inevitable arrival of Humira biosimilars in the US next year means that Abbvie is hurtling towards biopharma’s biggest-ever patent cliff. The anti-rheumatic is expected to sell $18.6bn this year in the country, setting a new record for sales at risk.

But a bigger storm is coming for biopharma. A swathe of blockbusters could start to lose exclusivity from 2026, including the checkpoint inhibitors Keytruda and Opdivo, and the blood thinner Eliquis. The most painful period of branded sales erosion in at least 30 years is approaching, and a couple of developers look particularly exposed.

The chart below puts the scale of the losses in a 30-year context; this shows only US sales and patent expiries, so the drop in revenues globally for these products will be much higher.

For clarity, sales at risk refers to a product’s annual revenue in the year before loss of exclusivity. Actual or predicted loss is the difference between that sales at risk number and the first full year of sales post expiry, as reported by companies for historic expiries or computed by Evaluate Pharma’s consensus for those still to happen.

The historic numbers in this analysis show that sales never drop as precipitously as these at-risk estimates suggest. Even small molecules, which see revenues disappear much more rapidly than biologicals, do not immediately drop to zero when copycats arrive.

But it is clear that there is a lot at stake for biopharma in the coming years, even if the real rate of erosion is unknown.

Burning questions

Companies and investors are keen to know how quickly a major source of income will be lost, but in reality this is very hard to estimate, particularly for biologicals. The burning question on Abbvie’s recent earnings call was what Humira might sell in 2023, but opinions range widely, despite the close scrutiny. 

The sellside is pencilling in US sales of $10.9bn in 2023, according to Evaluate Pharma, while the company has issued guidance in the $8.4-12.0bn range.

Another variable for expiries further out is the exact date of patent loss. Many of the products highlighted here are still being litigated, so could end up with longer life spans.

But these products will fall eventually. And what do large developers do when confronted with a revenue gap? They make acquisitions. This approaching wave of expiries is already being cited by those keen to see an uptick in M&A, and in many ways the need to replace sales provides a more convincing motivation for dealmaking than tumbling biotech valuations.

All of those named below will be feeling the pressure, in particular Bristol Myers Squibb and Abbvie, which appear more than once in the top 10. The likes of Merck & Co and Regeneron, meanwhile, face the loss of products that dominate their revenue streams.  

The impending fall of these mega-blockbusters will be music to the ears of those advocating lower drug costs, of course. But developers will not give up without a fight, and it will require a significant strengthening of political will to weaken industry's ability to weave the so-called patent thickets that protect these huge franchises. For now, it feels much more likely that these patents will get extended rather than falling unexpectedly. 

Coming of age: the blockbusters approaching expiry
Drug - manufacturer Sales at risk (% of total for year) Estimated US patent loss 
Humira - Abbvie $18.6 (42%) 2023
Keytruda - Merck & Co $15.3bn (28%) 2028
Eliquis - Bristol Myers Squibb $8.9bn (18%) 2026
Revlimid - Bristol Myers Squibb $8.7bn (40%) 2022
Opdivo - Bristol Myers Squibb $7.2bn (13%) 2028
Darzalex - J&J/Genmab $6.8bn (12%) 2029
Stelara - J&J $6.5bn (15%) 2023
Eylea - Regeneron $6.2bn (14%) 2023
Ocrevus - Roche $5.7bn (10%) 2029
Trulicity - Lilly $4.3bn (8%) 2028
Imbruvica - Abbvie  $4.2bn (10%) 2027
Note: sales at risk is annual US sales in the year before patent expiry. Source: Evaluate Pharma. 

28/09/22 - this story has been corrected to change the sales at risk number for Eliquis in the above table.

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