US approval of two new therapies for diarrhoea-predominant irritable bowel syndrome (IBS) in a single day is a sign of how rapidly the treatment landscape is shifting.
Sales of IBS drugs will explode over the next five years, driven in large part by the two agents approved yesterday, Valeant’s Xifaxan 550 and Actavis’ Viberzi (see table). Those two companies will dominate the space, with only Synergy Pharmaceuticals hoping to break a virtual duopoly with its uroguanylin analogue plecanatide.
Then there were two
Xifaxan and Viberzi together are reckoned to sell $1.4bn in sales by 2020. They will join Actavis’ Linzess, a drug for the constipation predominant form of the disorder, in driving sales of IBS agents up by nearly sixfold over this period.
As Actavis and Valeant have been two of the most active companies in terms of M&A over the last five years, it should come as no surprise that they have reached this ascendancy through acquisitions (Speciality players define M&A as big pharma seeks focus, May 26, 2015).
Actavis picked up Linzess and Viberzi via Forest Laboratories and Furiex Pharmaceuticals, while Valeant got Xifaxan thanks to a buyout of Salix Pharmaceuticals. Linzess and Xifaxan have the added value of use in other gastrointestinal indications, the latter in hepatic encephalopathy and traveller’s diarrhoea and the former in chronic idiopathic constipation.
|Valeant vs Actavis vs Synergy in IBS ($m)|
|Xifaxan 550||Valeant Pharmaceuticals International||-||331||657||929|
The dominance is pretty clear: by 2020, the two companies will account for more than 40% of all sales in the IBS indication, according to EvaluatePharma’s consensus. Another significant player in this picture is Almirall, which markets the ex-US version of Linzess as Constella. Jefferies forecasts Constella will sell around $67m in Europe and Mexico by 2020.
Linzess was discovered by Ironwood Pharmaceuticals, which entered into a 50/50 US commerical collaboration that has continued with Actavis.
How Valeant could come to dominate
The sellside analysts who handicap the race in IBS with diarrhoea have clearly placed a bet on Xifaxan, forecasting nearly double the sales of Viberzi. The reasons are not necessarily clear – as an antibiotic treatment it is limited to a two-week course that can be repeated twice more if the condition recurs. Viberzi does not have such a limitation.
On the other hand, as an already marketed product, Xifaxan can launch right away into the IBS space. Viberzi is an opioid and hence will not launch until the Drug Enforcement Administration has completed its scheduling, giving Xifaxan several months of first-mover advantage.
In a note today, ISI Evercore analyst Umer Raffat estimated a Xifaxan price of $1,167 for a two-week course of the antibiotic, while he believes that Viberzi will be more likely to resemble the Linzess pricing at around $3,000 a year. Thus a situation may emerge, both because of physician caution and payer utilisation management, in which Viberzi is saved for Xifaxan treatment failures.
As it stands, Actavis has the upper hand, if only just, in total IBS sales. But there are several million dollars in potential sales to play for if Synergy’s plecanatide proves itself in IBS with constipation. Success could put that project in direct competition with Actavis’ Linzess, and it is not a stretch to believe that Valeant would be an eager bidder if the pivotal trial reads out positive around the end of 2015.
This story has been corrected to note Ironwood Pharmaceuticals' collaboration with Actavis on Linzess.