MNC 2023 Performance Roundup: Patents & Capacity Focus

2024-03-19

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With the multinational pharma corporation (MNCs) annual reporting season for 2023 recently completed, GBI reviews company reports for performance highlights and trends, both globally and in the China market.The last 12 months saw the collapse of a mountain of COVID-19 vaccine sales, meaning that Pfizer lost its position as the leading pharma revenue generator globally to Johnson & Johnson. The lack of COVID competition allowed Merck, Sharp & Dohme’s PD-1 inhibitor Keytruda (pembrolizumab) to emerge as the world’s top-selling drug. However, the fact that more than half of the leading top - 20 blockbusters are either already off-patent or facing loss of exclusivity by 2028 underlines the urgency behind the recent surge in deal-making by Big Pharma. Meanwhile, in China, the success of one crucial product has seen Merck, Sharp & Dohme eclipse AstraZeneca as the market’s leading MNC pharma. J&JDisplaces Pfizer at Top of Revenue LeaderboardAfter underwhelming returns from its COVID-19 vaccine, the US giant Johnson & Johnson (J&J) returned to form in 2023. Focusing solely on pharmaceutical sales (as per all sales figures in this report), J&J generated USD 54.76 billion after growth of 4.8% year-on-year (YOY). J&J products occupied 4 of the top-20 selling drugs globally if co-development partnerships are included. The portfolio is led by auto-immune disease drug Stelara (ustekinumab), which hit USD 10.85 billion in 2023 sales, up 9% YOY, but faces its first biosimilar competitors in 2024, the first approved in Europe in January this year. Anti - CD38 antibody Darzalex (daratumumab), used to treat multiple myeloma (MM), hit USD 9.74 billion, up 22.2% YOY, and retains market exclusivity until 2029.Of the firm’s new launches, chimeric antigen receptor (CAR) T cell therapy Carvykti (ciltacabtagene autoleucel), in-licensed from China’s Legend Biotech, was a strong performer, with sales reaching USD 500 million during the year, up from USD 133 million in 2022. CEO Joaquin Duato underlined that “with more than 2,000 patients treated with Carvykti, it's already the fastest launched CAR-T in the market overall”. J&J is seeking approval for Carvykti as a second-line or later MM therapy, with a PDUFA date of April 4, 2024, and has taken steps to expand its lentivirus manufacturing capabilities in the US, as well as sites in the Netherlands and Switzerland, to meet expected growing demand for the therapy. An FDA investigation into the safety of CAR-Ts in general was also shrugged off by J&J, Duato noting: “We remain confident in ... both the risk-benefit of Carvykti in the indication that is being studied and at the same time on the potential of Carvykti to be a USD 5 billion plus asset at peak year sales”. Low-Key Deal-MakingAlthough J&J made no blockbuster multi-billion-dollar acquisitions during 2023, the firm has worked quietly to strongly expand its pipeline.“ CFO Wolk underlined the firm’s deal making during the year, when USD 3 billion was deployed for licensing and acquisitions. ”That included the purchases of antibody drug conjugate (ADC) specialist Ambrx for USD 2 billion and atrial fibrillation medtech firm Laminar for USD 400 million “as well as more than 50 smaller early stage licensing deals and partnerships that complement our current Innovative Medicine and MedTech pipelines”. The firm expects another strong year of 5%-6% growth in 2024.PfizerRecord Year of Approvals Bodes Well for FutureHaving led the world for the last two years in revenue terms, Pfizer’s fall from its COVID pinnacle of USD 99 billion biopharmaceutical sales in 2022 was faster than had been predicted after sales targets were missed due to cancelled government contracts for COVID-19 therapy Paxlovid (nirmatrelvir/ritonavir) and vaccine Comirnaty. Revenues from pharma sales were down -45% YOY, however, excluding COVID-19 products, global sales were up a respectable 7% YOY.Pfizer had 3 products in the global top-20 rankings, including the anticoagulant Eliquis (apixaban), the Prevnar family of vaccines, and the Comirnaty COVID vaccine. However, both Eliquis and Prevnar face patent expiration in 2026, while Comirnaty is unlikely to feature heavily in 2024. Nevertheless, Pfizer’s in-house pipeline and recent acquisitions are expected to produce a soft landing. There were a record nine US FDA new drug approvals during 2023, for: migraine therapy Zavzpret (zavegepant), RSV vaccine Abrysvo, alopecia treatment Litfulo (ritlecitinib), growth hormone Ngenla (somatrogon), multiple myeloma drug Elrexfio (elranatamab), ulcerative colitis drug Velsipity (etrasimod), Neisseria meningitidis vaccine Penbraya, as well as Comirnaty and Paxlovid. Abrysvo and the 2022-acquired migraine therapy Nurtec ODT/Vydura (rimegepant) as well as sickle cell disease treatment Oxbryta (voxelotor) were among the recent launches to begin making meaningful commercial contributions. Seagen AcquisitionMuch of Pfizer’s COVID windfalls went towards the USD 43 billion acquisition of antibody drug conjugate (ADC) pioneer Seagen, a deal which closed in December 2023. Pfizer CEO Albert Bourla, speaking during the earnings conference call, underlined the importance of the acquisition to the company’s future, described as putting Pfizer “in a strong position... to achieve a world-class oncology leadership”. Pfizer’s oncology-focused R&D resources were immediately doubled thanks to the merger, as well as commercial network gains. The deal doubles Pfizer’s oncology pipeline and is expected to produce an immediate USD 3.1 billion positive impact on 2024 revenues, helping Pfizer to raise its 2024 financial guidance into a range between USD 58.5 billion and USD 61.5 billion total revenues.Seagen’s current lead product is Padcev (enfortumab vedotin), a treatment for bladder cancer being co-developed with Astellas. First approved in 2019, Pfizer/Astellas secured a significant new indication approval for the drug in December 2023, the US FDA giving the nod for Padcev’s use alongside Keytruda (pembrolizumab) in first-line urothelial carcinoma. Wall Street sales forecasts for Padcev average at around USD 2.8 billion by 2030.One of the motivations behind Pfizer’s recent cost-cutting drive has been to free up resources to support the commercial launch of so many new products. New molecular entities (NMEs) are forecast to potentially generate up to USD 20 billion in new revenues by 2030, when a further USD 25 billion is forecast to be derived from the US giant’s licensing and acquisition deal-making. MSDKeytruda Claims its Rightful PlaceFor Merck, Sharp & Dohme (MSD), the programmed death-1 (PD-1) inhibitor Keytruda (pembrolizumab) took its place at the top of the global drug sales charts for the first time in 2023. The molecule generated USD 25 billion of MSD’s total USD 60.1 billion in revenues during 2023 after 21% YOY growth. Human papillomavirus (HPV) vaccine family Gardasil/Gardail-9 also enjoyed a strong year with 29% YOY expansion to be just outside the top-10 best-selling drugs globally in 2023 with USD 8.9 billion in sales.That means that Keytruda and Gardasil sales combined accounted for over 63% of MSD’s total pharma sales. First approved by the US FDA in 2014, Keytruda’s core patent in the US runs out in 2028. Gardasil was first approved in 2006 and is already off-patent, while Gardasil-9 was first approved in 2017 and is also set to lose exclusivity in 2028.However, Gardasil already faces competition in China – among the vaccine’s most significant markets globally – from locally developed innovative HPV vaccines, including 9-valent products.Like many of MSD’s peer companies, stocking the pipeline with the next generation of products to replace Keytruda and Gardasil is clearly a priority. Of note, 14 of the top-20 drugs by global sales are either already patent-expired or face loss of exclusivity within the next 4 years or less. MSD’s response was to put around USD 30 billion into R&D investments during 2023. That included the USD 10.8 billion acquisition of US biotech Prometheus Biosciences which closed in June 2023, mainly targeting PRA023, a tumor necrosis factor (TNF)-like ligand 1A (TL1A)-targeted antibody in late-stage development for autoimmune diseases including ulcerative colitis and Crohn’s disease. And in October, Merck paid USD 4 billion upfront as part of a potential USD 22 billion partnership with Daiichi Sankyo, taking ex-Japan development rights to three antibody drug conjugates (ADCs). That deepened MSD’s involvement in the ADC space, following three significant deals with China’s Sichuan Kelun Pharmaceutical signed in 2022, cumulatively worth north of USD 10 billion in total commitments. MSD’s BD activity over the last three years means it has built a formidable pipeline covering three core therapeutic areas of oncology, cardiometabolic diseases, and immunology, with a potential USD 15 billion in forecast potential sales for the pipeline added by deal-making during 2023. Over 20 Phase III trials were initiated during 2023, and an even greater number is expected for 2024. Potential market is untapped70% of Gardasil’s potential market in China still untapped: Finally, MSD’s China performance is worthy of note. The region produced sales growth of 20% during Q4 to USD 1.5 billion, and rose 32% YOY over the 12 months to USD 6.71 billion in sales – over 12% of MSD’s global pharma total – meaning that MSD cemented its place as currently the leading pharma company in China.Gardasil remains the key driver, and during the earnings conference call investors questioned whether the locally approved innovative HPV vaccines pose a threat to future growth, particularly considering that one domestic firm recently received approval for a two-dose regimen.CEO Rob Davis voiced his confidence in MSD’s ability to maintain “a vast majority of share in the private market”. The US firm continues to mainly target urban females in Tier 1 to Tier 3 cities, a population of about 200 million, of which, Davis noted, “probably about 30% have actually received vaccination. So, you are still looking at 120 million, 130 million eligible population”. With most of the local competitors targeting lower-tier cities and a different population, MSD remains bullish on its prospects in China. MSD also submitted data for Gardasil in male subjects late last year, and could gain approval later this year for that new market segment.