Biotech
Monday, January 29th, 2024 3:41 pm EDT
Key Points
- Looming Threat of Patent Cliff for Pharmaceutical Giants: Big pharmaceutical companies, including Bristol Myers Squibb, Merck, and Johnson & Johnson, are facing a significant threat as their blockbuster drugs approach the “patent cliff.” This term refers to the expiration of patents for leading branded products, allowing competitors to introduce generic versions at lower prices. The expiration of patents puts tens of billions of dollars in sales at risk between now and 2030. The loss of exclusive rights on drugs can affect companies differently, depending on factors such as the percentage of total sales attributed to a specific drug and the type of treatment it provides.
- Diverse Impact of Patent Expirations on Key Drugs: The article highlights specific drugs facing patent expirations and their potential impact on the respective pharmaceutical companies. Notable examples include Merck’s Keytruda, Bristol Myers Squibb’s Eliquis and Opdivo, and Johnson & Johnson’s Stelara. Each drug faces different timelines for patent expirations, and estimates suggest varying degrees of future revenue loss. The article emphasizes that the impact of patent cliffs could differ based on whether the drug is a small-molecule drug or a biologic, with many facing patent expirations being biologics.
- Pharmaceutical Companies’ Strategies to Offset Losses: To counter potential revenue losses from patent expirations, pharmaceutical companies are adopting strategies to navigate the challenges. This includes building drug pipelines, making acquisitions, and entering partnerships. Companies such as Merck, Bristol Myers Squibb, and Johnson & Johnson are actively working on plans to sustain growth beyond patent expirations. Additionally, companies are exploring new formulations, extending patents, and delaying competition to buy more time and mitigate revenue losses. The article also notes that the pharmaceutical industry, armed with around $1.4 trillion, is ready to make deals, and companies are looking for opportunities to acquire drugs, particularly those in late-stage development.
Big pharmaceutical companies, including Bristol Myers Squibb, Merck, and Johnson & Johnson, are poised to face significant challenges as their blockbuster drugs approach the “patent cliff,” a period when the patents for leading branded products expire. This exposes these drugs to competition from lower-priced generic alternatives, potentially leading to a decline in revenue for the pharmaceutical giants. The top 20 biopharma companies collectively face $180 billion in sales at risk from patent expirations between now and 2028. Some of the notable drugs facing patent cliffs include Merck’s Keytruda, Bristol Myers Squibb’s Eliquis and Opdivo, and Johnson & Johnson’s Stelara. The impact of patent expirations varies depending on factors such as the percentage of a company’s total sales attributed to a specific drug. Biosimilars, alternatives to biologic drugs, may pose a threat, but they historically face challenges gaining market share compared to generics.
The impending patent cliffs are prompting pharmaceutical companies to strategize and offset potential revenue losses. JPMorgan analysts suggest that the industry’s sales will remain stable through 2030 as companies improve their drug pipelines and explore acquisitions or partnerships. Companies like Merck, Bristol Myers Squibb, and Johnson & Johnson are making efforts to navigate the challenges. For instance, Merck is optimistic about its post-Keytruda patent expiration period, projecting over $20 billion in sales from oncology drugs by the mid-2030s. Bristol Myers Squibb aims for growth through acquisitions, like the recent purchase of Karuna Therapeutics for $14 billion. Johnson & Johnson sees its pharmaceutical business maintaining mid-single-digit sales growth through 2030, aided by its medical devices business. Additionally, pharmaceutical companies are employing strategies such as launching new formulations, extending patents, and delaying competition to mitigate revenue losses.
The type of drug, whether a small-molecule drug or a biologic, influences how patent cliffs affect pharmaceutical companies. Biologics like Keytruda, Stelara, and Opdivo face upcoming patent expirations, potentially impacting revenue. Biosimilars, although more challenging to develop and manufacture than generics, may take time to threaten the dominance of biologic drugs. The role of Medicare drug price negotiations, particularly under the Inflation Reduction Act, adds complexity to the situation. The policy, beginning with negotiations for ten prescription medications this year, could impact drugs facing patent expirations. While it is too early to determine the extent of Medicare’s ability to negotiate prices, experts note that the larger threat to revenue remains the entry of competitors into the market, irrespective of negotiated prices.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/01/28/big-pharma-merck-bristol-myers-jj-prepare-to-lose-revenue.html
