Pharma faces additional unprecedented challenges

Historically pharma companies have faced a number of major challenges, both internally and externally, which have shaped the pharmaceutical industry we see today. Ongoing issues include the declining efficiency of companies’ internal R&D processes, together with growing competition from both branded and generic players in increasingly crowded markets; resulting in fierce price competition. Heightening regulatory pressures also mean companies are more restricted in their promotion of products to patients and physicians, with payer decisions ever more critical to whether a drug is prescribed.

However, these issues are not new. Pharma has long been aware of these potential problems and has already implemented strategies to evolve from its traditional industry model towards a new model: Pharma 2.0. This new model is defined as a leaner, globalized entity whose increased scale is achieved ‘virtually’ rather than through accretion, Mr. Sinclair says. “Pharma 2.0 is focused on targeting high-growth markets through collaborative alliances, the use of ‘smart’ sales and marketing strategies, and cost-effective pricing,” he says.

In the last 12 months however, the industry has begun to face additional, unprecedented political and economic challenges. Many leading economies are now entering potentially deep and long recessions and this new economic reality, combined with President Obama’s overhaul of the US healthcare system have increased Pharma’s vulnerability just as it embarks on its first steps towards Pharma 2.0, with the extinction of the blockbuster model and the 2011 patent cliff fast approaching.

On balance, Datamonitor believes that President Obama’s healthcare reform proposals will have a negative impact on Pharma’s future growth. While the likely expansion in public healthcare to capture the estimated 15% of the US population who are uninsured will grow future drug revenues, generics companies and eventually biosimilars manufacturers will be the ultimate winners. The need to cut US healthcare spend, with the potential implementation of comparative effectiveness research and drug re-importation will offset any additional revenue Pharma may gain through expanded healthcare provisions.

On top of this, the industry now also faces added economic pressures, both directly and indirectly as a result of the global economic downturn. Pharma has already implemented a swathe of cost-cutting strategies, while as a result of the Biotech funding crisis many smaller companies face potential bankruptcy as traditional sources of funding (debt markets, public offerings, private placements and convertible bonds) are still largely closed for cash-burning firms. Furthermore, due to the worsening economic conditions in the US, uninsured patients are now even less able to cover the costs of their healthcare, Mr. Sinclair says. “With the growing size of the uninsured population, patients are increasingly switching from branded to generic drugs where available, in addition to making other personal cost-cutting healthcare choices; ultimately impacting pharmaceutical sales.

“Pharma may also struggle to justify the costs of expensive prescription drugs over the next few years, with greater pressure from payers to produce more robust pharmacoeconomic data,” he says.

Pharma is adapting to ongoing industry trends

In response to these ongoing trends, and as the first steps in the transition to Pharma 2.0, companies have adopted varied, often opposing, but not mutually exclusive strategies in order to adapt to market changes and shareholder expectations. The most pertinent include:

• Mega-mergers or small-scale acquisitions – Pfizer-Wyeth and Merck & Co.-Schering Plough versus the opinion of GlaxoSmithKline (GSK) CEO Andrew Witty that big M&A is unlikely to be a “great solution to anything in the next few years.” (1)
• Portfolio expansion or portfolio specialization – Johnson & Johnson is expanding its non-pharmaceutical footprint and Abbott is growing its medical device business. However Roche, which is focusing on its oncology franchise, is expected to generate two-thirds of ethical pharmaceutical sales in 2012 from this area.
• Improving pipelines through acquisition or through R&D satellite start-ups – Roche is bolstering its internal pipeline through the final acquisition of Genentech, while GSK and now Pfizer and Eli Lilly all embrace the start-up R&D model.

Despite these variations, pharma companies have implemented a number of unified strategic solutions to the mounting pressures the industry faces:

• Cutting costs – the most noticeable cuts thus far have been to primary-care sales teams, with R&D budgets also facing constraints.
• Move into specialized high-growth areas - companies have increased focus on developing biologic therapies that command higher prices and are currently relatively immune to generic competition in the US.
• Rest of world expansion – Branded Pharma are expanding their emerging market footprint to capitalize on the higher rate of growth in these countries compared to traditional markets. Sales of prescription drugs for the top 50 pharma companies in the ‘rest of world’ markets are forecast to grow twice as fast as those in the mature markets (2.2% CAGR in US, Japan, France, Germany, Italy, Spain and UK combined versus 4.1% in remaining global markets collectively; 2008-13)**.

“While companies have already adapted to some of the new Pharma industry challenges, strategies will need to adapt even further”, Mr. Sinclair says. “Turbulence in global financial markets and a rise in interventional politics, particularly in the US, will make Pharma’s journey across a radically altered healthcare terrain far more difficult, although the ultimate goals remain the same.

“Pharma needs to balance the more pressing short-term issues against the longer-term trends shaping the industry,” he says.

• As a standalone company, Merck & Co. faces a tough future of declining sales. Datamonitor forecasts that the proposed merger with Schering-Plough will succeed in returning Merck to a positive sales growth outlook.

• If management delivers on its promise of an additional $3.5bn of annual cost savings beyond 2011, Datamonitor calculates that the combined company will see operating profit growth rate accelerate to a strong 6.9% compound annual growth rate (CAGR) 2008-13.

• Schering-Plough’s immunology and inflammation franchise is expected to make an important contribution to the new company. However, for this to materialize the issues surrounding Schering-Plough’s partnership with Johnson & Johnson must be successfully resolved.

• The deal will allow Merck to consolidate 100% of the cholesterol joint venture sales. In addition, Schering-Plough’s respiratory franchise will integrate with Merck’s business in this category, and will add pipeline as well as marketed products. Other synergies will also be realized in women’s health and vaccines portfolios.

As a standalone company, Merck & Co. faces a tough future of declining sales

Datamonitor forecasts that Merck’s prescription pharmaceutical portfolio (including 50% of Zetia/Vytorin sales) will see sales decline at a CAGR of -0.3% from 2008-13. Generic competition against patent expired major products is the key factor behind this forecast sales contraction. Four brands-Singulair, Cozaar/Hyzaar, Fosamax and Zocor-are all expected to suffer particularly intense generic competition out to 2013.

Figure 1 highlights the scale of the expiry threat facing Merck & Co: between 2008 and 2013 Datamonitor predicts that Merck’s new launch products (including Isentress and Janumet) will boost annual sales by $3.5bn and core marketed products will generate a further $2.2bn annual increase. However, a wall of expiring products will wipe $6.1bn from annual sales leaving Merck’s 2013 annual sales standing $435m below 2008 levels.

Figure 1: Merck & Co. product lifecycle stage analysis, 2008–13

Schering-Plough – the right merger partner to return Merck to positive sales growth

In terms of resuscitating its sales growth prospects, Merck has selected an attractive merger target in Schering-Plough. As a standalone company, Datamonitor forecasts Schering-Plough to achieve a 2008-13 sales CAGR of 4.5%-the fastest growth rate to 2013 for any US big pharma player.

Figure 2 depicts the sales growth profile for Merck, Merck + Schering-Plough’s Rx portfolio and Merck + all of Schering-Plough (Rx, animal and consumer health etc.) respectively. The addition of Schering-Plough is expected to lift Merck’s 2008-13 CAGR from -0.3% to +1.7%.

Figure 2: Merck & Co. and Schering-Plough total sales ($bn), 2008–13

Management teams also see a major opportunity to achieve further operating cost cuts and accelerate profit growth

Like the majority of their big pharma peers, pre-merger Merck and Schering-Plough already had cost-minimizing plans in place, focused primarily on reducing sales-force head count. Taken together, these plans are expected to deliver combined cost savings of nearly $2.5bn. However, in the advent of the merger, management has proclaimed that they will achieve an additional annual cost saving of $3.5bn beyond 2011 through reductions in spending on marketing and administration, manufacturing and R&D.

Figure 3 presents a build up of Merck and Schering-Plough’s total sales offset by their total operating costs. Based on the impact of the $2.5bn pre-merger cost-reduction plans, Datamonitor forecasts that the merged entity would have an operating profit CAGR 2008-13 of 2.2%. Factoring in the additional $3.5bn merger-related cost savings accelerates this operating profit growth rate to 6.9%.

“To really appreciate the scale of the touted $3.5bn cost saving you have to remember that it will flow directly into the operating profit line – and with a typical pharma operating margin of 25%, these savings would be equivalent to creating 14 new blockbusters at the top line,” says Datamonitor head of company analysis Dr. Chris Phelps.

Figure 3: Merck &Co.’s forecast operating performance, 2008–13

Molecule type: Merck brings the vaccines and Schering-Plough brings the mAbs and therapeutic proteins

Purely from a sales and operating profit perspective the merger with Schering-Plough appears highly rational. However, beyond the numbers, the combination also offers an opportunity for Merck & Co. to diversify its portfolio across key strategic dimensions, most notably molecule type and therapy area.

Figure 4 presents the molecule type sales focus of Merck, Schering-Plough and the merged entity. Merck is primarily a small molecule company, generating over 80% of 2008 sales from this traditional molecule type. The rest of Merck’s pharmaceutical sales are generated from its vaccine operations. Merging with Schering-Plough will bring a portfolio that includes both monoclonal antibodies (mAbs) (Remicade and its follow-on Simponi – if the company retains rights) and therapeutic proteins (Puregon, Peg Intron etc. – from Schering-Plough’s own acquisition of Organon).

Nevertheless, the degree of molecule type diversification offered by this merger should not be overstated, according to Datamonitor senior analyst John Shortmoor. “The new company will remain entrenched in the small molecule market, accounting for 79.7% of combined 2008 sales, down just -1.9 percentage points from Merck’s pre-merger small molecule focus.”

Figure 4: Merck & Co.’s molecule type focus, percentage of prescription pharma sales (%), 2008

Therapy area analysis Merck’s therapy area focus: cardiovascular, respiratory and infectious diseases face generic threat

As it is evident from Figure 5, in terms of generated revenues for 2008, Merck’s main three areas of focus are cardiovascular, respiratory and infectious diseases. Coupling that with the knowledge that out of the $12bn portfolio that will be exposed to generic competition by 2015, 29% comes from cardiovascular, 36% from respiratory and seven percent from infectious diseases, the need for a drastic deal that will reshape Merck’s future becomes apparent.

Figure 5: Merck’s therapy area focus, 2008

In Figure 6, Datamonitor has analyzed the value of Schering-Plough’s therapy area portfolios and the expected change that these will bring to Merck’s therapeutic focus. A positive change in therapeutic focus means that either an existing portfolio is consolidated or a new one is created. A negative change indicates that despite the addition of new revenues the newly formed portfolio will be of less importance to the new company.

Shift in Merck & Co.’s therapeutic focus (ppt) from the addition of Schering-Plough’s prescription pharma portfolio ($m), 2008

Synergy opportunities: consolidation in CV, integration in respiratory and hepatitis

Schering-Plough possesses three franchise strengths that complement Merck’s strengths, and the resultant infrastructure overlaps will enhance synergy opportunities. First and most obviously, the deal will allow Merck to consolidate 100% of the cholesterol joint venture sales. Second, Schering-Plough’s respiratory franchise will integrate with Merck’s business in this category, which will be especially timely given Singulair’s 2012 patent expiration, and will add pipeline (Asmanex/Foradil and the QAB/Asmanex collaboration with Novartis) as well as marketed products (Nasonex, Asmanex). Third, Schering Plough’s protease inhibitors for hepatitis C (boceprevir in Phase III and SCH-900518 in Phase II) are in an area where Merck has also been active and will allow the new company to advance the most promising single and combination agents out of the two pipelines. The hepatitis C compounds also complement Merck’s strengths in other infectious diseases (antibiotics, HIV).

New portfolio acquisition/consolidation: immunology, respiratory and women’s health offer new opportunities

In addition to the synergy opportunities that will arise from the deal, Merck will also have the opportunity to either acquire new portfolios in areas where it has not traditionally been active or bolster failing or vulnerable franchises. The most prominent new portfolio acquired will be immunology & inflammation, where Remicade is expected to add annual sales in excess of $2bn, Datamonitor cardiovascular lead analyst Dr. Nick Karachalias says. “Furthermore, Merck stands to benefit significantly by acquiring the women’s health and urology portfolio that Schering-Plough built following the purchase of Organon. “In addition to venturing into previously uncharted territories, Merck will be able to rejuvenate its respiratory portfolio, which is expected to take a hit following Singulair’s 2012 patent expiration,” he says.

Portfolio analysis

Immunology and inflammation: a valuable portfolio, but J&J’s involvement will be critical Portfolio value

Merck stands to benefit significantly in the immunology & inflammation arena, as the acquisition of Schering-Plough’s products will bolster a failing portfolio and signify a sharp change in therapy area focus for Merck.

Schering-Plough has exclusive worldwide marketing rights to Remicade (infliximab), a monoclonal antibody targeting tumor necrosis factor (TNF) in all markets outside the US, Japan and portions of the Far East. Centocor (a subsidiary of Johnson & Johnson) brokered this deal in 1998 and as of a renegotiation in December 2007, the agreement now extends beyond 2014. Schering-Plough reported 2008 Remicade sales of $2,118m, so this is a substantial deal on its own. However, the original 1998 deal also includes Remicade ‘follow-on’ molecule Simponi (golimumab), which targets the same cytokine with improved administration and structural characteristics. In 2005, Schering-Plough exercised its rights to develop and market Simponi, which is expected to launch during 2009 and to reach blockbuster status, creating a vital future source of revenue for Merck.

The secret to the success of the anti-TNF biologic products lies not only in the high prices they command, but also in their ability to treat multiple indications. Although Remicade is often referred to as an arthritis drug, it gains a large proportion of its sales from additional indications such as Crohn’s disease and psoriasis. Datamonitor expects its successor Simponi to receive approval in the US and EU not only for rheumatoid arthritis but also ankylosing spondylitis and psoriatic arthritis, all of which are treated by rheumatologists, Dr. Karachalias says. “Schering-Plough’s experience and links with EU rheumatologists will aid Simponi, but Merck’s reputation among rheumatologists is not exemplary.

“The 2004 Vioxx withdrawal has created a distrust of Merck’s marketing tactics among this physician group, although Merck does continue to sell Arcoxia (etoricoxib) in a number of markets outside the US,” he says.   Datamonitor does not believe that the continuing market success of Remicade and Simponi is guaranteed. As the only intravenous anti-TNF on the market, Remicade will always have a niche of patients from all indications who do not want to, or cannot, self inject. But on the whole most patients prefer the ease and freedom of a self-administering subcutaneous injection, which underpins the success of Remicade’s key competitors Enbrel (etanercept) and Humira (adalimumab). Simponi will be the fifth anti-TNF brand on the market, joining a crowded and heavily competitive area with only a variable dosing method (intravenous or subcutaneous injection) to differentiate itself. The dual administration strategy is something that physicians interviewed by Datamonitor have expressed confusion about.

Datamonitor forecasts that Remicade sales will continue to level off and that the launch of an intravenous formulation of Simponi will result in a switching of patients to the newer molecule, to the detriment of Remicade. “What looks like two major blockbusters on paper may result in one blockbuster at the expense of the other, when market dynamics are taken into account,” Dr. Karachalias says.

Johnson & Johnson’s involvement

The ‘reverse takeover’ strategy used in this deal, which essentially means that the smaller Schering-Plough will technically acquire Merck, is thought to be a ploy to ensure a historically lucrative marketing deal is retained by Merck after this merger. However, the outcome is anything but certain.

Four change-of-control provisions are built into the licensing deal with Johnson & Johnson (J&J) and could potentially prevent Merck from gaining the overseas rights to both anti-TNF brands. The ‘reverse takeover’ strategy aims to prevent these clauses from being triggered. However, Datamonitor believes that at least one of these clauses will be breached giving J&J the right to terminate the agreement without compensation (Figure 7).

Figure 7: Ability of the reverse merger agreement to bypass the change of control provisions

Merck’s chief financial officer Peter Kellogg said the matter would be decided by binding arbitration should J&J raise an objection and that Merck would then ‘vigorously defend’ its position. If this turns out to be the case, the arbitrator will likely try to devise a solution that is equitable for all three parties and Datamonitor assume that J&J will obtain some compensation from the merged company.

The prospect of a battle is a dampener on the deal, but the question needs to be asked; why would J&J object? Maintaining Schering-Plough’s expertise and experience in marketing an anti-TNF in the EU must be a consideration for J&J. If it objects to the deal and retains Remicade and Simponi, it will have to find new marketing partners in the EU, something that will surely damage the franchise.

In addition, there is always the possibility that J&J could move to outbid Merck. This would be out of character for J&J, but the possibility cannot be discounted outright. In the past J&J has avoided entering public bidding wars with its pharma or biotech peers. However, the company faces numerous macro and company-specific challenges, so it may break from its traditional ways in pursuing an attractive target in the pharma space.

Women’s health and urology: Schering-Plough will significantly contribute in both marketed and pipeline products

Merck has enjoyed a leading position in the osteoporosis market thanks to its blockbuster oral bisphosphonate Fosamax, which in 2007 had sales of $3,049m. In anticipation of Fosamax’s patent expiry in 2008, Merck put in place an effective lifecycle management strategy, which included the launch of Fosamax Plus D. However, as expected the patent expiry has compromised Merck’s position as a market leader, cutting Fosamax’s sales to $1,553m in 2008.

The two pipeline osteoporosis drugs (MK-0822 and MK-5442) that Merck is developing are unlikely to make up for the revenues lost from the Fosamax franchise. Odanacatib (MK-0822) harbors greater potential as it is the furthest developed cathepsin K inhibitor and is expected to reach the FDA by 2012, ahead of GlaxoSmithKline’s and Ono’s competitor products. In addition, early clinical results have shown that it is safe and well tolerated. If these are confirmed in Phase III trials, Merck can exploit its leading market position and continue its successful osteoporosis franchise. In contrast, Datamonitor expects MK-5442 to launch in a competitive section of the market, currently dominated by Eli Lilly’s Forteo and target a niche population of severe osteoporosis sufferers.

The merger with Schering-Plough will not broaden Merck’s osteoporosis portfolio but it will considerably augment the highly related portfolio of women’s health. In particular, following the acquisition of Organon, Schering Plough has developed a strong market position in the infertility and contraception markets with not only numerous marketed products (Puregon/Follistim, Pregnyl, Ganirelix, NuvaRing) but also a solid pipeline with four products in Phase III development. In addition, Schering-Plough’s considerable dedicated sales force is expected to benefit the promotion of Merck’s HPV vaccine Gardasil, Dr. Karachalias says.

“As expected the addition of the Schering-Plough products will not only consolidate the women’s health and urology portfolio but it will also mark a radical change in Merck’s focus in this therapy area.”

Respiratory: marketed and pipeline portfolios will be bolstered

Schering-Plough has a firm position in the respiratory market, historically focusing on allergic rhinitis with Nasonex and Clarinex as its major brands. Merck’s only, but highly successful, respiratory product is Singulair, an oral non-steroidal anti-inflammatory for the treatment of allergic rhinitis and asthma, will complement Schering-Plough’s franchise nicely. The companies have already collaborated in the allergy market by developing a fixed-dose combination of Singulair and Claritin, an oral antihistamine and Clarinex’ predecessor. However, the compound was rejected by the FDA in April 2008, probably linked to a lack of additional clinical benefit over currently available products.

As the allergic rhinitis market is becoming increasingly genericized and growth opportunities are limited, both companies have broadened their focus to include asthma and chronic obstructive pulmonary disease (COPD). Schering-Plough has already launched Asmanex, a once-daily inhaled corticosteroid (ICS) for the treatment of asthma that contains the same molecule as Nasonex. The company is also collaborating with Novartis to develop Asmanex as part of two fixed-dose ICS/long-acting beta2-agonist (LABA) products. Datamonitor expects these fixed-dose inhalers to achieve combined sales of $3.2bn in 2017. The latter products are unlikely to compete with the Singulair/ICS fixed-dose combination product that Merck is thought to be developing, as they would target slightly different subsets of the patient population.

Both Schering-Plough and Merck are also developing novel anti-inflammatories for the treatment of COPD and severe asthma, targeting CXCR2 and 5-LO, respectively. Given the big unmet need and long history of development failures in these areas as well as possibly synergistic actions or different target populations, Datamonitor does not expect the merger to impact either compound’s progress. 

CNS: focus on the early stage pipeline

In terms of the CNS disease area, the merger will not have a significant impact on Merck’s outlook over the near to mid term. Neither company has a significant presence in the CNS market or a blockbuster CNS brand.

The merger will not offer Merck any synergies in its current core CNS indication of acute migraine therapy. Merck markets Maxalt (rizatriptan) in this indication, which it already planned to supplement with novel product telcagepant (currently in Phase III).

While Schering-Plough does posses several CNS drugs in its late-stage pipeline (Saphris asenapine (schizophrenia), esmirtazipine (insomnia), Sugammadex (anesthetic)), these will be entering mature and highly competitive markets and are not forecast to generate blockbuster revenues. While the combined company will remain underweight in terms of CNS therapy area revenues compared to its peers over the near to mid term, both companies have invested in CNS-focused R&D over the last few years, with a plethora of promising early-stage products providing the potential for significant gains in this therapy area over the long term.

Oncology: Temodar the only noteworthy addition

Oncology has historically been a minor source of revenue for Merck. The company markets a single anticancer drug, Zolinza (vorinostat), which is approved and recently launched for the niche indication of cutaneous T-cell lymphoma. It achieved estimated global sales of just $17m in 2008. Merck also markets Emend (aprepitant), indicated for chemotherapy-induced nausea and vomiting, although this has only achieved modest market penetration in a highly genericized market, with sales of $264m in 2008.

Merck’s acquisition of Schering-Plough will immediately increase the company’s footprint in the oncology market, providing three additional marketed cancer brands. The most lucrative of these is Temodar (temozolomide), which is firmly established as the standard of care for primary brain cancer and achieved global sales of $1bn in 2008. Caelyx (liposomal doxorubicin)-marketed in the EU for breast cancer, ovarian cancer, multiple myeloma and Kaposi’s sarcoma-and the melanoma drug Intron-A (interferon alfa-2b) collectively added further sales of over $500m in 2008.

The acquisition of Schering-Plough bolsters Merck’s narrow portfolio of oncology pipeline agents, although this is unlikely to drive significant future sales growth for the company. Deforolimus, which is in Phase III development for sarcoma, is Merck’s only late-phase oncology pipeline drug. The acquisition will give Merck one extra late-phase pipeline oncology agent, PEG-Intron (pegylated interferon-alfa-2b), which is in pre-registration in the US for melanoma. However, Datamonitor does not forecast this drug to achieve notable market penetration given the toxicity shown in clinical trials, low use of interferon-alfa-2b in melanoma and likely competition from biosimilar versions of interferon alfa-2b. The acquisition will also add a further three Phase II compounds-robatumumab, a CDK inhibitor and a CHK-1 inhibitor-to the two Phase II agents already being developed by Merck, MK-0457 and MK-0646.

Cardiovascular disease: consolidation of the JV and shift towards specialist care

The consolidation of the cholesterol joint venture between Merck and Schering-Plough has been touted as one of the key drivers for the deal. Undoubtedly working closely together on the development and marketing of Zetia (ezetimibe) and Vytorin (ezetimibe and simvastatin) the two companies would have had a chance to assess their compatibility in terms of practices and corporate cultures. Management claimed that 100% ownership of the cholesterol franchise will make for a streamlined decision-making ability and facilitate the creation of future combinations for Zetia.

However, despite the fact that the franchise’s worth is considerable (generating sales of $4.6bn in 2008) it has recently suffered major setbacks. Its growth in the US has been reversed by the well-known controversies surrounding the ENHANCE and SEAS studies. With the medical community focusing on intensive statin therapy for the treatment of dyslipidemia, the possibility that prescriptions for Zetia and Vytorin in the US will fall to the equivalent levels noted in Europe looms large.

In addition, Merck’s cholesterol pipeline has been substantially weakened by the non-approval in the US of Tredaptive (niacin and laropiprant, formerly Cordaptive; approved in Europe but not yet launched due to manufacturing problems). This product could be approved in the US in approximately 2012, after completion of the ongoing outcomes study (HPS2-THRIVE Study) that is being requested by the FDA, Dr. Karachalias says. “The impact of this delay or non-approval is particularly meaningful given Merck’s dependence on the molecule in its planned combination products, MK-0524B [Tredaptive and generic Zocor] and MK-0524C [Tredaptive and generic Lipitor].”

Within the cardiovascular arena, Merck’s hypertension portfolio (Cozaar and Hyzaar) also holds great importance with sales approaching $3.6bn in 2008. However, patent expiries will all but eliminate this revenue stream from 2010 onwards. These imminent patent expiries, in combination with the challenges faced by the cholesterol franchise have left Merck in a highly exposed position with regards to its cardiovascular products.

“The merger with Schering-Plough is unlikely to alleviate the problems that Merck is facing since the only marketed cardiovascular product [apart from their share of the cholesterol joint venture] that they are bringing to the deal is Integrilin (eptifibatide). While the latter is leading its class in terms of sales, it is nowhere near as successful as Merck’s products,” Dr. Karachalias says.

The situation is reversed in the pipeline with Schering-Plough having the most promising late-stage agents in the form of its thrombin receptor antagonist SCH-530348. The agent, that has been fast-tracked by the FDA is nearing completion of Phase III trials and is expected to be submitted to the FDA in 2010 or 2011. In Phase II trials, SCH 530348 showed a trend toward fewer ischemic events without increasing bleeding when added to standard antiplatelet therapy with aspirin and clopidogrel in patients undergoing PCI (percutaneous coronary intervention). If Phase III trials confirm that the drug does actually reduce ischemic events without increasing bleeding, it will be a surefire winner. On the other hand, Merck’s late-stage pipeline relies heavily on further combinations of Tredaptive and anacetrapib, a cholesterol ester transfer protein (CETP) inhibitor in development in a class tainted by the safety concerns surrounding Pfizer’s late-stage failure, torcetrapib.

Even if Schering-Plough’s late-stage pipeline fulfils its commercial potential it is unlikely that it will be able to cover the gap left by the soon to be defunct hypertension franchise and the diminishing sales of Zetia and Vytorin. Hence Merck’s original strong position in the cardiovascular arena will be diluted after the deal. In addition, the resulting company is expected to change its focus in the cardiovascular arena from primary care indications to indications mainly covered by specialists.

Diabetes: Januvia remains the sole focus

Merck has performed an impressive entry in the diabetes therapy area leapfrogging Novartis to bring the first, and still only, DPP-4 (dipeptidyl peptidase-4) inhibitor in the market. With sales of $1.4bn in 2008, two years after launch, Januvia (sitagliptin) has had the second most successful launch in the cardiovascular and metabolic diseases arena, behind only Pfizer’s mega-blockbuster Lipitor. Merck has already launched a combination with metformin (Janumet) and is developing a combination with pioglitazone (MK-0431c). The FDA changed the requirements for approval of antidiabetic medications late in 2008, raising the bar in terms of proving cardiovascular safety and at the same time ensuring Januvia enjoys an even longer period in the market without any true competitors, Dr. Karachalias says.

“Schering-Plough has virtually nothing to offer in the diabetes arena both in terms of marketed products and in terms of developmental pipeline. Inevitably, Merck’s focus in the therapy will be somewhat diluted post-merger.”

Infectious diseases: Merck focuses on vaccines, Schering-Plough on hepatitis

Vaccines

Merck is the second-biggest player in the vaccines market, achieving vaccine franchise sales of just under $4.1bn worldwide (including 50% of joint venture sales from SP-MSD). The company’s recent strong vaccine sales growth was mainly fuelled by the launch and rapid uptake of the human papillomavirus (HPV) vaccine Gardasil. While recent growth has stalled a bit, cross-marketing opportunities with Schering-Plough’s strong Women’s health portfolio may support a re-acceleration.

Vaccines now play a crucial role for Merck’s overall pharmaceutical revenues, with the share of vaccines in Merck’s global pharmaceutical sales increasing from 6.2% in 2004 to 21.3% in 2008. The company’s performance last year has been dented by ongoing manufacturing issues, interrupting supply of six of the company’s vaccines, as well as by the slower than expected uptake of Gardasil. Merck’s biggest strength is the company’s innovative portfolio of novel vaccines, including Gardasil, the rotavirus vaccine RotaTeq and the shingles vaccine Zostavax, all of which were launched in 2006 at premium prices. While the failure or discontinuation of several pipeline candidates has thinned Merck’s vaccine pipeline considerably, it will be strengthened by Schering-Plough’s Nobilon unit; a Dutch vaccine development subsidiary spun out of Organon in 2003. Despite this, the merger will inevitably dilute the significance of vaccines to Merck’s overall sales performance.

Antifungal and antibacterials

Merck is a significant player in the market for hospital infections with two first-in-class drugs, Primaxin, the first carbapenem (launched in 1985 for serious bacterial infections), and Cancidas, an intravenous antifungal drug, the first echinocandin (launched in 2001). Invanz, the first next-generation carbapenem, was approved in November 2001. These three drugs enjoyed combined 2008 sales of $1.6bn. Merck’s strong franchise in this sector may give a boost to the commercial success of Schering-Plough’s oral antifungal drug Noxafil, a product with disappointing sales since its first launch in 2005 (2008 sales: $149m). Interestingly, Pfizer is developing a combination product of a triazole (Noxafil’s drug class) and an echinocandin; an approach that is now open to Merck as well.

HIV

In the HIV market, Merck has one marketed antiretroviral and a strong pipeline which will make it a fierce competitor. The company launched Isentress (raltegravir), a first-in-class integrase inhibitor in 2007 and has an active early-stage pipeline. Although Schering-Plough has no marketed antiretrovirals, the company has a CCR5 inhibitor (vicroviroc) in Phase III development. Isentress is already proving a commercial success with worldwide sales of $361m in 2008, forecast to grow to $1.5bn by 2013. Vicriviroc’s outlook, however, is not nearly as bright. Belonging to the same class as Pfizer’s commercial flop Selzentri/Celsentri (maraviroc), it suffers from an efficacy limited to a subset of patients. Although if vicriviroc is successfully approved, there is an attractive opportunity for Merck/Schering-Plough to trial and market Isentress and vicriviroc use in combination, strengthening the combined entity’s presence in the HIV market.

Hepatitis C

In the hepatitis c virus (HCV) arena the situation is somewhat reversed. In this commercially very attractive area, Merck currently has no marketed HCV products, but has a HCV protease inhibitor (MK-7009) in Phase II development. Schering-Plough on the other hand is a well-established leader in the HCV market, with marketed pegylated interferon (Peg Intron) and ribavirin (Rebetol) therapies achieving combined sales of $1.2bn in 2008. The developmental protease inhibitor boceprevir in Phase III and its follow-up compound SCH900518 in Phase II are among the most eagerly anticipated new HCV drugs with large sales potential. The new combined entity will therefore probably prioritize its research efforts in favor of either MK-7009 or SCH-900518 as boceprevir’s follow-up protease inhibitor.

]]> http://about.datamonitor.com/media/archives/2041/feed 0 http://about.datamonitor.com/media/archives/1127 http://about.datamonitor.com/media/archives/1127#comments Fri, 28 Nov 2008 17:27:19 +0000 media@datamonitor.com http://about.datamonitor.com/media/?p=1127 London - Cytotoxic therapy, or chemotherapy as it is commonly known, has been the cornerstone of cancer treatment for many years and involves the use of drugs that are toxic to all cells – including those that are perfectly healthy. Whilst relatively effective, this leads to the unpleasant side effects commonly associated with cytotoxic treatment, such as vomiting, nausea, alopecia and fatigue. Despite this, and the rise in prominence of targeted therapies, cytotoxics are used in almost all cancer types and as a result of this high volume of sales, make up the second largest selling class of cancer therapeutics. However, given the relative maturity of this therapeutic class, generics companies remain keen to emulate the success of several cytotoxic brands that have attained blockbuster sales (more than $1 billion) over the years, and according to independent market analyst Datamonitor*, generic incursion will cause a decline in total cytotoxic market value after it reaches a peak of $16.5bn** in 2013.

Cytotoxic therapies are the second largest class of cancer therapeutics

An estimated 11 million people are affected with cancer worldwide; a number that is likely to rise in the future given the ageing nature of the global population. Lung, breast, prostate and colorectal cancer (CRC) are the four most common types of cancer, accounting for around 40 percent of the total. Cytotoxic agents help kill cancer cells or stop them from multiplying, making them applicable in almost every cancer type. Unfortunately, they also attack healthy cells, which leads to the aforementioned side effects. However, cytotoxic treatment regimes remain effective, and for many years cytotoxic therapy has been used to treat cancer either alone, or in combination with other treatment types such as radiotherapy.

Sales of the 25 cytotoxic therapy cancer brands that are currently available in the seven major markets (7MM) in 2007 totaled $10 billion, says Datamonitor oncology analyst Chandni Surti. “Even though targeted therapies are becoming more and more popular, cytotoxics remain the backbone of cancer treatment.

“Eleven of the 25 brands are approved for use in breast cancer, the incidence of which is estimated to reach 455,315 in the seven major markets in 2008. As the incidence of cancer continues to rise with the ageing population, the use of effective cytotoxic therapies is likely to remain strong,” she says.

Sanofi-Aventis leads the cytotoxic therapy cancer brand market

Sanofi-Aventis markets four out of the 25 cytotoxic therapy cancer brands, Eloxatin (oxaliplatin), Taxotere (docetaxel), Gliadel (carmustine) and TS-1 (tegafur + gimeracil + oteracil), which it co-develops with Taiho, making it the current market leader. Taken together, Eloxatin and Taxotere are approved for use in the four major cancer types, making them the top two sellers with combined sales of $3.8bn in 2007.   Taxotere and TS-1 are the leading cytotoxic therapy cancer brands by number of approved indications.

Taxotere is approved for use in six cancer types; breast cancer, gastrointestinal cancers, endometrial cancer, non small cell lung cancer (NSCLC), ovarian cancer, and squamous cell carcinoma of the head and neck (SCCHN). TS-1 is currently only approved in Japan, where it is used to treat breast cancer, CRC, gastrointestinal cancers, NSCLC, pancreatic cancer and SCCHN. TS-1 is forecast to launch for gastric cancer in the US in 2010 and EU in 2012.   However, Ms. Surti says: “patent expiries for these leading cytotoxic brands, Eloxatin in 2007 (EU) and Taxotere in 2010 (US & EU), are likely to have a significant impact on Sanofi-Aventis’s performance in the broader oncology market.”  

Patent expiry threatens sales of best-seller

Sanofi-Aventis’s Eloxatin is a DNA-interactive cytotoxic agent that is used extensively for CRC in the US, EU and Japan. Sales of Eloxatin generated $2bn in the seven major markets in 2007, making it the best-selling cytotoxic therapy cancer brand ahead of Taxotere ($1.8bn) and Eli Lilly’s Gemzar (gemcitabine; $1.2bn). Given the sheer size of the CRC market – in 2007 CRC affected an estimated 470,000 people in the 7MM – Eloxatin’s commercial success is not surprising.

However, patent expiry, which has already occurred in the EU, is the biggest threat to Eloxatin sales. Eloxatin’s patent is set to expire in Japan in May 2013 and the US in August 2016. Higher generic erosion rates are applicable in the US compared to the remaining major markets, implying a greater dent in brand sales. In fact, the impact of generics is expected to reduce the cytotoxic therapy brands’ overall US market share from 56% in 2007 to 31% in 2017. Despite this, Eloxatin is forecast to remain the best-selling cytotoxic therapy cancer brand in the 7MM, achieving sales of $2.7bn in 2017.  

Two newer cytotoxic cancer brands compete for market share

Eisai/Johnson & Johnson’s Dacogen (decitabine) and Celgene/Nippon Shinyaku’s Vidaza (azacitidine) are antimetabolite cytotoxic agents approved in the US for myelodysplastic syndromes (MDS), a type of blood cancer that can progress to leukemia. Following its launch in 2006, Dacogen has become a major competitive threat to Vidaza, which was launched earlier in 2004. Dacogen made $137m in 2007, allowing it to quickly catch up with the sales of Vidaza ($140m**).

Datamonitor forecasts Dacogen sales to grow in line with Vidaza over the forecast period of 2007 to 2017, Ms. Surti says. “Both hypomethylating agents seek EU approval for use in MDS and Datamonitor forecasts their launch to occur around the same time in 2009. The increase in sales forecast for Dacogen ($1.3bn) and Vidaza ($1.2bn) helps boost sales of the total cytotoxic therapy cancer brand market to $14.9bn in 2017.”

Not all women who experience menopausal symptoms seek treatment

In spite of its certainty, there exists great variation in women’s experiences of the menopause; while some women do not encounter any symptoms during menopause or only have a few symptoms, others develop severe and distressing symptoms which significantly decrease their quality of life and lead them to seek medical treatment.

Of the wide range of symptoms that women going through the menopause may experience, hot flashes and night sweats (also known as vasomotor symptoms) are the most common, affecting approximately 75% of women aged over 50 years(2). Such symptoms can cause extreme anxiety for sufferers in work or social situations.

Despite the large proportion of women who experience symptoms of the menopause, not all will seek treatment. On the basis of a large, US-based study reporting that approximately 60% of symptomatic women consult a healthcare provider for help with their symptoms(3), Datamonitor estimates that over 68 million women will seek treatment for menopausal symptoms in the seven major markets (7MM)** in 2008. A number of factors could prevent a woman from receiving drug treatment says Datamonitor central nervous system (CNS) analyst Charlotte Mackey. “These include symptoms not being severe enough to impact on quality of life and prompt treatment-seeking behaviour, a physician’s decision that symptoms are not severe enough to warrant treatment, a lack of patient knowledge regarding the available drug treatments, as well as patients’ reluctance to interfere with what they consider to be a natural process,” she says.

Safety fears over HRT have fuelled demand for non-hormonal treatment options

Hormone replacement therapy (HRT) serves to increase a woman’s levels of the female hormones oestrogen and progestogen, which the ovaries gradually stop producing as she enters the menopause. Available treatment options include both estrogen only and estrogen and progestogen combination therapies.

HRT has formed the mainstay of treatment for menopausal symptoms for almost 60 years. Such treatments are highly effective and have been reported to reduce hot flashes and their frequency in postmenopausal women by 70-90%(4,5). However, since 2002 large studies have generated much controversy and concern over the safety of HRT. Arguably the most influential of these was the Women’s Health Initiative (WHI) trials(6), which linked use of HRT to an increased risk of breast cancer and certain cardiovascular diseases. The publication of this and similar studies substantially reduced physician and patient confidence in HRT and led to high rates of treatment discontinuation. As a result, sales of HRT products fell sharply and demand increased for safe and effective non-hormonal treatment options. Key opinion leaders interviewed by Datamonitor agree that six years after the initial publication of the WHI trial data, alarm raised by media reporting continues to generate mistrust of HRT for menopausal symptoms among patients, Ms. Mackey says.

“The key opportunity for non-hormonal treatments of menopausal symptoms lies in capturing sales that have been lost by the hormonal treatments since 2002. On this basis, Datamonitor estimates that non-hormonal treatments to have revenue potential of at least $535million across the US and 5EU markets in 2007,” she says.

In order to be widely prescribed, the ideal non-hormonal treatment for symptoms of the menopause must possess comparable efficacy to HRT, minimal side effects, and be able to be safely co-administered with commonly prescribed drugs. “Crucially, such a drug must carry no increased risk of breast cancer or cardiovascular problems,” she adds.

Non-hormonal drugs in development for menopausal symptoms fail to match the efficacy of HRT

Despite increased interest in non-hormonal treatment options since the 2002 publication of the WHI, few non-hormonal drugs are presently in development for the treatment of menopausal symptoms; there are only four such drugs currently in clinical trials compared to the twelve hormonal treatments in development. The current non-hormonal pipeline is dominated by reformulations of centrally acting drugs, principally antidepressants, which have historically been the most extensively studied pharmacological alternatives to HRT. The remainder of the non-hormonal pipeline comprises a reformulation of a marketed anticonvulsant drug. Although regulatory approval of antidepressants for menopausal symptoms may represent a benefit to the estimated 25% of women undergoing the menopausal transition who experience depressive symptoms, Ms. Mackey says. “Ultimately, however, Datamonitor believes that their dominance renders the non-hormonal development pipeline weak and lacking in innovation.”

As well as being few in number, available clinical trial data demonstrates that developmental non-hormonal drugs do not match the effectiveness of conventional hormonal treatments in reducing hot flashes and night sweats.

For example, at 12 weeks, 100mg of Wyeth’s Pristiq (desvenlafaxine) has been found to reduce hot flashes by 64%. By comparison, the market leading hormonal treatment-Premarin (conjugated equine estrogen-CEE), which is also marketed by Wyeth- reduces the frequency of hot flashes by 94% at 12 weeks, Ms. Mackey says. “Although presently experiencing regulatory delays, Datamonitor believes Pristiq could by the first non-hormonal treatment to enter the menopause market in early 2009.

“Key advantages of Pristiq include its rapid onset of action and ability to improve sleep quality and mood while not negatively effecting sexual function,” she says.

Prescribing of non-hormonals will be greatest among patients in whom hormonal therapy is not appropriate

At first glance, the future for non-hormonals appears bleak, with future sales revenue unlikely to rival that of HRT products, which generated combined sales of $1.57 billion**. Nevertheless, Datamonitor believes that they will be welcomed as useful additional treatment options by doctors for the estimated 115 million women in the 7MM who are eligible for drug intervention for their troublesome menopausal symptoms, Ms. Mackey says.

“In particular, it is expected that demand for a safe non-hormonal treatment for symptoms of the menopause will be high among key patient groups for whom HRT is not a suitable treatment option. These core groups include breast cancer patients and survivors of breast cancer as well as women with certain cardiovascular disorders.

“Furthermore, highly symptomatic women who do not wish to receive HRT due to profound safety concerns, and mildly symptomatic women who do not believe their symptoms are severe enough to warrant HRT use also represent potential patients for companies developing of non-hormonal treatments for menopausal symptoms,” she says.

Targeted therapies are the top-selling therapy class in the oncology market

In 1997, Biogen Idec/Genentech/Roche/Zenyaku Kogyo’s Rituxan (rituximab) – a monoclonal antibody used to treat non-Hodgkin’s lymphoma – became the first targeted cancer drug to reach the market. Since Rituxan’s launch, researchers have elucidated more of the mechanisms driving cancer and have identified a variety of potential drug targets, resulting in a proliferation of the number of marketed targeted therapies. Currently, 24 different targeted cancer therapies are commercially available in at least one of the seven major markets**.

Targeted therapies (used either alone or in combination with cytotoxic therapies) have led to improvements in treatment outcomes across many tumor types, allowing some of them to become the standard-of-care in their approved indications. The resulting high level of uptake, coupled with their premium prices, make targeted therapies the leading therapy class in the oncology market in terms of sales. According to Datamonitor’s report, global sales of targeted therapies totaled $17.3 billion in 2007, growing a staggering 33% in just a year, says Datamonitor oncology analyst Dr. Tom Gray. “A number of targeted therapy cancer brands have achieved blockbuster sales, and have become important sources of revenue for some of the leading pharmaceutical and biotech companies.”

Not surprisingly, an increasing number of companies have turned their attention to the cancer targeted therapy market, undoubtedly trying to emulate the blockbuster status that several brands have already achieved. Since 2005, 10 new branded targeted drugs have entered the market. With more pipeline drugs looking likely to gain approval in the near future, the market is set to become even more competitive and fragmented.

Use in new tumor types and treatment settings will drive high sales growth

Some drug targets play a role in several different types of cancer, which means that targeted therapies have considerable potential for expansion across different indications. For example, Genentech/Roche/Chugai’s Avastin (bevacizumab), a monoclonal antibody that prevents the growth of new blood vessels to a tumor, is already approved for four different solid tumors -colorectal cancer, lung cancer, kidney cancer and breast cancer. Given the persistent level of unmet need across a number of tumor types, Datamonitor anticipates further indication expansions for a number of marketed targeted therapies in the next five years.

Several other factors will drive continuing market penetration by the targeted therapy cancer brands, including growing physician awareness of recently launched brands, use in earlier lines of therapy and different treatment settings such as the adjuvant and maintenance settings.

Datamonitor forecasts some of the key targeted therapies to achieve high sales growth between 2008 and 2017, driven by these factors. Combined sales of the targeted therapy brands will grow at a compound annual growth rate (CAGR) of 11%, reaching over $42 billion in the seven major markets by 2017. As a result, eight new targeted therapy cancer brands will achieve blockbuster status by 2017, including Pfizer’s Sutent (sunitinib), OSI/Genentech/Roche/Chugai’s Tarceva (erlotinib) and Bayer Schering/Onyx’s Nexavar (sorafenib).

Cost-conservativeness is the one of the biggest threats facing the targeted therapy cancer brands

Although the targeted therapies cancer brands market will be one of the biggest areas of growth in the pharmaceutical and biotech industry over the coming years, it will face a number of significant threats. The rising incidence of cancer and growing use of targeted therapies, coupled with their high cost, will put healthcare budgets under increasing strain. In more cost-conservative markets, this has already led to restricted use of certain brands. In the UK for example, the National Institute for Health and Clinical Excellence (NICE) has recommended against use of a number of targeted cancer drugs for National Health Service (NHS) patients on the grounds of low cost-effectiveness, Dr. Gray says. “If other healthcare systems follow the UK’s example, which looks an increasing possibility, this could significantly dampen growth of the market and will ultimately impact the effectiveness of treatment available to patients.”

Additionally, a number of brands will have to contend with the threat of patent expiry by 2017, including Novartis’ Gleevec (imatinib) and Takeda/ Johnson & Johnson’s Velcade (bortezomib). Similarly, Dr. Gray says, “if legislation allowing biosimilar (biologic follow-on products) monoclonal antibodies goes ahead, sales of certain other brands could also suffer.”

Genentech and Roche look likely to consolidate their leading position

In the rapidly evolving competitive landscape of the targeted therapy cancer brands market, the current market leaders – Genentech and Roche – look well-placed to consolidate their position. The companies’ oncology portfolio includes the three leading brands in 2007 -Rituxan, Herceptin (trastuzumab) and Avastin, Dr. Gray says. “Datamonitor believes these brands will remain the three leading targeted therapy cancer brands in 2017, achieving combined sales of over $23 billion in the seven major markets.

“While Genentech and Roche are set to dominate the market between 2008 and 2017, the high growth achieved by a number of different brands will make targeted cancer therapies an increasingly important revenue source for several other companies as well,” he says.

Bleak prognosis for advanced stage NSCLC patients

In 2008, an estimated 360,000 people in the seven major markets** will be diagnosed with NSCLC. Currently, screening programs are not part of standard clinical practice to routinely detect early development of the disease. As NSCLC is often asymptomatic until it has progressed, the majority of patients will be diagnosed with advanced stage of the disease where treatment has a palliative, rather than curative intent.

The primary risk factor for NSCLC is smoking, which is responsible for more than 85% of all lung cancer-related deaths. The risk for lung cancer increases with the number of cigarettes smoked per day and the number of years spent smoking.

Although the peak of the lung cancer epidemic seems to have passed in the US, Western and Northern Europe, Asia is expected to face a major epidemic in the future, says Datamonitor oncology analyst Deyna Chatzimichalaki. “While the incidence of smoking is decreasing in Western countries, it is increasing in Asia, with more smokers dying and more children taking up smoking.”

Treatment options are limite

Despite recent advances and the increased role of molecular targeted therapies in treatment, NSCLC remains a disease of poor prognosis, with few treatment options available for patients with advanced disease. Surgery can be curative in earlier stages of the disease but patients’ older age, associated co-morbidities or advanced disease stage often prohibit its use. As a result, it is estimated that only about 20% of all patients are considered surgical candidates at presentation. Moreover, more than half of patients die of tumor progression after complete surgical resection.

In the management of advanced disease, which is largely based on conventional chemotherapy, the role of molecular targeted therapies is still limited. Genentech/Roche’s Avastin is the only targeted therapy to receive approval for the first-line treatment of advanced disease, extending patient median survival when used in combination with chemotherapy, Miss Chatzimichalaki says. “However, due to safety concerns, not all patients are eligible for treatment with Avastin.

“Similarly, other targeted therapies such as Tarceva (OSI Pharmaceuticals/Genentech//Roche/Chugai) and Iressa (AstraZeneca) seem to be more effective only in certain patient populations, thus limiting the number of patients who can truly benefit from treatment,” she says.

Molecular targeted therapies are the focus of development

The high level of unmet need in the treatment of the disease and the large patient population are, however, driving extensive R&D activity in the field of NSCLC. Currently there are over 100 drugs in development, more than half of which are molecular targeted therapies.

Many researchers are of the opinion that an efficacy plateau has been reached with conventional chemotherapy in the treatment of NSCLC. Therefore, most drug developers are investing their resources in the development of novel molecular targeted therapies, in an attempt to improve on the activity and toxicity of chemotherapy. Molecular targeted therapies are the focus of development, accounting for 60% of the entire NSCLC pipeline.

Due to the clinical and molecular heterogeneity of NSCLC, improvements in patient outcomes are likely to arise from targeting multiple signaling pathways, including angiogenesis and apoptosis, Miss Chatzimichalaki says. “This theory seems to be reflected in the NSCLC pipeline, where the majority of molecular targeted therapies are multi-targeted inhibitors.”

Individualized medicine may help improve patient outcomes

It is becoming increasingly clear that NSCLC is a highly heterogeneous disease. This leads to variations in the response to treatment, with survival and sensitivity often being restricted to subgroups of patients. Unfortunately, increasing evidence suggests that new drugs may struggle to improve patient outcomes in unselected patient populations.

In order to maximize the therapeutic potential of novel drugs, developers are currently investigating the field of biomarkers. Biomarkers, when positive, are thought to be predictive for response to treatment, although their correlation with prognosis and survival is less well-defined, Miss Chatzimichalaki says. “Their use can help in the selection of patients who have more chances of responding to a particular therapy. Biomarkers may also allow, for example, for the selection of patients who are most likely to recur after surgery and should therefore require post-operative therapy

“This type of individualized medicine – tailoring therapy to patients’ clinical or molecular characteristics – may help improve survival for NSCLC patients in the future,” she says.

Three of the four big cancers commonly metastasize to the bone

In 2008, an estimated 225,174 people in the seven major markets** will be diagnosed with bone metastases from cancers of the breast, lung, prostate, thyroid and the main form (85%) of kidney cancer, renal cell carcinoma.

The outlook for patients whose cancer has metastasized to the bone is grim: a third of advanced lung cancer patients will develop bone metastases and only five percent of these patients will live beyond five years after diagnosis. Almost 70% of advanced breast and prostate cancer patients develop bone metastases respectively, and only around a quarter of these patients are still alive after five years.

Patients with bone metastases are often affected with skeletal complications such as bone pain, skeletal fractures, hypercalcemia and spinal cord compression (where the tumor presses against the spinal cord), says Datamonitor cancer analyst Chandni Surti. “Although bisphosphonates reduce the risk of skeletal complications by up to 50%, they do not improve survival in the majority of advanced cancer patients.”

Prevention is better than cure

For over 18 years, bisphosphonates (pamidronate and clodronate) have been used to treat bone metastases. Bone metastases alter the normal bone remodeling process to cause excessive bone breakdown or bone formation. Bisphosphonates work by causing programmed cell death (apoptosis) of the cells actively involved in bone breakdown (osteoclasts). Roche/GlaxoSmithKline’s Bondronat (ibandronate) and Novartis’ Zometa (zoledronate) are newer and more potent bisphosphonates. These third-generation agents are now being investigated for their potential to prevent bone metastases in early stage cancer patients – a move that could completely transform the management of this adverse complication.

Unfortunately physicians are currently unable to identify which cancer patients will develop bone metastases. Furthermore, it is difficult to predict which bone metastases patients are at a greater risk of developing skeletal complications, Ms Surti says. “A highly unmet need would be addressed if bisphosphonate use can prevent bone metastases in early stage cancer patients. This would not only translate into a significant survival benefit, but also improve the quality of life of patients.”

In one small pilot study of 40 patients, Zometa prevented the development of bone metastases in 60% of patients compared to 10% of patients who received no bisphosphonate therapy at 12 months. Zometa and other bisphosphonates are currently undergoing further clinical investigation to fully determine their potential in preventing bone metastases.

Can newer agents break into the bone metastases market?

Two of the four bisphosphonates approved for use in bone metastases have already undergone patent expiry (pamidronate and clodronate), and patent expiries across the seven major markets** are also approaching for Bondronat in 2011 and Zometa in 2012 respectively.

It may be that the availability of cheaper generic bisphosphonates poses a threat to newer, more costly agents in development for bone metastases, Ms Surti says. “On the other hand, new agents could see rapid uptake if they demonstrate higher efficacy and/or safety profiles compared to bisphosphonates.

“It is likely that the approaching patent expiries will present an opportunity for emerging agents to enter the bone metastases market and possibly spur some further interest amongst drug developers,” she says.

Amgen/Daiichi Sankyo’s denosumab shows promise

At first look the bone metastases drug development pipeline may seem under-sized for a deadly metastases with a relatively large patient population that spans a variety of major cancer types. However, the presence of effective agents from big pharma companies such as Novartis and Roche/GlaxoSmithKline has likely reduced market interest for new drug developers. But while bisphosphonates dominate bone metastases treatment, there is still much scope left to improve treatment outcomes.

One promising agent, denosumab is currently in Phase III development for bone metastases. Denosumab is a new targeted therapy being developed by Amgen in the EU and US and Daiichi Sankyo in Japan. It is a fully human monoclonal antibody that selectively targets a major mediator of bone breakdown, RANKL (receptor activator of nuclear κB ligand). In addition to its more targeted mechanism of action, some physicians state that denosumab’s subcutaneous route of administration will prove advantageous over intravenous bisphosphonates, making it more convenient for patients as well as medical staff, Ms Surti says.

“The ongoing Phase III trials are investigating denosumab’s ability to reduce skeletal related events when compared to the intravenous bisphosphonate Zometa. Denosumab has already shown promise in Phase II bone metastases trials in breast, prostate, multiple myeloma and other advanced cancer patients.”