TOP SELLING DRUGS
|Prevnar||amily pneumoccal vaccine||$4,464||12%|
Sales from biopharmaceutical products made up around 92% of Pfizer’s total revenues in 2014 and the pharma giant recorded direct product sales of more than $1 billion for each of 10 biopharmaceutical products in the year under review as well. These products represented 54% of total revenues from biopharmaceutical products.
In all, global biopharma revenues dropped to $45.7 billion, a decrease of 5%, partly due to negative foreign exchange rates, which impacted revenues by $857 million, or 2%.
Geographically, in the U.S., biopharma sales dipped 8% to $1.4 billion, reflecting, among other things, according to the company, lower alliance revenues, primarily due to Enbrel, reflecting the expiration of the co-promotion term of the collaboration agreement in October 2013—approximately $1.3 billion in 2014—and Spiriva, reflecting the final-year terms, and termination on April 29, 2014, of the co-promotion collaboration, which, per the terms of the collaboration agreement, resulted in a decline of Pfizer’s share of Spiriva revenue—approximately $395 million in 2014.
Lower revenues were recorded for Detrol LA ($321 million) and Celebrex ($198 million) due to loss of exclusivity and lower revenues from Lipitor ($191 million), which were partially offset by the strong performance of Lyrica ($352 million) as well as the growth of Prevnar, Xeljanz, Eliquis, Xalkori and Inlyta, which collectively, accounted for about $760 million.
Pfizer’s international markets, which accounted for 62% of the firm’s total biopharma revenues, decreased $764 million, or 3% also due to the unfavorable impact of foreign exchange of approximately $857 million, or 3%. However, higher revenues were recorded for Lipitor in China, Lyrica in developed markets, Enbrel outside Canada, and the performance of recently launched products Eliquis, Xalkori, and Inlyta, which collectively added approximately $941 million in 2014. Prevenar and Xeljanz also grew (approximately $228 million).
These positive growth factors were partially offset by the operational decline of certain products, including Norvasc, Zithromax, Xalabrands, Detrol, Effexor and Chantix/Champix, in developed international markets, and Sutent in China (collectively, approximately $320 million in 2014). Lower revenues were also reported as a result of the loss of exclusivity and subsequent multi-source generic competition for Viagra in most major European markets and Lyrica in Canada (collectively, approximately $248 million in 2014); lower alliance revenues (approximately $218 million in 2014, excluding Eliquis), primarily due to the expiration of the co-promotion term of the collaboration agreement for Enbrel in Canada, the ongoing termination of the Spiriva collaboration agreement in certain countries, the loss of exclusivity for Aricept in Canada and the termination of the co-promotion agreement for Aricept in Japan in December 2012; and the continued erosion of branded Lipitor in most international developed markets (approximately $197 million in 2014).
On the R&D front, Pfizer’s expenses increased 26% compared to the previous year due mostly to a charge associated with a collaboration with Merck to jointly develop and commercialize an investigational anti-PD-L1 antibody currently in development as a potential treatment for multiple types of cancer. The charge includes an $850 million upfront cash payment as well as an additional $309 million, reflecting the estimated fair value of certain co-promotion rights for Xalkori given to Merck.
Additional R&D expenditures include ongoing Phase 3 programs for certain new drug candidates, including Pfizer’s PCSK9 inhibitor, and ertugliflozin, also in collaboration with Merck; investments in Ibrance (palbociclib) and Pfizer’s vaccines portfolio, including Trumenba, as well as potential new indications for previously approved products, especially for Xeljanz.
Hospira Acquisition. Pfizer entered into a definitive merger agreement to acquire Hospira, the world’s leading provider of injectable drugs and infusion technologies and a global leader in biosimilars, for approximately $17 billion. The global market value for both generic sterile injectables and biosimilars is expected to grow, estimated to be $70 billion and $20 billion in 2020, respectively. The transaction, subject to customary closing conditions, is expected to close in 2H15.
The acquisition expands Pfizer’s portfolio of sterile injectable pharmaceuticals with Hospira’s generic sterile injectables product line, including acute care and oncology injectables, with a number of differentiated presentations. Pfizer’s branded sterile injectables include anti-infectives, anti-inflammatories and cytotoxics. Pfizer also plans to employ its commercial capabilities, global scale, and scientific and development capabilities to significantly expand Hospira’s portfolio of marketed biosimilars, including Retacrit to treat anemia associated with chemotherapy, and Nivestim, a biosimilar version of filgrastim (GCSF),
Collaboration with OPKO Health. On December 13, 2014, Pfizer entered into a collaborative agreement with OPKO to develop and commercialize OPKO’s long-acting human growth hormone (hGH-CTP) for the treatment of growth hormone deficiency (GHD) in adults and children, as well as for the treatment of growth failure in children born small for gestational age (SGA) who fail to show catch-up growth by two years of age. hGH-CTP has the potential to reduce the required dosing frequency of human growth hormone to a single weekly injection from the current standard of one injection per day.
Acquisition of Marketed Vaccines Business of Baxter International. On December 1, 2014 Pfizer completed the acquisition of Baxter’s portfolio of marketed vaccines for $635 million. The portfolio that was acquired consists of NeisVac-C and FSME-IMMUN/TicoVac. NeisVac-C is a vaccine that helps protect against meningitis caused by group C meningococcal meningitis and FSME-IMMUN/TicoVac is a vaccine that helps protect against tick-borne encephalitis. As part of the agreement, Pfizer also acquired a portion of Baxter’s facility in Orth, Austria, where these vaccines are manufactured.
Collaboration with Merck KGaA. On November 17, 2014, Pfizer formed a collaboration with Merck to jointly develop and commercialize avelumab, an investigational anti-PD-L1 antibody currently in development as a potential treatment for multiple types of cancer. Pfizer and Merck will explore the therapeutic potential of this novel anti-PD-L1 antibody as a single agent as well as in various combinations with it and Merck’s broad portfolio of approved and investigational oncology therapies. Both companies will collaborate on up to 20 high priority immuno-oncology clinical development programs expected to commence in 2015. These clinical development programs include six trials (Phase II or III) that could be pivotal for potential product registrations. Pfizer and Merck will also combine resources and expertise to advance Pfizer’s anti-PD-1 antibody into Phase I trials.
As part of the deal, Pfizer made an upfront payment of $850 million to Merck, who is also eligible to receive regulatory and commercial milestones of as much as $2 billion. Both companies will jointly fund all development and commercialization costs, and split equally any profits generated from selling any anti-PD-L1 or anti-PD-1 products from this collaboration. Also, as part of the agreement, Pfizer gave Merck certain co-promotion rights for Xalkori in the U.S. and several other key markets. The deal cost Pfizer $1.2 billion of research and development expenses.
Acquisition of InnoPharma. On September 24, 2014, Pfizer completed the acquisition of InnoPharma, a privately-held pharmaceutical development company, for $225 million.
License from Cellectis SA. On June 18, 2014, Pfizer entered into a global arrangement with Cellectis to develop Chimeric Antigen Receptor T-cell immunotherapies in the field of oncology directed at select cellular surface antigen targets. Pfizer made an upfront payment of $80 million to Cellectis and will also fund R&D costs associated with 15 Pfizer-selected targets and, for the benefit of Cellectis, a portion of the R&D costs associated with four Cellectis-selected targets within the arrangement. Cellectis is eligible to receive development, regulatory and commercial milestone payments of up to $185 million per product that results from the Pfizer-selected targets. Cellectis is also eligible to receive royalties on sales of any products commercialized by Pfizer.
At the beginning of fiscal 2014, Pfizer formed two distinct businesses: an Innovative Products business and an Established Products business. The Innovative Products business is composed of two operating segments––the Global Innovative Pharmaceutical segment (GIP) and the Global Vaccines, Oncology and Consumer Healthcare segment (VOC). The Established Products business consists of the Global Established Pharmaceutical segment (GEP).
GIP is focused on developing, registering and commercializing novel, value-creating medicines. These therapeutic areas include inflammation, cardiovascular/metabolic, neuroscience and pain, rare diseases and women’s/men’s health and include leading brands, such as Xeljanz, Eliquis and Lyrica (U.S. and Japan). GIP has a pipeline of medicines in inflammation, cardiovascular/metabolic disease, neuroscience and pain, and rare diseases. Revenues in the segment decreased 3% to $13,861 million in 2014. Total GIP revenues from emerging markets were $1.6 billion in 2014. R&D expenses increased 31% reflecting incremental investment in late-stage pipeline products.
Pfizer’s VOC segment focuses on vaccines and products for oncology and consumer healthcare. Consumer Healthcare manufactures and markets several well known, over-the counter (OTC) products. Each of the three businesses in VOC operates as a separate, global business. Revenues increased 9% during the year.
Global Vaccines revenues increased 13% to $4,480 million in 2014, primarily due to the performance of Prevnar 13 in the U.S. Total Vaccines revenues from emerging markets were $1.0 billion.
Global Oncology revenues increased 12% to $2,218 million due to continued strong underlying demand for recent product launches, Xalkori and Inlyta globally, as well as growth from Bosulif, primarily in the U.S. Total Oncology revenues from emerging markets were $375 million in 2014.
Consumer Healthcare revenues increased 3% to $3,446 million due to the launch of Nexium 24HR in the U.S. in late-May 2014 and growth of vitamin supplement products in emerging markets. Total Consumer Healthcare revenues from emerging markets were $942 million in 2014.
The GEP segment includes the brands that have lost market exclusivity and, generally, the mature, patent-protected products that are expected to lose exclusivity through 2015 in most major markets and, to a much smaller extent, generic pharmaceuticals. Additionally, GEP includes Pfizer’s sterile injectable products and biosimilar development portfolio. Revenues decreased 9%, to $25,149 million. Total GEP revenues from emerging markets were $7.5 billion in 2014.
If spending $17 billion is any indication, it’s safe to say that Pfizer expects injectables and biosimilars to be strong growth areas.
That was the price tag for injectables specialist Hospira, which it purchased during the year. While bolstering its own sterile injectable capabilities, the deal more importantly gives Pfizer access to the hot growth area of biosimilars—copycat versions of biological drugs. The drug giant is now poised to become the market leader in both the biosimilars and generics markets.
Pfizer said in a statement that its acquisition of Hospira will create “a leading global sterile injectables business.” The company estimates that the global market values for generic sterile injectables and biosimilars, will be $70 billion and $20 billion, respectively, in 2020.
Hospira’s generic sterile injectables product line is focused on acute care and oncology injectables and will complement Pfizer’s branded sterile injectables, which include anti-infectives, anti-inflammatories and cytotoxic drugs.
With headquarters in Illinois, Hospira’s injectable generic pharmaceuticals make up about 75% of total company revenue and its portfolio includes more than 200 generic drugs. About 20% of revenue comes from foreign sales.
In terms of biosimilars, Hospira said during the JPMorgan HealthCare Conference that it has biosimilars being developed for 11 expensive biologic drugs, targeting an opportunity of $40 billion.
The good news for Pfizer is that the FDA is poised to allow the sale of biosimilars after many years of debate. On January 7, an FDA advisory panel decided unanimously that a drug made by Sandoz, the generics arm of Swiss pharmaceutical giant Novartis, should be accepted as a replacement for Amgen’s cancer treatment drug Neupogen.
According to Pfizer, roughly $100 billion worth of biologic medicines are slated to lose patent protection in the next five years.
Pfizer says it plans to employ its commercial capabilities, global scale, and scientific and development capabilities to significantly expand Hospira’s portfolio of marketed biosimilars, including Retacrit to treat anemia associated with chemotherapy, and Nivestim, a biosimilar version of filgrastim (GCSF), to treat neutropenia. In addition, Hospira’s large portfolio of generics, which are currently distributed primarily in the U.S., could be shipped more broadly to Europe and other key emerging markets.
After the deal was announced, experts and analysts began sounding off that the deal is part of a broader strategic objective that will see Pfizer’s generic products unit, Global Established Products (GEP), eventually spun off. Is Pfizer in for the long haul, building up its established pharmaceutical segment permanently, or will it sell the business?
Hot on the heels of Novartis, Pfizer has been at the top of the Pharma news boards with the flutterings of discussions with Astra-Zeneca, bringing about much industry and political debate. While this acquisition never materialized, Pfizer has made strategic acquisitions of InnoPharma in July and Hospira in February this year. With InnoPharma carrying a strong portfolio of generic drugs and injectables and Hospira’s infusion technologies, it’s been a clear enhancement to its product portfolio. The company also acquired a minority stake holding in AM-Pharma this year with an exclusive option to acquire the remaining equity of the biopharmaceutical company should they decide.
Immunotherapy seems to be a top priority for Pfizer, with collaborations with Cellectis to develop Chimeric Antigen Receptor T-cell (CAR-T) technology and Kyowa Hakko Kirin to explore the potential of humanized monoclonal antibodies.
Meanwhile, the cutting edge innovative development site in Cambridge, MA, opened mid-2014 and proclaims Pfizer’s continuing force in R&D. The new site, which has conglomerated three separated area locations will be the main stay for innovative drug development pathway and geographically places them centrally to leading global academic institutions and hospitals.
With the recent announcement in May 2015 of its intention to commit $3 million worth of grants in clinical research for advanced breast cancer in the U.S., combined with their recent acquisitions, Pfizer could be fighting back at Novartis on the financials in 2016.