* Drugmakers concentrating R&D on cancer
* Analysts warn competition could weigh on returns
* Peak sales forecasts for new drugs down 43 pct vs 2010
By Caroline Copley
ZURICH, Jan 7 Pharmaceutical companies including
Switzerland's Novartis and Roche are among
those developing a treatment for a specific type of lung cancer,
a field that is now so crowded it may impact profits.
A better understanding of the cause of tumours has drawn
resources into cancer research at the expense of antibiotics and
cardiovascular disease but over-concentration in certain fields
could cut commercial rewards, some analysts say.
Both Swiss firms are working on treatments for a specific
genetic mutation of metastatic non-small cell lung cancer
(NSCLC) called anaplastic lymphoma kinase positive (ALK+), which
tends to afflict younger patients and non-smokers.
They are behind the leader in the field, Pfizer,
whose drug Xalkori was launched in 2011 and is expected to have
had sales of around $280 million last year.
A further six drugs are in clinical testing for the same
mutation, according to analysts at Barclays, even though it
affects only around 5 percent of people with NSCLC.
Increased competition can improve the quality of drugs for
patients but having so many companies chasing after the same
relatively small pool of people could pile pressure on the
returns firms earn on their R&D.
"Whilst biopharma has enjoyed significant commercial success
in areas such as oncology over the past decade, pipelines are
now increasingly over-concentrated against many targets
diminishing future returns for the industry overall," Barclays
Other crowded development areas include treatments for
melanoma, rheumatoid arthritis and immunotherapies such as
compounds designed to block the activity of a receptor on immune
cells called programmed death 1, or PD-1.
It has been harder for companies to make money from new
products in recent years. Around half of all new products that
come to market fall short of revenue expectations because those
paying for drugs, including insurance companies or healthcare
authorities, are demanding greater innovation and efficiency
before they foot the bill.
Indeed, the fruits of research have become less bountiful,
according to a study by Deloitte and Thomson Reuters.
The average internal rate of return from pharmaceutical
research and development fell to around 4.8 percent in 2013 from
7.2 percent in 2012 and 10.5 percent in 2010.
Over the same four-year period, the average forecast peak
sales of each new drug have dropped by 43 percent to $466
million in 2013, reflecting the impact of austerity measures on
health spending, plus a shift to more niche drugs.
In effect, those lower forecast sales for new drugs have
cancelled out the benefit of an increase in new drug approvals,
which remained at a healthy level in 2013, despite falling short
of the bumper tally in 2012.
The focus on areas such as cancer and inflammation comes as
research into cardiovascular disease, dementia and antibiotics
The lack of research into antibiotics threatens to create a
crisis of drug-resistant "superbugs", while there hasn't been a
new drug approved to treat Alzheimer's in a decade.
Novartis and Roche have 59 and 68 projects respectively in
development for cancer compared to a handful for heart disease.
Both Novartis' LDK378 and Roche's RG7853 have won
"breakthrough therapy", a designation created by the U.S. Food
and Drug Administration in 2012 to help speed drugs to market
that treat serious or life-threatening conditions and which are
deemed likely to work better than existing treatments.
The status should help shave years off the approval process
and get the drugs to patients faster.
Novartis aims to file for approval of LDK378 by healthcare
regulators in early 2014 even though it is still conducting
Phase III trials.
Analysts are dubious about whether Novartis will manage to
win market share from Pfizer. Forecasts compiled by Thomson
Reuters Pharma predict LDK378 will have annual sales of $329
million by 2018 lagging the $830 million expected for Xalkori.
Still, coming second to market can sometimes actually be a
help in the short term when it comes to price, says Brian
Godman, a researcher at Sweden's Karolinska Institute.
"If you've already got a benchmark at a price and there's
not biosimilar competition around at the time you launch, then
that helps to set the price for your new drug," he said.
But Godman who works with various health authorities across
Europe researching drug pricing and reimbursement options, sees
increasing competition eventually playing into the hands of
those paying the bill.
"If we tie up more of these niche areas and we start to see
more competition, if anything prices will start to decrease."