The trend for big pharma companies to bunch up in therapeutic categories such as cancer is raising the risk of commoditisation, reducing sales and shortening product lifespans.
That is the thrust of a research note by analysts at Jefferies, who suggest that AstraZeneca and Novo Nordisk are the most exposed to overcrowding, while Roche and Novartis have taken “welcome…moves towards increased diversification”.
Oncology will account for around 30% of large-cap pharma sales by 2022, up from 20% four years ago, and for AZ the consolidation is most stark with just three cancer drugs – Imfinzi, Lynparza and Tagrisso – accounting for a third of its estimated 2025 revenues.
Exhibit A in their analysis is the six PD-1/PD-L1 checkpoint inhibitor drugs already on the market, with new entrants still to come from Asian companies, that are predicted to make up around 25% of pharma oncology sales in that year.
That overcrowding could lead to pricing pressure and shorten the time new entrants have before they are exposed to generic competition, while the consolidation around a particular mechanism also exposes the class to “disruptive new drugs” that may appear on the market, they suggest.
Another problem is that with checkpoint inhibitors being tested in just about every type of cancer, there is a potential shortfall of patients required for clinical trials.
Overall, oncology sales are expected to increase by over 50% to around $128bn between 2018 and 2022, and the big question now is whether overcrowding in cancer is a “strategic shift or blinkered blunder”, according to Jefferies.
“Ultimately, we believe immuno-oncology investments will likely produce meagre returns for most companies involved, with many probably abandoning these efforts over the mid-term, potentially resulting in the need for further industry consolidation,” the analysts suggest.
Cancer is the most stark example of overcrowding right now, but immunology is also getting busier, expected to make up 14% of large-cap 2022 sales. Rare diseases is also a major growth area as big pharma continues to back away from traditional therapeutic areas like cardiovascular, renal, metabolic and infectious diseases.
Immunology is however less of a concern than cancer, says Jefferies, because of “better ongoing potential for this market category to expand given chronic treatments, improved diagnosis, and earlier use of novel drugs” such as IL-23 inhibitors and JAK inhibitors.
Jefferies says newer classes of biologics could add at least $30bn in revenues in 2022, while the older TNF inhibitor class will still bring in $30bn in sales even in the face of biosimilar competition.