Celgene, BMS and Novartis set to dominate by 2022
For the last few years, Evaluate Ltd, a life science market intelligence firm, has been assembling their annual EvaluatePharma® Orphan Drug Report. Based on their coverage of over 5,000 of the world’s leading pharmaceutical and biotech companies, the Orphan Drug Report 2017 highlights trends in prescription sales for orphan vs. non-orphan drugs, US revenue per patient, orphan designation analysis in USA, Europe and Japan, product and company performance and the most valuable orphan drugs in development. The following is a summary of details from the fourth edition of this report on the expected performance of the orphan drug market between now and 2022. The full report can be found here.
It’s important to understand what defines an orphan drug, a pharmaceutical product aimed at rare diseases or disorders. In the U.S., rare disease populations are defined as having less than 200,000 patients (<6.37 in 10,000). To classify as an orphan drug, the medication has to meet certain criteria. For instance, the first indication approved has to be for an orphan condition. Also, the product has to generate more than 25% of sales from orphan indications—which excludes drugs like Avastin, Enbrel, Humira and Remicade, because the orphan designations for those products don’t reach the 25% threshold.
ORPHAN MARKET DRIVERS
Why is there a current upsurge in the sector? Mainly because “orphan” is not such a diminutive term anymore. The Orphan Drug Act of 1983 financially incentivized the development of orphan drugs. Companies developing these medications receive a 50% tax credit on R&D costs. Before the act was passed, only 38 orphan drugs were approved. Since then, 425 indication designations covering 347 drugs have been approved. The success of the original Orphan Drug Act in the US led to it being adopted in other key markets, most notably in Japan in 1993 and in the European Union in 2000.
And there are significant financial incentives. In the U.S., a company receives seven years of marketing exclusivity from approval. The market exclusivity blocks “same drug” recombinant products.
Indeed, large pharma groups finding orphan indications for some of their biggest sellers mean that seven of the ten top companies by orphan indications are global majors, and the likes of AbbVie are trying to ensure their seat at the big table through acquisition. The Chicago-based group is now in the top 20 companies by orphan sales, thanks to its acquisition of Pharmacyclics.
The enduring appeal of orphan drugs remains grounded in a variety of factors, including the lack of alternatives for patients, lower R&D costs, easily defined patient populations, and the prices that the drugs are able to command. So far orphan drug developers have managed to defend the cost of these life-changing drugs, due to the relatively small patient populations they serve and the continued paucity of options for sufferers.
What has changed in the last 12 months is the increased scrutiny of the price of these lifesaving products.
The image of the plucky small biotech striving to develop treatments for the rare diseases largely ignored by big pharma is long gone. Instead, this year the report finds big pharma dominating the sector. Seven of the top 10 companies by orphan drug sales are global industry players, who have won approval for their biggest products in various niche indications.
There is little doubt that insurers will continue to cover orphan drugs, due to the fact they are frequently the only option for patients and, for now, remain a relatively small part of overall budgets.
But according to the findings in this year’s report the market will carry on expanding rapidly, with sales growth forecast at 11% per year, more than twice the rate predicted for conventional drugs.
In fact, sales of orphan drug are expected to almost double between 2016 and 2022, to hit $209B. This rapid growth and current willingness of payers to stump up for the huge price tags are two of the main reasons why the sector has become more and more attractive to some of the industry’s biggest players. However, some see big pharma’s interest in this space as a potential problem, claiming that these groups are taking unfair advantage of the lower R&D cost, speedier approval times, favorable patent life and pricing incentives for developing orphan products.
And the pricing incentives are substantial. According to this year’s report, of the top 100 drugs in the US the average cost per patient per year for an orphan drug was $140,443 in 2016, compared with $27,756 for a non-orphan.
In what might spell trouble for the industry, payers and politicians are taking note.
Exondys 51 and Spinraza—both treat rare and fatal childhood illnesses—might have won broad approvals from the US regulator, but some payers are insisting on much narrower interpretations of their clinical effectiveness.
In February, Republican senator Chuck Grassley announced that he would be starting an investigation into potential abuses of the Orphan Drug Act. President Donald Trump has also expressed his concern over drug pricing; whether this will spill over into orphan drug pricing is unknown but not impossible.
As such, if the orphan drug industry is to continue to thrive it must continue to generate innovations that justify the huge cost of these life transforming treatments.
Highlights from the report include:
• Worldwide orphan drug sales forecast will total $209B (CAGR 2017 to 2022:+11.1%); approximately double overall prescription market growth
• Orphan drugs set to be 21.4% of worldwide prescription sales by 2022 (excluding generics)
• Median cost per patient differential is expected to be 5.5 times higher for orphan drugs compared to non-orphan
• Celgene is set to climb to number one position in orphan drug sales to 2022
• Shire will be the largest company by sales in the orphan non-oncology space in 2022
• AstraZeneca, Abbvie and Johnson & Johnson are set to march up the orphan drug sales ranking table
• Revlimid (lenalidomide) will be the No.1 orphan drug in 2022
• Opdivo (nivolumab) will be the No.1 orphan drug in Europe in 2022
• Orphan drugs are forecast to account for 55% of the cumulative value of the European pipeline to 2022
• Axicabtagene Ciloleucel (Kite Pharma) is the most valuable R&D orphan drug
• The first decline since 2012 for FDA orphan designations was in 2016 with 333; A record number of applications made to the FDA for orphan designation in 2016
WORLDWIDE ORPHAN DRUG SALES (2000-2022)
Worldwide Orphan Drug Sales Forecast to Total $209B (CAGR 2017 to 2022: +11.1%) which is Double the Overall Rx Market Growth. Orphan Drugs Set to be 21.4% of Worldwide Prescription Sales by 2022; (excluding generics)
The market for orphan drugs, based on the consensus forecast for the leading 500 pharmaceutical and biotechnology companies, will grow by 11.1% per year (CAGR) between 2017 and 2022 to $209B. The growth of the orphan drug market is more than double that of the overall prescription drug market, which is set to grow by 5.3% over the period 2017-2022.
Orphan drugs are set to account for 21.4% of global prescription sales in 2022, excluding generics, up from 6% in 2000.
In 2016 orphan drug sales increased 12.2% to $114B vs. 2015, while non-orphan drug sales increased by 2.4% to $578B. [See orphan drug chart 1]
TOP 100 USA DRUG COST PER PATIENT PER YEAR 2012-2016
Average Orphan Drug Cost to Patients $140,443 in 2016; Median Orphan Drug Cost $83,883
The average cost per patient per year in 2016 for an orphan drug was $140,443 versus $27,756 for a non-orphan drug. The average drug price has increased year on year for both orphan and non-orphan drugs since 2012. The median price differential between an orphan and non-orphan drug in 2016 was 5.5 compared to 9.8 in 2012.
The median price of orphan drugs and non-orphan drugs has increased by a factor of 1.3 and 2.3 since 2012 respectively. [See orphan drug charts 2 & 3]
2016: USA REVENUE PER PATIENT PER YEAR FOR TOP 20 SELLING ORPHAN DRUGS
Soliris will be the Highest Revenue Orphan Drug in 2016
Revenue per patient for the Top 20 USA selling orphan drugs is correlated (R2 = 0.77) to the number of patients treated in 2016. A similar analysis of the Top 10 selling orphan drugs that treated fewer than 10,000 patients confirms a closer correlation (R2 = 0.94). This analysis confirms industry perceptions that smaller patient groups allow a pricing premium to be achieved versus non-orphans. Products such as Gleevec support the notion of an innovation premium for drugs that create a step change in treatment options and therapy outcomes. Soliris confirms the pricing power resulting from indications with the fewest number of patients. [See orphan drug charts 4 & 5]
WORLDWIDE ORPHAN DRUG SALES IN 2022: TOP 20 COMPANIES
Celgene to be Number One in Orphan Drug Sales in 2022 with BMS and Novartis in Second and Third Place. AZ, Abbvie and J&J Set to March up the Orphan Sales Ranking Table.
It is expected that Celgene will overtake Novartis as the world’s number one orphan drug company in 2022, climbing two places, and pushing Novartis down to number three.
One product contributes the majority of orphan sales for two of the top four; Celgene (Revlimid, 80% of sales ) and BMS (Opdivo, 68% of sales).
Seven of the Top 10 companies by orphan drug sales in 2022 are forecast to be Global Majors.
The Top 5 companies in 2022 are forecast to account for almost one third (30.6%) of the orphan drug market.
2022: TOP 20 SELLING ORPHAN DRUGS IN THE WORLD
Revlimid (lenalidomide) will be the No.1 Orphan Drug in 2022.
EvaluatePharma® finds that Revlimid will be the world’s largest orphan drug in 2022, with sales of $13.6B for all indications. Revlimid from Celgene was first approved in December 2005 for the orphan treatment of myelodysplastic syndrome. Revlimid is also approved for the orphan indications Non-Hodgkin’s lymphoma and multiple myeloma and remains in development for a number of other orphan conditions.
Bristol-Myers Squibb’s Opdivo approved for multiple myeloma & Hodgkin’s lymphoma, and designated for hepatoma, glioblastoma, small cell lung cancer and oesophageal cancer is set to be a distant second with $9.1B in worldwide sales. [See orphan drug charts 6 & 7]
2022: TOP 20 ORPHAN R&D PRODUCTS BASED ON NPV
Axicabtagene Ciloleucel will be the World’s Most Valuable R&D Orphan Drug
Kite Pharma’s Anti-CD19 chimeric antigen receptor (CAR) T cell therapy in development for Non-Hodgkin’s lymphoma, is the world’s most promising R&D orphan drug, with an NPV of $7.9B. The top three ranked products account for 19% of the total orphan NPV.
Of the products in R&D, eight are classed as being developed in-house or having been in-licensed. The remaining four products were acquired through a company acquisition. [See orphan drug charts 8 & 9]
Evaluate is the trusted provider of commercial intelligence including product sales and consensus forecasts to 2022 for commercial teams and their advisors within the global life science industry. It helps clients make high value decisions through superior quality, timely, must-have data and insights, combined with personalized, expert client support. Evaluate comprises EvaluatePharma®, EvaluateMedTech®, EvaluateClinical Trials® , EP Vantage and Evaluate Custom Services.
For the full report, click here.