Big Pharma will remain dependent on small molecules, but biologics will spur growth
The Big Pharma business model essentially was built on small-molecule products, which are relatively inexpensive to develop
and manufacture, thus allowing companies to concentrate on fueling growth with an assertive sales and marketing strategy.
However, once patent protection is lost, small molecules are easy for generic-drug companies to manufacture. Manufacturers
of generic drugs do not have to support large R&D teams and they are able to compete aggressively on price. The resulting
commoditization of the small-molecule market has forced the Big Pharma players to seek diversification into areas of high
unmet need (e.g., oncology) or, in terms of molecule type, into biologics. The Big Pharma shift to biologics will be led by
mAbs, which are forecast to grow by $22.1 billion during 2008–2014 at a 9.5% CAGR, thus making them the biggest growth factor
for this sector. Therapeutic proteins also will experience strong growth during 2008–2014, contributing an increase in sales
of $9.2 billion at a CAGR of 3.6%. By contrast, small molecules—which accounted for 80.4% of Big Pharma's 2007 sales—will
decline by $25.6 billion during 2008–2014. Despite these shifts, Big Pharma will remain dependent on small-molecules, which
will account for 71.4% of its sales in 2014. Biologics (i.e., mAbs and therapeutic proteins combined) will account for 21.8%
of sales, up 6.7% from 2008 (see Figure 2).
Figure 2: Molecular-class focus by company type, 2002–2014. mAb is monoclonal antibody, sm is small molecule, TP is therapeutic
protein, and Vacc is vaccine.
At a company level, a clear correlation can be drawn between small molecules and declining sales versus biologics and sales
growth. Of the top 16 Big Pharma companies, only Novartis (Basel), Bayer (Leverkusen, Germany), Merck & Co, and Boehringer
Ingelheim (Ridgefield, CT) will see net positive growth from their small-molecule portfolios. By contrast, the remaining 12
companies are forecast to see a net growth in their biologics portfolios.
Roche (Basel)—primarily through its acquisition of Genentech (South San Francisco, CA)—contributes about 51.4% of the mAb
growth for Big Pharma. Aside from Roche, Abbott Laboratories (Abbott Park, IL) also will exhibit strong growth in the mAb
sector. Its growth is attributable to its acquisition of Knoll and its licensing of international rights to Synagis and Numax
from MedImmune (Gaithersburg, MD). Johnson & Johnson also will exhibit strong growth, spurred by the growth of Simponi (golimumab),
Stelara (ustekinumab), and its share of bapineuzumab sales.
Growth from therapeutic proteins will be spread more evenly across Big Pharma. Sanofi-Aventis (Paris), primarily through insulin
analog Lantus; Pfizer, through Enbrel; and Bristol-Myers Squibb (New York), through Orencia and belatacept, will make significant
contributions. Novartis also will report growth in therapeutic proteins, primarily attributable to its launch of biosimilar
drugs through its generic-drug division Sandoz. However, none of these companies will experience biologics growth remotely
close to the level of mAb growth forecast for Roche.
Midcap companies stick with small molecules
Datamonitor defines a midcap pharmaceutical company as one that has annual prescription sales below $10 billion, derives >50%
of sales from biologics, and is not headquartered in Japan. Midcap pharma is entrenched in the small-molecule market and accounts
for $46.7 billion or 93.8% of total sales in 2008. This percentage is expected to remain relatively unchanged. Interestingly,
Gilead (Foster City, CA), Actelion (Allschwil, Switzerland), and Celgene (Summit, NJ), the strongest performing midcap pharmaceutical
companies until 2014, will derive all of their growth from small-molecule sales. However, these companies will expand into
other molecule types only at a low level. UCB (Brussels) will expand through the growth of its mAbs Cimzia and epratuzumab,
and Allergan (Irvine, CA) through the growth of therapeutic protein Botox. By 2014, mAb and therapeutic proteins will account
for 1.7% and 5.9% of midcap pharmaceutical sales, respectively (see Figure 2).
Therapeutic proteins dominate, but mAbs gain ground
Biotechnology companies focus primarily on biologics, but from 2008 to 2014, the dominance of therapeutic proteins within
the molecular class mix will decline steadily as mAbs gain market share. Nevertheless, therapeutic proteins will remain the
dominant molecule type throughout, accounting for 68.0% of 2014 sales. This shift in focus toward mAbs will be spurred by
this molecular class's relatively strong growth of $4.4 billion in 2008–2014, which resulted primarily from the launch of
Amgen's (Thousand Oaks, CA) Prolia and continued sales growth of Merck KGaA's (Darmstadt, Germany) Erbitux. Interestingly,
therapeutic proteins will deliver greater sales growth until 2014 (i.e., $5.2 billion) because of Novo Nordisk's (Bagsvaerd,
Denmark) insulin-analog portfolio, which includes NovoRapid, NovoMix, and Levemir. Small-molecule growth will total less than
half of that delivered by biologics, at $3.1 billion.
Biogen Idec has the biggest mAb focus and also the biggest biologics focus; mAbs and therapeutic proteins accounted for 98.9%
of its 2008 sales. Novo Nordisk will account for the majority of the peer set's therapeutic-protein sales growth, with an
increase of $4.7 billion forecast between 2008 and 2014, to be supported primarily by Genzyme (Cambridge, MA, $1.3 billion).
By contrast, declines of $741 million and $221 million are forecast for Biogen Idec and Amgen's therapeutic-protein portfolios,
respectively (see Figure 2).