The next decade will bring significant changes to the pharmaceutical industry as several top-selling drugs lose patents and competitive forces pressure the drug makers to look for new avenues for growth. In this article we take a look at the drugs in Bristol-Myers Squibb's (BMY) portfolio that will fall off a patent cliff before 2020.
Plavix – Perhaps the most recognizable in Bristol-Myers (BMS) portfolio, Plavix is a platelet aggregation inhibitor, which provides protection against heart attack or stroke in patients with a history of heart diseases. The drug was developed in collaboration which Sanofi (SNY) and accounted for over one-third of BMS’s total revenue in 2011. The composition of matter patent for this drug expired on May 17, 2012 in the U.S., and the sales of this drug have plummeted almost 65% since due to intense competition from generic drugs. The sales are likely to decline further as more national patents related to the drug expire in the EU region during 2013.
Baraclude – After Plavix, Baraclude is the next significant challenge that BMS will have to face immediately. It is used in the treatment of chronic hepatitis B infection and fetched almost $1.4 billion in revenues for the firm in 2012. In February 2013, the composition of matter patent covering this drug was invalidated by the U.S. district court for the district of Delaware. Originally, the patent was scheduled to expire in 2015, but now the drug may face generic competition in the U.S. as early as in 2013. The firm will continue to sell in other parts of the world without competition from generic drugs until 2016.
Abilify – The antipsychotic and anti-depressant drug is the next bestselling drug after Plavix. The drug was developed by Otsuka in Japan, and it markets the drug in partnership with BMS in the U.S and Europe. The drug brought in $2.8 billion in revenues for BMS in 2012. However, BMS’s rights to commercialize the drug in EU and U.S. will end in 2014 and 2015 respectively. Simultaneously, Otsuka’s U.S. patent for the drug expires in 2014, and the drug will face competition from generic products soon.
Sustiva Franchise – Sustiva is a drug from BMS for the treatment of HIV. When sold along with another drug called Truvada (which is developed by Gilead, an American biotechnology company) in a fixed-dose combination, the package is called Sustiva franchise. Such fixed dose combinations “help simplify HIV therapy for patients and providers.” BMS made over $1.5 billion in revenues from this franchise in 2012. The patent for Sustiva ends in 2013 and 2015 for E.U and U.S., respectively. However, this is not likely to end the exclusivity for the combination therapy as described above. We expect a gradual decline in the sales of Sustiva as more companies develop generic variants and know how about the variants increases in the market.
Reyataz – Reyataz is another drug for the treatment of HIV. BMS develops it under a worldwide license from Novartis and markets it as a combination with Norvir, a drug from Abbott Laboratories. The market exclusivity for the drug ends in U.S., Canada and China in 2017 and in major EU countries and Japan in 2019. The drug accounted for $1.5 billion of BMS’s 2012 revenues.
Erbitux – Erbitux is a treatment for the cure of colorectal cancer, and head and neck cancer. BMS distributes the drug in partnership with Eli Lilly and reported $702 million in revenues from the sale of this drug. Data exclusivity for this drug ends in 2016 in the U.S., while the patent expires in 2018.
In all, the company needs to replace over $10 billion in revenues over the next six years to just match 2012 revenue numbers. That is a concession for the BMS because the firm's 2012 revenue numbers were extraordinarily low due to a 65% decline in the sales of Plavix that year.
Disclosure: No positions.