GlaxoSmithKline plc (GSK), Pfizer Inc. (PFE), Merck & Co., Inc. (MRK): Buy These Patent-Cliff Proof Stocks

Patent expiration is one of the major issues faced by pharma companies, which increases the competition from generic medicines and eventually leads to downfall in their sales. Moreover, due to the long production cycle of new drug development, the R&D becomes ineffective to offset the patent cliff. I have picked up three such companies from the industry, which have significant drugs pipeline for the future. These companies have efficient strategies to tackle the aftermaths of patent cliff and have a series of new drugs waiting for approval. Let’s see how these three companies have developed their drug pipeline and what prospects these drugs offer from an investor’s perspective.

GlaxoSmithKline plc (NYSE:GSK)

Glaxo recently got initial endorsement from FDA advisory committee for its much discussed drug Breo/Relvar. This will facilitate its final approval in May 2013. Breo is a treatment for lung diseases like chronic obstructive pulmonary disease (COPD) and is the replacement of Advair. The market for COPD is huge, as this is the third common reason of death in the US and the sixth most common reason in the UK. This drug will help the company to compensate for the loss of patent of its current top performing drug Advair which had annual sales of $7.6 billion in 2012. GlaxoSmithKline plc (NYSE:GSK) had lost Advair’s US patent in 2010 and its European patent will expire in 2013. For now, there is no generic competitor in the US because of the higher regulatory barriers, but it is expected that by 2016 it will face tough generic competition. I believe till that time the company will be able to establish Breo to offset the loss of Advair.

Apart from this, one new disease in which the company is expected to perform well is Duchenne Muscular Dystrophy. It is estimated that this disease has an occurrence rate of one out of 3500 boys. Also, this disease is not as fatal as compared to other genetic diseases in early childhood leading to the diseased patient living for a longer time. This will create a huge market for drugs for this disease. It is estimated that the total market for this disease can reach $6 billion per year. Currently, there are only three noteworthy drugs for this disease, GlaxoSmithKline plc (NYSE:GSK)’s Drisapersen being one of them which is in phase three trial. Other two drugs include Sarpenta’s Eteplirsen which has its post two trials meeting with FDA, and PTC Therepeutics’ Atalauren, which has filed application for marketing the drug in Europe and Middle East region.

Pfizer Inc. (NYSE:PFE)

Pfizer Inc. (NYSE:PFE) recently announced that it got breakthrough therapy designation for its advanced breast cancer drug Palbociclib. This drug was awarded this title for being effective along with providing improved safety in clinical trials. This drug is the key for the company in its oncology division. However its final stage trial is not yet started and will not complete before 2015. But with this success it is expected that Pfizer Inc. (NYSE:PFE) may apply for early approval of this drug and if approved this drug has the potential to reach sales of $5 billion yearly.

Additionally, its oncology division is doing well with its blockbuster drug Sutent, which has annual sales of around $1.2 billion. Sutent is used for metastatic renal cell carcinoma and is popular among physicians. The company got FDA nod for Inlyta as a second line treatment for metastatic renal cell carcinoma in January 2013. This will help the company to tap additional market from those who have not shown efficacy with its first line treatment Sutent.

Apart from these, the company recently got conditional approval of Bosulif for a type of blood cancer (chronic myelogenous leukemia) from European Medicine Agency (EMA). Bosulif is already approved in USA and this approval will further enhance the market for this drug and with a price of $8000 per month; this drug is expected to reach sales of $300 million in 2013.