Merck & Co., Inc. (NYSE:MRK) reported a 7% decline in fourth-quarter profit after the patent expiry of Singulair on August 13, 2012, in the United States. Singulair is a drug used to treat asthma and allergies. It had revenue of $1.34 billion in the first quarter. Several drug companies are losing patent exclusivity, and generics companies have been eagerly awaiting this patent cliff to launch cheaper concoctions of the original drugs.
Given the rising costs of healthcare all over the world, and the increase in chronic diseases, patients and healthcare providers have been increasingly pressuring regulatory bodies to allow the prescription of generics, and have achieved considerable progress, especially in some European countries.
Along with Merck, companies such as Pfizer Inc. (NYSE:PFE), AstraZeneca, Sanofi, Forest Laboratories, Bristol-Myers Squibb, and Eli Lilly & Co. (NYSE:LLY) recently lost patent exclusivity on their drugs.
| Company Name | Drug with expired patent |
| Pfizer | Lipitor |
| Astrazeneca | Seroquel |
| Sanofi-Aventis | Plavix |
| Forest Laboratories | Lexapro |
| Bristol-Myers Squibb | Zyprexa |
| Eli Lilly | Olanzapine |
Source: Economic Times
Drugs in the pipeline
Merck & Co., Inc. (NYSE:MRK) lacks transparency compared to its competitors in releasing information about drugs prior to Phase II trials. There are two drugs under discussion that have the potential to serve large markets if they succeed. FDA has accepted Suvorexant, a novel compound that assists in sleep onset, as well as sleep maintenance, for standard review.
Merck & Co., Inc. (NYSE:MRK) is also taking a novel approach to osteoporosis treatment through its drug Odanacatib, a weekly treatment to increase bone density. It would be up for possible registration in 2014, after additional data on safety and efficacy has been obtained from a clinical trial.
Odanacatib will be used to treat osteoporosis. This affects roughly 200 million women worldwide, of whom approximately 20% are receiving treatment as of now. Of those, about 25% cannot tolerate bisphosphonates, which is a major alternate treatment.
Pfizer , by comparison, has 90 projects in its drug pipeline right now. 35 of these projects are in Phase 2 trials, 18 in Phase 3 trials, and 11 in the registration phase. Like Pfizer, Merck is exploring drugs with the potential to treat Alzheimer’s disease. Given that it has a strong competitor like Pfizer pursuing the active development of a treatment for the same disease, Merck needs to ensure that its product has a superior differentiating quality in terms of safety, efficacy, cost, and/or treatment approach.
Additionally, it must carefully monitor the drug through the various stages of development to check that it is not wasting resources on a drug that might not be able to successfully compete against the treatment approaches developing in the laboratories of competitors.
In March 2012, Merck & Co., Inc. (NYSE:MRK) announced that the FDA issued a Complete Response Letter regarding their NDA for Atozet, an investigational medicine for high cholesterol. They were asked for additional data, which they submitted earlier in January this year.
In 2008, the FDA had turned down Merck’s original filing for Bridion (sugammadex), on concerns related to allergic reactions and bleeding events, however, the company filed new data on these side effects, and the FDA has accepted the new filing for the neuromuscular reversal agent.
Tredaptive, a cardiovascular disease management drug, which would have catered to a large market recently, failed to clear a Phase III trial. Results showed that adding Tredaptive to statin therapy did not lead to a significant reduction in the risk of major vascular events compared to statin therapy.
Rather, some types of non-fatal serious adverse events increased significantly. This failure was a major disappointment, as Tredaptive was one of the candidates in Merck’s pipeline slated for a U.S. regulatory filing in 2013.
Some comments and updates on Merck’s strategy
If a big pharmaceutical firm wants to profit from the orphan drug market, one of the ways to do that is to get into deals with smaller companies with products in the advanced pipeline. Merck wisely took this path a year ago when it decided to partner with Endocyte.
Merck & Co., Inc. (NYSE:MRK) paid $120 million upfront, and could pay an additional $880 million when certain milestones are met by vintafolide, which is currently in a phase III clinical trial targeting platinum-resistant ovarian cancer, and is in a phase 2 trial focusing on non-small-cell lung cancer. It received orphan drug status in March 2012 in Europe.
This focus on orphan drugs makes sense at a time when there is a need for greater number of products and diverse business approaches. Indeed, patent expirations are leading to decline in the sales of blockbuster drugs. In such a scenario, taking on a new approach which involves selling high-cost drugs to a smaller number of customers for a less prevalent disease makes sense.
In fact, some companies like Eli Lilly had started this process years ago. Eli Lilly & Co. (NYSE:LLY) received approval from the FDA for Alimta, the first drug approved in the U.S. for treating malignant pleural mesothelioma, in 2004. This disease is a rare form of cancer, with only about 2000 new diagnoses each year. Lilly has experienced huge success with this product, which generated $2.6 billion in sales in 2012.
A few years back, when I was working at Merck, it was also focusing on expanding the global reach of its products. For instance, its antibiotic and antifungal drugs Invanz and Cancidas are being marketed in other nations like India. With antibiotics and antifungals, it is very important to keep in mind the type of micro-organism prevalence in different parts of the world, and the types of drugs required for treatment.
Additionally, doctors’ previous experience with other drugs and the type of data they need (especially data that is relevant with respect to the population they are treating) must be kept in mind while planning marketing strategies. As Merck markets its drugs across the globe, it must gauge local needs and past prescription behavior to ensure it can sell its products persuasively to customers.
