Big Pharma’s Progress Report and Financial Roundup

So how did the pharmaceutical majors fare in the first quarter and what are the key product and pipeline developments? DCAT Value Chain Insights (VCI) examines the latest.

First-quarter results are in for Pfizer, Sanofi, AstraZeneca, Bayer HealthCare, Bristol-Myers Squibb, Eli Lilly, AbbVie, Roche, Novartis, and others. DCAT Value Chain Insights (VCI) examines the financial performance of the pharmaceutical majors, the key product and pipeline developments, and what may be ahead for the rest of 2015.

A roundup of results and activity
Pfizer.Pfizer reported overall first quarter revenues of $10.86 billion, a 4% decline, year over year. The company manages its commercial operations through two distinct businesses: an Innovative Products business and an Established Products business. The Innovative Products business is composed of two operating segments: the Global Innovative Pharmaceutical segment (GIP) and the Global Vaccines, Oncology and Consumer Healthcare segment (VOC). The Innovative Products business posted revenues of $5.74 billion in the first quarter, up 9% year over year. Revenues for the GIP segment were flat at $3.075 billion, and revenues from VOC were up 44% year over year to $1.33 billion.The Established Products business consists of the Global Established Pharmaceutical segment (GEP). It posted first-quarter 2015 revenues of $5.01 billion, a 16% decline year over year. The company increased overall revenues on an operational basis by 2% despite the significant negative impact from product losses of exclusivity, including Celebrex in the US and the termination of the Spiriva co-promotion collaboration in the US. Key upcoming activity for Pfizer is the closing of its $17 billion acquisition of the specialty pharmaceutical company, Hospira, which is expected to close later this year.

Novartis. For the first quarter of 2015, Novartis reported net sales from continuing operations of $11.9 billion (-7%, +3% constant currency) in the first quarter. Growth products contributed $3.7 billion or 31% of net sales, up 15% (in US dollars) over the prior-year quarter. The results reflect the completion, in March 2015, of a series of transactions by Novartis with GlaxoSmithKline(GSK). These included the acquisition of certain oncology products and right of first negotiation to the pipeline compounds from GSK, the creation of a consumer healthcare business through a joint venture combining the two companies’ consumer healthcare divisions, and the divestment of the Novartis non-influenza vaccines business to GSK. The three-part deal follows the divestment of Novartis’ Animal Health to Eli Lilly and Company, in a deal completed in January 2015.

On the cost-savings front, Novartis Business Services (NBS), the company’s shared services organization, was fully operational in the first quarter, with organizational structure and financial systems in place as of January 2015 and over 8,700 full-time-equivalent associates by the end of the first quarter. NBS is designed to enhance profitability by harmonizing high-quality services at better price across Novartis. Synergies generated by the organization are expected to improve margin over time. The cost within the scope of NBS was stable from the prior year. Five strategic locations were selected for Global Service Centers. Moving from division-specific services to a cross divisional model, NBS is securing delivery of the majority of transactional services through the five Global Service Centers. In the first quarter of 2015, the company generated approximately $350 million in procurement savings by leveraging scale.

On the manufacturing front, Novartis continues to optimize its manufacturing footprint. In the first quarter of 2015, the company announced two site closures: the over-the-counter manufacturing site in Humacao, Puerto Rico, and its chemical production site in Resende (Brazil). Further, the company finalized the divestment of the pharmaceutical manufacturing site in Taboão da Serra (Brazil) to União Quí­mica. For Novartis as a whole, this brings the total number of production sites that have been, or are in the process of being, restructured, closed, or divested to 26. Related to this initiative, Novartis recorded exceptional charges of $48 million in the first quarter of 2015, bringing total exceptional charges to $746 million cumulatively since the program began in the fourth quarter of 2010. For continuing operations, the total number of production sites that have been, or are in the process of being, restructured, closed or divested is 20, the exceptional charges recorded in the first quarter amount to $45 million, and the exceptional charges recorded cumulatively since the program began amount to $620 million. In total, the company’s productivity initiatives generated gross savings that contributed approximately $650 million in the first quarter of 2015.

Roche. Roche reported overall group sales in the first-quarter of 2015 of CHF 11.833 billion ($12.374 billion) up 5% at constant exchange rates (CER) with pharmaceutical sales up 4% CER to CHF 9.322 billion ($9.746 billion). In pharmaceuticals, medicines for HER2-positive breast cancer (Herceptin, Perjeta, Kadcyla) saw strong growth of 23%. Herceptin sales increased 12% to CHF 1.652 billion ($1.727 billion), Perjeta sales increased 82% to CHF 322 million ($337 million), and sales of Kadcyla increased 80% to CHF 179 million ($187 million).Herceptin, along with Avastin and MabThera/Rituxan, were Roche’s top-selling drugs in the first quarter. Sales of Avastin (+6%), which is used to treat seven different cancers, was up 6% at CER to CHF 1.619 billion ($1.692 billion), and sales of MabThera/Rituxan, used in treatment for blood cancer and rheumatoid arthritis, were up 5% to CHF 1.744 billion ($1.823 billion).

Sanofi. Sanofi reported overall first-quarter revenues of EUR 8.81 billion ($9.942 billion), up 12.3% on a reported basis and 2.4% at constant exchange rates (CER). Pharmaceutical sales were up 2.2% on a CER basis to EUR 7.45 billion ($7.45 billion), driven mainly by Genzyme, consumer healthcare products, and established prescription products in emerging markets, which were partially offset by lower sales of diabetes, the company’s largest product franchise, which declined 3.2% (CER) year over year to EUR 1.837 billion ($2.074 billion). Lantus (insulin glargine), the company’s top-selling product had a 5% decline to EUR 1.584 billion ($1.788 billion). In the US sales of Lantus were EUR 1.007 billion ($1.137 billion), a decrease of 13.1% due to the expected rebates required to maintain favorable formulary positions with key payers for contracts that started January 1, 2015. In emerging markets, Lantus sales were strong, up 18.0% to EUR 276 million ($312 million), reflecting solid growth in all regions. In Western Europe, Lantus first-quarter sales were up 6.3% to EUR 223 million ($252 million) driven by growth in Germany, Portugal and Spain. Toujeo, Sanofi’s next-generation basal insulin used to treat adults with Type 1 and Type 2 diabetes, was granted approval by the US Food and Drug Administration in late February. Full launch activities in the US market commenced at the end of March. Sanofi recently managed to secure earlier and broader market access for Toujeo than expected due to a refined contracting strategy with payers in the US As a result, Sanofi expects its global diabetes sales performance at constant exchange rates in the first quarter of 2015 to be indicative of the full year performance of this division.

AstraZeneca. AstraZeneca reported first-quarter revenues of $6.057 billion, a 1% increase on a CER basis and a 6% decline on a reported/actual basis. Product sales declined by 3% in the quarter reflecting in part the US market entry of a Nexium generic product from mid-February 2015. Nexium sales declined 25% (CER) to $644 million in the first quarter and sales of its top-selling product, the anti-cholesterol drug, Crestor, declined 7% (CER) to $1.167 billion. In the US, Crestor product sales declined by 13% to $614 million, reflecting lower volumes in line with total prescription share, as well as inventory movements. In Europe, product sales declined by 5% to $243 million reflecting prevailing competitive trends while emerging markets delivered growth of 12% at $178 million. The company’s key pipeline focus is its oncology franchise, which it has 72 trials underway, including 31 in immuno-oncology

Merck & Co. Merck & Co. reported first-quarter revenues of $9.425 billion, down from $10.264 billion in the year-ago period, a decrease of 8% compared with the first quarter of 2014, including a 5% negative impact from foreign exchange and a 9% net unfavorable impact resulting from the divestiture of the company’s consumer care business to Bayer Healthcare and select products, partially offset by the 2015 acquisition of Cubist Pharmaceuticals. The company focused on important launches in the first quarter of 2015, including Keytruda (pembrolizumab) for the treatment of advanced melanoma in patients whose disease has progressed after other therapies, Belsomra (suvorexant) for the treatment of insomnia, and Zerbaxa (ceftolozane/tazobactam), a combination product for the treatment of certain serious bacterial infections in adults. Zerbaxa was acquired through the acquisition of Cubist, which was completed in late January 2015.

Eli Lilly and Company. Eli Lilly and Company reported a 1% decline in first-quarter revenues to $4.645 billion due to the unfavorable impact of foreign exchange rates and the continuing impact of Cymbalta and Evista patent expirations, largely offset by the inclusion of revenue from Novartis Animal Health (which the company acquired in early 2015), higher US prices, and increased volume for several products. For new products, key recent highlights include several development and commercial milestones for Cyramza (ramucirumab). It was launched in the US for second-line metastatic non-small cell lung cancer, launched in the EU for advanced second-line gastric cancer, and approved in Japan for patients with unresectable, advanced or recurrent gastric cancer, where the company expects to launch the product in mid-2015. The company also submitted in the US and the EU regulatory filings for second-line metastatic colorectal cancer, and in the EU for second-line metastatic non-small cell lung cancer. Also in 2015, the US Food and Drug Administration (FDA) approved Glyxambi (empagliflozin/linagliptin) tablets as an adjunct to diet and exercise to improve glycemic control in adults with Type 2 diabetes when both empagliflozin and linagliptin are appropriate treatments. Glyxambi is part of the company’s diabetes collaboration with Boehringer Ingelheim. Glyxambi has now been launched in the US. Also as part of that collaboration, the company and Boehringer Ingelheim announced that Boehringer Ingelheim received a positive opinion from the Committee for Medicinal Products for Human Use of the European Medicines Agency (EMA), recommending approval for a single-pill combination therapy with empagliflozin/metformin hydrochloride for the treatment of adults with Type 2 diabetes. If approved, the new therapy will be marketed under the name Synjardy in Europe. One setback in its diabetes franchise, Eli Lilly will delay the submission of basal insulin peglispro (BIL), a potential once-daily treatment for Type 1 and Type 2 diabetes, to regulatory agencies until after 2016. The delay includes filings with the FDA and the EMA in order to generate additional clinical data to further understand and characterize the potential effects, if any, of changes in liver fat observed with BIL treatment in the Phase III study. 

Bristol-Myers Squibb. Bristol-Myers Squibb reported first-quarter revenues of $4.041 billion, a 6% increase year over year. Excluding the divested diabetes alliance, global revenues increased 10% or 17% adjusted for foreign exchange impact. US revenues increased 16% to $2.0 billion in the quarter compared to the same period a year ago. International revenues decreased 2% to $2.0 billion. Bristol-Myers Squibb’s global sales in the first quarter included Eliquis, which grew by $249 million, Yervoy, which grew 20%, Orencia and Sprycel, which grew 10% each, Daklinza and Sunvepra, which had combined sales of $264 million, and Opdivo, which had sales of $40 million.

Bristol-Myers Squibb also made several key acquisitions and partnerships in the first quarter of 2015. In April, the company completed its acquisition of Flexus Biosciences, Inc., a privately held biotechnology company focused on discovering and developing novel anti-cancer therapeutics. The transaction, which was announced in February, includes full rights to F001287, Flexus’ lead preclinical, small-molecule IDO1-inhibitor targeted for IND filing in the second half of 2015 and an IDO/TDO discovery program that includes its IDO-selective, IDO/TDO dual and TDO-selective compound libraries. Also in April, the company announced an agreement with uniQure N.V. that provides Bristol-Myers Squibb with exclusive access to uniQure’s gene therapy technology platform for multiple targets in cardiovascular diseases. The collaboration includes uniQure’s proprietary gene therapy program for congestive heart failure that is intended to restore the heart’s ability to synthesize S100A1, a calcium sensor and master regulator of heart function, and thereby improve clinical outcomes for patients with reduced ejection fraction. Beyond cardiovascular diseases, the agreement also includes the potential for target-exclusive collaboration in other disease areas. In total, the companies may collaborate on 10 targets, including S100A1. In March, the company acquired an exclusive global license to Novo Nordisk’s discovery biologics research program focused on modulating the innate immune system as a therapy for autoimmune diseases. And also in March, the company acquired an exclusive option to license and commercialize Prostvac, Bavarian Nordic’s investigational Phase III prostate-specific antigen-targeting cancer immunotherapy in development for the treatment of asymptomatic or minimally symptomatic metastatic castration-resistant prostate cancer. In February, the company announced an agreement with Rigel Pharmaceuticals, Inc. for the discovery, development and commercialization of cancer immunotherapies based on Rigel’s portfolio of small molecule TGF beta receptor kinase inhibitors. The collaboration will focus on developing a new class of therapeutics aimed at increasing the immune system’s activity against various cancers either as monotherapy or in combination with immune checkpoint inhibitors, including Opdivo and Yervoy.

Abbvie. AbbVie’s global sales were $5.040 billion in the first quarter, up 10.5% year-over-year. On an operational basis, sales increased 17.8%, excluding a 7.3% unfavorable impact from foreign exchange rate fluctuations. First-quarter sales growth was driven by the continued strength of the company’s top-selling product, Humira, which increased 18.0%, or 26.0% on an operational basis, excluding the impact of foreign exchange rate fluctuations. Total company sales growth was also driven by the launch of Viekira, as well as strong operational growth from other key products, including Synagis, Synthroid, Creon and Duodopa. In March 2015, AbbVie and Pharmacyclics, Inc. announced a definitive agreement under which AbbVie will acquire Pharmacyclics and its flagship asset Imbruvica I (ibrutinib), a treatment for hematologic malignancies. The acquisition accelerates AbbVie’s clinical and commercial presence in oncology, including hematological oncology.The deal is expected to close later this year. 

Bayer Healthcare. Sales of Bayer HealthCare increased by 25.6% (Fx & portfolio adj. 7.2 percent) to EUR 5.742 billion ($8.486 billion) in the first quarter of 2015. Sales of the pharmaceuticals segment rose by 7.2% (Fx & portfolio adj.) to EUR 3.200 billion )$3.615 billion). The company’s most recently launched products, the anticoagulant Xarelto, the eye medicine Eylea, the cancer drugs Stivarga and Xofigo, and Adempas to treat pulmonary hypertension posted combined sales of EUR 898 million ($1.014 billion). Sales of consumer health climbed by 7.2 % (Fx & portfolio adj.) to EUR 2.542 billion ($2.872 billion). The products acquired from Merck & Co., Inc., contributed EUR 495 million ($559 million) to the growth in consumer care.

Boehringer Ingelheim. Boehringer Ingelheim reported a decline in overall sales in 2014 and expects a moderate increase in sales for 2015. In 2014, the company generated net sales of around EUR 13.3 billion ($14.4 billion), which, currency-adjusted, represented a decline of 3.2% (-5.3% in euro terms). For the current financial year, the company expects a moderate increase in net sales compared with the previous year. In 2014, prescription medicines, the company’s most important business, generated net sales of EUR 10.1 billion ($10.9 billion). At EUR 3.2 billion ($3.5 billion), Spiriva for the treatment of chronic obstructive pulmonary disease (COPD) remains the company’s best-selling product. Diabetes is another important franchise. In 2014, the Trajenta/Jentadueto product family for the treatment of Type 2 diabetes generated an increase in net sales, currency-adjusted, of around 37% to EUR 636 million ($689 million). The anticoagulant Pradaxa contributed EUR 1.2 billion ($1.3 billion) to net sales. Medicines launched in the last few months include Striverdi Respimat for treating COPD, Jardiance (empagliflozin), Glyxamibi, a combination of the active ingredients, linagliptin and empagliflozin, for the treatment of Type 2 diabetes, Ofev for the treatment of idiopathic pulmonary fibrosis and, at the beginning of January 2015, Vargatef for the treatment of advanced lung cancer patients with adenocarcinoma after chemotherapy. With net sales of more than EUR 1.4 billion ($1.5 billion), the company’s consumer healthcare medicines business accounted for 11% of the group’s net sales. In its animal health business, Boehringer Ingelheim generated net sales of more than EUR 1 billion ($1.08 billion) and net sales of EUR 501 million ($543 million) in 2014 in its contract manufacturing of biopharmaceuticals. Overall, sales in the US, Japan, and Germany, accounted for approximately 55% of the company’s net sales in 2014, with net sales of around EUR 912 million ($988 million) in Germany, net sales of around EUR 1.7 billion ($1.8 billion) in Japan, and around EUR 4.6 billion (4.98 billion) in the US.

Biogen. Biogen Inc. reported first quarter 2015 results, including revenues of $2.6 billion, a 20% increase compared to the first quarter of 2014. Total multiple sclerosis product sales were $2.1 billion in the first quarter of 2015 compared to $1.7 billion in the same quarter last year. Tecfidera revenues were $825 million in the first quarter of 2015 compared to $506 million in the same quarter last year. Interferon revenues, including Avonex and Plegridy, were $755 million in the first quarter of 2015, compared to $761 million in the same quarter last year. Tysabri revenues were $463 million compared to $441 million in the same quarter last year. In other first-quarter highlights, in January 2015, Biogen and Columbia University Medical Center formed a $30 million strategic alliance to conduct genetics discovery research on the underlying causes of disease and to identify new treatment approaches. Also in January 2015, Samsung Bioepis, a joint venture (JV) between Samsung Biologics and Biogen, received European Medicines Agency (EMA) acceptance and validation of its marketing authorization application (MAA) for its etanercept biosimilar candidate. In March 2015, the EMA also accepted and validated the MAA for the JV’s infliximab biosimilar candidate. And in February 2015, Biogen completed its acquisition of U.K.-based Convergence Pharmaceuticals. Convergence is a clinical-stage biopharmaceutical company with a portfolio of ion channel-modulating product candidates for neuropathic pain including CNV1014802, a product candidate being developed for trigeminal neuralgia, a chronic orphan disease.

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