We are in the midst of third quarter earnings reports, and they show with stark detail what the tsunami of patent losses means to the financial underpinning of drug-makers. It's a serious problem that will erode earnings for years to come. Pharmaceutical researcher Evaluate Pharma estimates there are $290 billion of sales at risk from patent expirations between this year and 2018.
Companies are trying to put the most positive spin they can on the impact, but the effects can take your breath away. For example, Sanofi , suggested in their company's most recent earnings call that things are looking up because its new full-year projection is for earnings to drop only 12% this year, not the 15% projected earlier. Sanofi lost protection for three drugs. Mega blockbuster Plavix, a blood thinner, alone saw sales drop 70%.
And the patent cliff pain continues. In 2013, patents will expire on drugs that currently have sales of $29 billion annually. The research firm expects more than 70% of that total will be lost to generics. Falling revenue is usually tracked by a falling share price, but the firm points out that patent cliff problems, when a wave of big-ticket drugs lose protection, generally show up several years in advance with a stalling stock price.
The implications are, of course, huge. But is it all bad? "The patent cliff is generally portrayed as a bad event for the Industry, but it may turn out to be a good event, with companies feeling liberated from the mega-blockbuster curse of replacing aging cash flow
streams."
That depends, on how companies respond. Too often, spurred by the feeling they need to raise their share price--and perhaps made overconfident by the success of aging blockbusters--they blow it. They take excess cash from those aging cash cows and overindulge on "risky, late-stage, in-process R&D assets in seemingly high-priced and speculative in-licensing deals and company
acquisitions”.
Even those companies that say they are dedicated to finding their future with R&D don't always seem to know how. Statistics points out the industry has plunked down $1.1 trillion, in the last decade on research and development--and too often with very poor results.
So what are the drugs that top the 2013 patent expiry list? Presented here the top 15, out of about 120, that will see patents expire next year. It is led by Eli Lilly's anxiety and depression drug Cymbalta, which last year generated $4.9 billion in sales for the company. It includes Purdue Pharma's OxyContin, which sold to the tune of $2.4 billion last year, and tails off with the Novartis osteoporosis treatment Reclast, which generated $612 million.
While the overall losses are less than this year's, which will see patent protection stripped away on about $67 billion, they will keep some companies in a vise grip of indecision. Others, perhaps, will free themselves and find their way to smart investments and drugs that provide benefits to patients and returns to shareholders.
Companies are trying to put the most positive spin they can on the impact, but the effects can take your breath away. For example, Sanofi , suggested in their company's most recent earnings call that things are looking up because its new full-year projection is for earnings to drop only 12% this year, not the 15% projected earlier. Sanofi lost protection for three drugs. Mega blockbuster Plavix, a blood thinner, alone saw sales drop 70%.
And the patent cliff pain continues. In 2013, patents will expire on drugs that currently have sales of $29 billion annually. The research firm expects more than 70% of that total will be lost to generics. Falling revenue is usually tracked by a falling share price, but the firm points out that patent cliff problems, when a wave of big-ticket drugs lose protection, generally show up several years in advance with a stalling stock price.
The implications are, of course, huge. But is it all bad? "The patent cliff is generally portrayed as a bad event for the Industry, but it may turn out to be a good event, with companies feeling liberated from the mega-blockbuster curse of replacing aging cash flow
streams."
That depends, on how companies respond. Too often, spurred by the feeling they need to raise their share price--and perhaps made overconfident by the success of aging blockbusters--they blow it. They take excess cash from those aging cash cows and overindulge on "risky, late-stage, in-process R&D assets in seemingly high-priced and speculative in-licensing deals and company
acquisitions”.
Even those companies that say they are dedicated to finding their future with R&D don't always seem to know how. Statistics points out the industry has plunked down $1.1 trillion, in the last decade on research and development--and too often with very poor results.
So what are the drugs that top the 2013 patent expiry list? Presented here the top 15, out of about 120, that will see patents expire next year. It is led by Eli Lilly's anxiety and depression drug Cymbalta, which last year generated $4.9 billion in sales for the company. It includes Purdue Pharma's OxyContin, which sold to the tune of $2.4 billion last year, and tails off with the Novartis osteoporosis treatment Reclast, which generated $612 million.
While the overall losses are less than this year's, which will see patent protection stripped away on about $67 billion, they will keep some companies in a vise grip of indecision. Others, perhaps, will free themselves and find their way to smart investments and drugs that provide benefits to patients and returns to shareholders.
