Is Roche In Trouble With $21 Billion In Sales Nearing Patent Expiry?
Source:

Forbes

September 4, 2019

Roche Holding’s (NASDAQ:RHHBY) key blockbuster drugs – Herceptin and Avastin – will lose their market exclusivity in 2019, while another blockbuster drug, Rituxan, has already lost its exclusivity. These three drugs are important for Roche, and Roche’s stock, as they generate $21 billion in annual sales, representing one-third of the company’s total revenues.

We show historical examples to see the pattern of decline in sales after patent expiry. The decline in sales after patent expiration can be attributed to lower price points of biosimilars and generics. However, in Roche’s case, we expect the decline for the above three drugs combined not to be steep in the near quarters, as pharmaceutical companies that have received the regulatory approvals for biosimilars to the above three drugs, haven’t announced the launch date yet, and post launch, it will take some time for the market to adopt to the biosimilar.

You can look at our interactive dashboard analysis ~ How Much Revenue Does Roche Stand To Lose With Patent Losses of Its Key Oncology Drugs? ~ for more details. In addition, look at our data for healthcare companies here.

Roche’s Key Oncology Drugs That Have Either Lost Or Are About To Lose Market Exclusivity Are Avastin, Herceptin, And Rituxan
Avastin is used for the treatment of lung cancer, and in combination therapy for breast and renal cancer. Avastin’s annual sales have hovered around $7.0 billion in the recent years, but it will lose its market exclusivity in 2019.

Herceptin is used for the treatment of a certain type of breast and stomach cancer. Herceptin’s sales have also hovered around $7 billion in the recent years, and it will lose its market exclusivity period in 2019.

Rituxan is used for the treatment of non-Hodgkin’s lymphoma and chronic lymphocytic leukemia, and rheumatoid arthritis. Rituxan’s sales have been over $7 billion in recent years. However, its patent expired in 2018, and the sales were impacted.

These Are Important Drugs For Roche, As They Account For One-Third of The Company’s Total Revenues

Avastin, Herceptin, & Rituxan Could Lose >15% of Sales Over The Next Two Years

Broadly, The Trend of Decline In Sales Post The Loss of Exclusivity (LoE) Period Is Evident From Several Examples Over The Last Few Years, As Shown Below

Teva’s Copaxone sales declined from $4.3 billion in 2013 to $4.0 billion in 2015, following its patent expiry in 2014.

Novartis’ Gleevec U.S. sales plunged from $2.5 billion in 2015, the year it lost its patent, to $1.2 billion in 2016.

Bristol-Myers Squibb and Otsuka’s Abilify sales declined from $7.6 billion in 2014 to $1.0 billion in 2016, following its patent expiry in 2015.

AstraZeneca’s Nexium sales declined from $3.9 billion in 2013 to $2.5 billion in 2015, following its patent expiry in 2014.

Eli Lilly’s Cymbalta sales plunged from $5.0 billion in 2012 to $1.6 billion n 2014, following its patent expiry in 2013.

GlaxoSmithKline’s Advair also saw sales decline from $5.6 billion in 2015 to $4.0 billion in 2017, following its patent expiration in 2016.

The Decline In Sales Post Loss of Exclusivity Period, Can Largely Be Attributed To Cheaper Generics Or Biosimilars That Hit The Market, And Eat The Market Share of The Original Biologic.

There is a huge price difference between the original biologic, and their generic versions, that are launched after patent expiry.

There is a difference between a generic and biosimilar. Generics are usually made for the drugs that are easy to copy, develop, and manufacture, while biosimilars are made for complex drugs, involving much more cost, and are comparatively difficult to develop.

As such, biosimilars are usually priced around 20% to 30% below the original biologic, as shown in case of Inflectra, while a generic could be priced >90% below the original biologic, as shown in case of Gleevec.

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