Lipitor accounts for a sizeable share of the $250 billion in aggregate sales estimated by EvaluatePharma for the prescription drugs heading over the patent cliff over the next five years. Studies done by the Tufts Center for Drug Discovery have shown that the industry has relied in recent years on only three out of 10 compounds in its portfolio to generate average, or greater than average, R&D costs.
“In other words, seven out of 10 products in their portfolio actually don’t earn the cost of developing a new drug. And a lot of the top selling drugs, the ones that sustain the pipelines—the three out of 10 products—are the ones that are going off patent in this five-year window right now,” Kenneth I. Kaitin, Ph.D., director of the Tufts center, told GEN.
He said pharma giants like Pfizer have responded in two ways to the dawning of generic competition: by hammering out agreements, company by company; and by tying up generic drugmakers in lawsuits.
“With having a number of generic companies producing their product, if they got agreements with those companies and they get some sort of percentage or royalty on the sale of that, then in essence, Pfizer will be benefiting from all of these companies,” Dr. Kaitin explained. “If it’s keeping the drug off the market, then ultimately the longer the drug can be delayed, it’s probably worth it when you consider a drug that earns as much money as Lipitor does.”
The patent cliff presents an opportunity for Pfizer to build generic capabilities through mergers and agreements with generic drug makers. Pfizer began going down this road in 2008, when it indicated it wanted to start selling generic versions of rivals’ off-patent drugs.
Amid the turmoil of the restructuring it announced in July, Pfizer said it would hold on to its generics, or Established Products, unit. It said that generic drugs are the fastest growing segment of fast-growing markets in emerging nations: “Given these dynamics and the company’s footprint and asset base, the company believes that the Established Products business is well positioned to capture the opportunities being created by the demographics and rising economic power within these markets,” Pfizer said at the time.
How much Established Products can bring to market, and how well, will decide in no small part how far Pfizer will get in recouping the billions of dollars in sales it will lose once Lipitor begins to go off-patent.