Drug Sales in U.S. Grow at Slower Pace

[Pharma Newshound]

Source: Bloomberg.com

Drug Sales in U.S. Grow at Slower Pace as Generic Use Surges

By Rob Waters and Shannon Pettypiece
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March 12 (Bloomberg) -- Drug sales in the U.S. grew at their slowest pace since 1961 as cheaper copies of top-selling medicines flooded the market and U.S. regulators approved fewer new products, a report said.

Sales of medicine rose 3.8 percent to $286.5 billion in 2007, compared with an 8 percent increase a year earlier when demand spiked as the U.S. Medicare program for the first time offered prescription drugs to the elderly, the Norwalk, Connecticut-based health research firm IMS Health Inc. said today in a statement.

Treatments that had $17 billion in sales in 2006 lost patent protection last year, opening the way for cheaper copies to enter the market, IMS said. Safety concerns also hurt some drugs while the main winners were high-priced biotechnology treatments for cancer, schizophrenia and immune disorders that are primarily prescribed by specialists.

``The blockbuster model is certainly slowing,'' said Diana Conmy, corporate director of IMS's Market Insights division. ``The continued impact of generics will be a major issue. There will be fewer product approvals and those will tend to be more specialist driven with narrower indications.''

While two-thirds of all drugs sold in the U.S. are now generics, brand-name drugs account for 80 percent of sales, Conmy said. When a drug's patent expires, cheaper copies are allowed on the market, driving down the price.

The number of prescriptions increased 2.8 percent in 2007, slower than the 4.6 percent increase in 2006. Nineteen new drugs were approved by the U.S. Food and Drug Administration, the fewest since 1983, the report said.

Anemia Drugs

Anemia drugs such as Amgen Inc.'s Aranesp and Epogen and Johnson & Johnson's Procrit declined to $8.6 billion from $10.1 billion as the drugs were linked to higher risks of heart attack, stroke and death at high doses.

``For the next couple years, many of the well-known blockbuster drugs across a variety of categories are facing patent expirations,'' said Russell McAllister, a Portland-based analyst with Merriman Curhan Ford & Co., in a telephone interview yesterday. ``That's the problem that a lot of big pharma companies are facing. Their core, branded franchises are expiring without new drugs to replace those lost revenues.''

Among the biggest drugs to lose patent protection last year was Pfizer Inc.'s blood pressure pill Norvasc, with $4.9 billion in 2006 sales.

Cholesterol Drugs

Sales of cholesterol drugs, the top-selling category of medication, declined 15.4 percent, IMS said. Many patients switched to generic versions of Merck & Co's Zocor, which lost patent protection in June 2006.

Revenue from stomach acid medicines, the No. 2 category, rose to $14.1 billion from $13.7 billion, led by AstraZeneca Plc's Nexium, the second best-selling drug in the U.S. with $5.5 billion in 2007 sales.

Antipsychotics used to treat schizophrenia and bipolar disorder, such as Eli Lilly & Co.'s Zyprexa, passed antidepressants to become the third-best-selling drug class in the U.S., increasing 12 percent to $13.1 billion from $11.7 billion in annual sales.

Antidepressants remained the most widely used class of drugs with 233.7 million prescriptions in 2007, IMS said.

The decline in sales of mass-market drugs stems partly from a lack of innovation, said McAllister.

``There's a lot of me-too drugs in these categories and as a result it's difficult for the big pharma companies to maintain those franchises,'' he said. ``The Nexiums of the world, the $6 billion juggernauts -- we're going to see fewer and fewer of those over time, because the major therapeutic categories have decent alternatives.''

`Niche Category'

The increased number of drugs available as generics is good news for consumers, said Conmy, because ``there should be lower- cost options for patients in different therapy classes.''

The rising use of generics is double-edged, McAllister said.

``It's both beneficial and harmful,'' he said. ``The cutting-edge drugs of five years ago are suddenly the $5-copay generics. The downside for the consumer is that if the big pharma companies don't see these areas as being profitable then the incentive to innovate is lower.''

To contact the reporters on this story: Rob Waters in San Francisco at rwaters5@bloomberg.net ; Shannon Pettypiece in New York at spettypiece@bloomberg.net