Pipeline antipsychotic drugs will drive the next market evolution

Aug 07, 2009 (Datamonitor via COMTEX) -- JNJ | Quote | Chart | News | PowerRating -- Antipsychotic pipeline developers have been in the spotlight of late following a number of significant regulatory developments, including the FDA's approval of Johnson & Johnson's Invega Sustenna. With a global value of around $22 billion in 2008, and given their status as the leading drug class in the US, the commercial opportunity for novel pipeline antipsychotics is considerable.

Since the introduction of clozapine, the first atypical antipsychotic to treat schizophrenia, the growth of this class has been rapid. Offering improved efficacy, tolerability and superior side effect profiles compared to typical antipsychotics, the launch of atypical antipsychotics further evolved the treatment of schizophrenia. However, the real growth driver has been the breakdown of the 'stigma' of using antipsychotics and their expansion into different indications such as schizoaffective disorder, anxiety and depression. The broad clinical profile of atypical antipsychotics allows them to target a spectrum of psychiatric indications, increasing access to a wider variety and larger number of patients and therefore driving sales prescriptions and revenues. Pursuing indication expansion, AstraZeneca's Seroquel (quetiapine) and Eli Lilly's Zyprexa (olanzapine) became the biggest selling antipsychotics in 2008 with global sales of $5.5 billion and $5.4 billion, respectively.

In this increasingly competitive environment, new market entrants need to stand out to make a significant impact on established brands and generic antipsychotics. Despite a favorable side effect profile, Schering-Plough's Saphris (asenapine) has only comparable efficacy and a similar mechanism of action to that of the existing brands. However, the FDA advisory board backing for both schizophrenia and bipolar disorder is significant, as bipolar disorder is an even larger market than schizophrenia (by patient number prescribing). As such, Datamonitor believes that sales in bipolar disorder will be critical to the drug's success. Datamonitor forecasts sales of around $600m by 2013, after which Saphris will be competing for prescriptions with generic versions of leading brands Zyprexa and Seroquel.

Johnson & Johnson has successfully achieved differentiation with its depot formulation Risperdal Consta (risperidone), the first intramuscular injection, which consistently releases the active metabolite over a long period of time. As such, Risperdal Consta has been a commercial success, with global sales of $780m in 2008. With improved patient compliance, depot formulations tackle a crucial unmet need in antipsychotics and FDA approval of follow-on product Invega Sustenna (paliperidone palmitate) will only enhance J&J's antipsychotic franchise. This new depot offers a superior dosing regime with a once per month administration compared to Risperdal Consta's once per two weeks regime, and its improved ready-to-use formulation will provide ease of use for physicians and patients alike. Indeed, by providing uninterrupted compliance to patients, Invega Sustenna is positioned to become the next blockbuster antipsychotic.

As a leading antipsychotic developer, J&J has the experience and network to successfully launch Invega Sustenna in this highly competitive market. Additionally, physicians are already familiar with the company's other antipsychotic products. However, small to mid-sized pharmaceutical firms which lack experience and funds will struggle to launch their drugs without an experienced partner in this competitive market. This will severely limit penetration if their respective drugs eventually reach the market.

To this end, companies that do not have sufficient resources are aiming to align themselves with major pharmaceutical firms to help launch their drugs. Merck & Co's agreement to buy Schering-Plough for $42 billion, for instance, will undoubtedly aid market penetration and the launch of Saphris. Although Merck is not currently a large psychiatry market player, the combined entity's sheer size, scale and marketing power will serve Saphris well in gaining market entry.

Meanwhile, Japanese pharmaceutical company Dainippon Sumitomo is also searching for partners to break into the European and US markets for pipeline antipsychotic lurasidone, while Vanda Pharmaceuticals is seeking a partner or 'buy out' to help facilitate the launch of FDA-approved Fanapt (iloperidone). Conversely, following negative efficacy results in Phase III clinical trials for acute schizophrenia, Lundbeck cancelled its partnership with Solvay for bifeprunox. Some hope for Solvay remains in the drug's potential for the maintenance treatment for schizophrenia, although the company will need a partner to help develop and launch bifeprunox in the US.

While new undifferentiated oral products will struggle to compete with established market-leading brands, the market is such that if a new drug is able to become a second or third-line alternative and captures just 5% of the market it will still earn blockbuster revenues. Ultimately, the challenge for pipeline developers is innovation in terms of efficacy, tolerability and compliance, which will convince psychiatrists to prescribe new antipsychotics instead of the established brands with which they are familiar in the near term, and generic versions of these brands from 2012 onwards.

Ultimately, companies with pipeline antipsychotics which offer nothing new will find it hard to enter into partnerships and launch the products. However, due to the size of this market and the revenue potential of second and third-line alternatives, the threat of generic incursion should not deter large pharmaceutical companies from pursuing acquisitions, licensing deals and research collaborations in an attempt to fill the gaps in their product pipelines.

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