Blockbuster brands generate generic goals

Today, the antipsychotic market is one of the largest and most commercially attractive central nervous system (CNS) markets, with annual revenues of $10.4 billion in 2003 and a growth rate of 24.1%. There are two main classes of antipsychotics: the older conventional dopamine antipsychotics, first launched in 1950s; and the new second-generation antipsychotics (SGAs), which currently drive the antipsychotic market, yielding revenues of over $9.5 billion in 2003, with a 93.3% market share.

Zyprexa (an SGA) leads the market with 2003 revenues of $4.1 billion across the seven major markets, a CAGR of 24.3% and market share of 39.3%. The success of Zyprexa comes from a combination of its second-to-market status, impressive efficacy, range of formulations and aggressive marketing tactics by Lilly.

The patent challenge

It was also Zyprexa that spearheaded the penetration of SGAs into the bipolar disorder market, being one of the first drugs to be recognized as suitable for maintenance therapy since the approval of lithium over 30 years ago. However, 2004 has been a bad year for Zyprexa, with fourth quarter revenues down by 5% from the year-ago quarter to $1.1 billion, while US sales of the drug fell by 19% over the previous quarter.

The future outlook for Zyprexa is also being hampered by the ongoing patent challenges from numerous generic drug manufacturers. Although the trial proceedings ended in February 2004, a final verdict has still yet to be given. A judge's decision is expected during the current financial quarter, although a delay of this length has to have a reason, and must continue to worry Lilly.

Whatever the outcome of patent litigation, revenues from Zyprexa are forecast to continue to decline as Lilly also faces numerous lawsuits in the stemming from diabetes and other alleged side effects of the drug.

With Johnson and Johnson's Risperdal (risperidone) and AstraZeneca's Seroquel (quetiapine) also blockbusters in the SGA class, and Bristol-Myers Squibb's Abilify (aripiprazole) forecast to attain blockbuster status in 2005, the extreme interest in this market from generics manufacturers is unsurprising.

Revenues face generic erosion

Risperdal is approved for schizophrenia and bipolar mania and because it is available in numerous formulations, there is significant off-label usage of the drug. However looming patent expires from 2006 onward present a significant threat. Likewise, Seroquel faces patent expiries in the EU and in 2007, although it is protected in the until 2011.

Although the antipsychotic market has up until now had relatively low exposure to generics, the future entrance of generic risperidone and quetiapine from 2007 onwards, plus the increasing drive towards generic prescribing as a cost-saving measure means that brand companies will find it increasingly difficult to avoid the effects of generic erosion on their revenues.

SGAs are generally acknowledged by payers as a cost concern, and with rising general and mental healthcare costs, governments are now increasingly looking towards cost-containment measures, including reducing the amount spent on medications and thereby encouraging physicians to prescribe cheaper generics.

Related research:

·          Commercial Insight: Antipsychotics - From Blockbuster Brands to Billion Dollar Generics

·          Top CNS Portfolios in 2004 - The Industry Gold Standards

·          Global Generics Guide 3rd Edition: Benchmarking Generics Company Capabilities and Strategy