Investors have long heard of the problems plaguing Big Pharma, especially blockbuster drugs coming off patent in the near future, exposing them to competition from cheaper generics. A record number of drug sales will come off patent in the upcoming "patent cliff" arriving in 2010-2012. BusinessWeek lists a few: Pfizer's (PFE) Lipitor, Bristol-Myers Squibb's (BMY) Plavix and Avapro, Eli Lilly's (LLY) Zyprexa, Wyeth's (WYE) Effexor, and Merck's (MRK) Cozaar/Hyzaar and Singulair.

But there are some promising drugs to replace the lost sales of these blockbusters, according to Arthur Wong of S&P:

  • Amgen (AMGN): Denosumab for osteoporosis
  • AstraZeneca (AZN): Brilinta (AZD6140) for arterial thrombosis
  • AstraZeneca and Bristol-Myers Squibb: Onglyza (Saxagliptin) for diabetes
  • Bristol-Myers Squibb: Belatacept for organ transplants
  • Eli Lilly: Effient (Prasugrel) as platelet inhibitor
  • King Pharmaceuticals (KG): Embeda/Remoxy (Morphine/Oxycodone) for pain
  • Merck: Cordaptive for atherosclerosis
  • Novartis (NVS): Afinitor (Everolimus) oncology drug
  • Novo Nordisk (NVO): Liraglutide for diabetes, obesity
  • Sanofi-Aventis (SNY): Multaq (Dronedarone) for atrial fibrillation

Pfizer is conspicuously absent here. The big pharmaceutical company reported financial results for first-quarter 2009 last week. While it beat analyst estimates on cost cuts, its sales declined across the board and are set to decline even further when Lipitor comes off patent; it already faces competition from generics of rivals.

Pfizer did not demonstrate any growth drivers going forward and its pipeline is unimpressive and not exciting. In fact, it was just a month ago that Pfizer discontinued two trials, and at the end of March, it had 12 percent fewer drugs in its pipeline than six months earlier with 100 drugs (pdf), 25 of them in phase 3, but most of the projects are for new applications, not new drugs.

While Pfizer promises growth will come from Wyeth and its pipeline, note that Wyeth itself also has drugs coming off patent. Wyeth reported flat earnings results also on cost cutting and taxes, while revenue fell short of analyst estimates on stronger dollar. Effexor sales already tumbled 20 percent the last quarter and the decline is likely to continue. And Wyeth is another name missing from this list of ten most promising drugs. Wyeth's pipeline includes eight registrations (pdf) for applications of drugs, five of them in the U.S., and the phase 3 drugs, many are new.

Of course, there are no guarantees the drugs listed as the most promising late-stage drugs will actually deliver, but the fact that both Pfizer and Wyeth star in the first list of drugs coming off patent and are absent from the second list of promising drugs is a little telling.

There are opportunities for Pfizer with Wyeth; it can further develop Wyeth's pipeline, bolster its own pipeline and try for new applications on existing drugs. But so far developments have been choppy and somewhat disappointing.


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