August 29, 2008

Monoclonal Antibody Sales to Almost Double By 2013

In 2007, total global monoclonal antibody sales reached $26 billion and are forecast to almost double by 2013. Traditionally, the 'big five' monoclonal antibodies have dominated the market, accounting for almost 80% of sales in 2007. However, Datamonitor has identified an emerging group of eight, each of which will achieve annual sales of at least $500 million between 2007-2013.

Segmenting the prescription pharmaceutical market by molecule type (small molecule, therapeutic protein, monoclonal antibody and vaccine) reveals different outlooks for each segment, with a particularly stark difference in forecast growth rates between small molecules and monoclonal antibodies (mAbs). Although the small molecule segment will continue to account for the majority of total market sales, it is growing at a slower rate. In contrast, the mAb segment, while still accounting for a modest share of total market sales in 2013, will grow at an impressive CAGR of 10.9% in 2007-13.

The primary reason for the difference between the outlooks for the small molecule and mAb growth segments is the degree of exposure to generic competition. Small molecules are the focus of the voracious generics industry, while mAbs are expected to remain effectively insulated from generic competition in 2007-2013 due to an insurmountable blend of regulatory, technical and intellectual property barriers.

However, the superior growth outlook of mAbs is due to more than simply the absence of generic competition. These kinds of treatments currently command a three-fold average revenue per product premium over small molecules. This revenue premium is supported by a higher demand for mAbs because they address therapy areas which have both high unmet needs and lower competitive intensity, due to accessing a novel target space.

Historically, within the total mAb market, it has been the 'big five' that have generated the vast majority of sales growth, and this trend is forecast to continue. This 'big five' consists of Genentech/Roche's colorectal, breast and non-small cell lung cancer treatment Avastin (bevacizumab) and the HER2+ breast cancer treatment Herceptin (trastuzumab); Biogen Idec/Genentech/Roche's Non-Hodgkin's lymphoma and rheumatoid arthritis treatment Rituxan (rituximab) and the anti-inflammatory mAbs (primarily treating rheumatoid arthritis); Abbott's Humira (adalimumab); and Johnson & Johnson/Schering Plough/Mitsubishi Tanabe's Remicade (infliximab). Remarkably, these five mAbs each already have or are forecast to have annual sales greater than $3 billion in 2007-2013.

In 2007, total company reported sales figures for these five key therapies made up 77% of the total mAb segment. The 'big five' has also shaped the historical performance of the mAb market: their combined sales growth has contributed to 78% of the market's impressive absolute sales growth of $22 billion. These same five mAbs are expected to retain their market leadership, with a combined 60% market share in 2013.

The fact that the 'big five' all share common characteristics perhaps provides some insight into their success. They are all first-to-market mAbs addressing novel targets (with the exception of second-to-market Humira), and all address disease areas with high unmet need. The sheer size of the sales for these five products can be further explained by their successful 'land grab' strategy: after starting in a commercial environment with close to a 100% market share, subsequent aggressive horizontal expansion across multiple indications rapidly increases their potential market size.

While the bulk of the mAb segment growth is indeed expected to come from the 'big five', Datamonitor has identified a number of emerging therapies that are each forecast to demonstrate significant increases in annual sales (to greater than $500m) between 2007 and 2013. There are eight products outside of the 'big five' forecast to achieve such growth: - Elan/Wyeth's bapineuzumab; Amgen and Eisai's denosumab; AstraZeneca/Abbott's Numax (motavizumab); Johnson & Johnson/Schering Plough's golimumab; Genentech/Novartis's Lucentis (ranibizumab); Roche/Chugai's Actemra (tocilizumab); Biogen Idec/Elan's Tysabri (natalizumab); and UCB's Cimzia (certolizumab pegol).

Together, the 'emerging eight' will generate a combined increase in annual sales of approximately $11 billion between 2007 and 2013, which represents a larger injection of growth to the mAb segment than that which has been provided by the 'big five' incumbents.

Through their embryonic launch phases, bapineuzumab and denosumab are both commercially reminiscent of the 'big five': each holds the potential to enact a 'land grab' of a novel target (amyloid beta and RANKL, respectively) and also address disease areas with high unmet need. However, the sheer novelty and unprecedented nature of their targets carries a significant risk of development failure.

Bapineuzumab and denosumab, meanwhile, will also lead to therapeutic diversification of the mAb segment away from its historical core focus on oncology and immunology and inflammation and into new areas such as Alzheimer's disease (bapineuzumab) and osteoporosis (denosumab).

To date, one of the key competitive advantages of mAbs has been their ability to modulate protein targets that no other molecule type can reach, most notably small molecules. However, mAbs that bind target proteins which possess a cytoplasmic tyrosine kinase domain will face a potential threat from small molecule agents targeting this domain. From the perspective of mAbs targeting receptor/ligand pairings which contain members of the receptor tyrosine kinase superfamily (Avastin, Herceptin, Erbitux etc), tyrosine kinase domains present a weak point, or a 'way in' for direct small molecule competitors.

In contrast, those mAbs that bind target receptor/ligand pairings which are devoid of small molecule-suited hydrophobic pockets (Rituxan/CD20, nosumab/RANKL, bapineuzumab/Amyloid beta) look set to remain insulated from any direct small molecule competitive threat.