There's a new competition brewing in the $10 billion market for drugs to treat deadly lung diseases as the growing number of smokers in emerging markets drives demand.
Novartis AG (NOVN) aims to convince doctors that its new Ultibro medicine for chronic obstructive pulmonary disease is better than GlaxoSmithKline Plc (GSK)'s blockbuster Advair, which is also used to treat asthma. Glaxo, meanwhile, has developed new products in anticipation of the day that Advair faces competition from generic copies.
The illness, also known as smokers' cough, kills a person every 10 seconds and will become the third leading cause of death worldwide by 2030, according to the World Health Organization and Brentford, U.K.-based Glaxo. Conditions known as chronic bronchitis and emphysema are both included in the COPD diagnosis. While asthma affects more people globally, it doesn't kill on the scale of COPD, according to the WHO.
"The disease is massively out there," said Richard Russell, a COPD specialist at Wexham Park Hospital in southeastEngland who says he sees six or seven new patients every week. "We're still getting new patients all the time with advanced disease who have never received treatment."
While the proportion of smokers among the global population has been steadily falling, the number of COPD cases will continue to rise because of the delayed appearance of symptoms and growing numbers of smokers in emerging markets, especially China, drug makers say. Though pollution exacerbates COPD, smoking is the main driver.
The market for COPD medicines may rise to $14 billion in 2018 from $10 billion this year, Citigroup Inc. analysts estimate. Including asthma, the respiratory market will total more than $30 billion, according to Bloomberg Industries.
COPD is characterized by breathlessness, excess saliva and mucus in the airways and a chronic cough. About 65 million people globally have moderate to severe COPD, according to the WHO. Current rates of smoking in China suggest a future patient population of at least 75 million, Bloomberg Industries estimated.
"COPD is a global epidemic and a growing problem in both the developed world and in emerging markets," said David Morris, Novartis's global head of primary care development, including respiratory disease. "We see this as a sustained investment."
The European Union's drug regulator on July 26 recommended that the European Commission approve Ultibro for COPD. The commission usually follows the regulator's advice. Basel, Switzerland-based Novartis has said it plans to file for approval in the U.S. at the end of next year.
Advair, marketed as Seretide in most countries outside the U.S., was Glaxo's best-selling drug last year, with 5.05 billion pounds ($8 billion) in sales, split about evenly between asthma and COPD. It's been on the market for more than a decade and was the world's third-best-selling medicine last year behind AbbVie Inc. (ABBV)'s Humira and Johnson & Johnson's Remicade, which both treat arthritis.
Boehringer Ingelheim GmbH's Spiriva, the second-most-prescribed drug for COPD, had sales of 3.6 billion euros ($4.7 billion) last year. Patients typically take Advair or Spiriva or both. AstraZeneca Plc (AZN)'s Symbicort had $3.2 billion of sales last year.
Latent demand also lies in the reluctance of smokers to visit doctors about their conditions, Russell said.
"They don't want to come to us, because they think they're going to get nagged about smoking," he said. "The whole concept of early treatment and diagnosis is still in its infancy."
The patent on Advair expired in 2010 in the U.S., the world's largest drug market. A separate patent on the Diskus device used to inhale the medicine remains in force through 2016.
While copying Advair and its delivery device will be difficult, Novartis's generics division, Sandoz, probably will be the first to succeed, followed by Actavis Inc. (ACT) and Mylan Inc., according to analysts at Sanford C. Bernstein & Co.
As a result, Glaxo and competitors have been racing to develop follow-up products. Some from Novartis, Glaxo and Almirall SA (ALM) have won regulatory approval recently.
Given Advair's dominant position, the new products may face difficulty gaining acceptance by doctors and reimbursement authorities, according to experts.
"If there's no obvious clinical benefit over existing treatments and if there's no significant cost savings to be had, then all of these drugs will struggle," said Russell, who consults for drugmakers including Glaxo, Novartis, Boehringer and Almirall.
Still, the new-product approvals have helped the companies' shares outperform rivals this year. Glaxo and Novartis have each risen 21 percent, while the Bloomberg Europe Pharmaceutical Index has risen 15 percent.
Glaxo's Breo Ellipta, which was approved in May in the U.S. as a once-daily drug, showed no statistical difference to Advair, which is taken twice a day, in a late-stage study, according to the company.
Breo and Advair both contain a steroid to reduce inflammation and a so-called LABA bronchodilator, which relaxes the airways in the lungs. While Glaxo has highlighted the convenience of once-daily dosing, that may not be enough to persuade insurance companies and governments to pay the cost, said John Hurst, senior lecturer in respiratory medicine atUniversity College London.
"I don't buy once-daily being a life-changing step forward," said Hurst, who conducts research with Glaxo, Novartis and Boehringer, among others. "It's not so much more convenient that I would be prepared to pay more money for it."
Glaxo declined to comment on the price of Breo relative to Advair.
Glaxo does have an advantage given its decade-long experience selling Advair, Russell said.
Among doctors, "there's a lot of familiarity with Glaxo, and the Glaxo marketing machine is very powerful," he said.
While Glaxo is mindful of the payer perspective and the need to be realistic, the company is confident that once-daily is "a compelling proposition" for physicians, said Darrell Baker, head of Glaxo's respiratory drug development.
"We have a lot of research to back that up," he said.
What could turn heads is an on-going study that is investigating the impact of Breo on mortality in patients with moderate COPD and with increased heart disease risk. Positive results, which may be released in early 2015, could "transform" the reimbursement outlook, Citigroup analysts said in a note earlier this month.
Spiriva is another type of bronchodilator that is often combined with Advair for patients who still have trouble breathing with single treatment. Among his patients taking Advair, 80 percent also take Spiriva, Russell said.
Glaxo's Anoro and Novartis's Ultibro, which is administered by an inhaler called Breezhaler, are the first in a new class of COPD drugs that combine both types of bronchodilators in a single device and leave out the steroid component contained in Breo, which in high doses has been linked to fatal pneumonia in studies.
"I'm much more interested in that," Hurst said.
The U.S. Food and Drug Administration will hold an advisory committee meeting on Anoro tomorrow, with a regulatory decision expected in December. The drug showed strong efficacy at both doses for which the company is seeking approval, FDA staff said in a report Sept. 6.
Glaxo, Novartis and Boehringer are among drugmakers presenting studies on COPD drugs at the European Respiratory Society's annual meeting in Barcelona, concluding Sept. 11.
Anoro probably will lead the combination therapy market, with sales reaching $1.7 billion by 2020, according to the average of six analyst estimates surveyed by Bloomberg. Ultibro, whose sales may reach $1.05 billion in 2020, may be hindered by the Breezhaler device, which must be loaded with a new capsule after each use, compared with Anoro's multi-dose Ellipta device, according to analysts.
Given that Spiriva is also taken through a single-dose inhaler, patients are familiar with the concept, Novartis's Morris said.
"This device is very simple, very intuitive," he said.
Still, Glaxo is confident it will maintain its market-leading position with its range of products that can all be delivered through Ellipta, Baker said.
Boehringer and Almirall are also developing their own LAMA/LABA combinations, which probably will reach the market by 2015, according to Citigroup.
"Is there a need for these new treatments? Absolutely," Hurst said. "It's a highly prevalent condition, and despite the best available treatments we have today, patients remain symptomatic."