A decline in U.S. drug approvals, spurred by an “increased conservatism” on safety issues by the Food and Drug Administration, raises the stakes in 2011 for the nation’s largest drugmakers, including Indianapolis-based Eli Lilly and Co.
Regulators cleared 21 medicines, the fewest since 2007, for sale last year. It was the first time in a decade that Pfizer Inc., the world’s largest drugmaker, as well as Lilly, Merck & Co. and Bristol-Myers Squibb Co. were shut out at the same time, according to agency records.
Pfizer, facing generic competition this year to the top-selling cholesterol pill Lipitor, and Bristol-Myers have said they are seeking approval of three drugs that may bring in $4 billion annually by 2016. Their applications follow a year in which analysts say that added safety reviews delayed approval of medicines with potential annual sales of more than $1 billion.
The FDA is “trying to cover their butts,” Simos Simeonidis, a senior biotechnology analyst at Rodman & Renshaw in New York, said. “Overall you have seen an increased conservatism from the FDA and an increased emphasis toward safety.”
Congress passed legislation in 2007 authorizing the agency to require plans to minimize potential side effects of new drugs before approval. Confusion about how to apply the power has contributed to a rise in three-month extensions of reviews and “complete response letters” seeking more data, said Ira Loss, an analyst with Washington Analysis.
The 11-member Standard & Poor’s 500 Pharmaceuticals Index fell 2.9 percent last year, underperforming a 13-percent increase in the broader S&P 500.
The FDA’s powers were expanded after the agency took years to identify heart risks with Merck’s painkiller Vioxx and GlaxoSmithKline Plc’s diabetes pill Avandia. Vioxx was withdrawn from the market in 2004 and Avandia was restricted last year. New drugs now often require safety plans that can involve educating doctors and patients about known side effects or conducting additional studies to find rare complications.
The FDA’s 2010 tally is “disappointing” because it doesn’t include promising medicines that investors expected to be approved, including Glaxo and Human Genome Sciences Inc.’s Benlysta for lupus and Lilly and Amylin Pharmaceuticals Inc.’s Bydureon for diabetes, said Loss, who has covered the FDA for more than three decades.
Bydureon, a once-weekly version of the injectable diabetes drug Byetta, was delayed Oct. 19 when the FDA asked for a study of the medicine’s heart risks. The decision surprised investors because the FDA didn’t request new studies when it issued its first complete response letter in March.
Bydureon sales for San Diego-based Amylin may reach $899.5 million in 2014, according to the average estimate of two analysts in a Bloomberg survey. Its marketing partner, Indianapolis-based Lilly, may get $506 million, analysts forecast. The estimates have been lowered by $200 million to $300 million in the past 12 weeks following the regulatory delay, according to Bloomberg data.
Amylin found the delay “disappointing” and is addressing the FDA’s concerns, said Anne Erickson, a spokeswoman. The company plans to reply to the agency by the end of this year.
Bristol-Myers’s ipilimumab for skin cancer, originally scheduled for a decision by the FDA by Dec. 25, was delayed until March. The medicine, which would be the first new melanoma drug in more than a decade if approved, may produce as much as $1 billion in annual sales within five years, according to Linda Bannister, a health-care analyst at Edward Jones & Co. in Des Peres, Mo.
Delayed regulatory decisions are critical to pharmaceutical and biotechnology companies. The Pharmaceutical Research and Manufacturers of America, a Washington, D.C.-based trade group, estimates that it costs $1.3 billion on average to bring a new drug to market, and that only one in 10,000 medicines tested may reach commercialization.
“You get these complete response letters, which basically push things back at least a year,” Loss said. “That has a tremendous effect on the planning and the expense outlay for these companies.”
The FDA doesn’t have an official tally yet for 2010 drug approvals, according to Sandy Walsh, an agency spokeswoman. The FDA approved 25 new medicines in 2009 and 24 the previous year, according to data on the agency’s website. Nineteen new drugs were cleared in 2007, the fewest in 24 years, according to data compiled by Bloomberg.
“There has been no systemic change in how the FDA is approaching drug approvals” Walsh said in an e-mail. “The primary factor driving first-cycle approval is the quality of the application.”
No drugmaker had more than one new medicine approved in 2010, according to data Bloomberg compiled. The figures, derived from an agency database of “new molecular entities,” exclude blood products and vaccines such as Seattle-based Dendreon Corp.’s Provenge for prostate cancer, approved April 29 after a three-year wait, because the FDA doesn’t consider them drugs.
Noteworthy approvals included Basel, Switzerland-based Novartis AG’s multiple sclerosis pill Gilenya and closely held Boehringer Ingelheim GmbH’s blood thinner Pradaxa, according to Loss. The Ingelheim, Germany-based company has sold Pradaxa in Europe since 2008.
Companies pay fees to the FDA in exchange for timely decisions on new drug applications. Delays and inconsistency in the review process may arise in negotiations when user-fee legislation comes up for renewal in 2012, according to Les Funtleyder, a fund manager at Miller Tabak & Co. in New York.
“Investors can incorporate any set of rules,” Funtleyder said. “What they can’t deal with is uncertainty, which seems to be what’s coming out of the FDA at the moment.”
The number of new-drug applications submitted to the FDA was down by about half as of Nov. 15, compared with 2009, according to agency data. Most medicines are assigned 10-month reviews while drugs granted priority status are supposed to be evaluated within six months.
Bristol-Myers and Pfizer, both based in New York, are seeking approval of a blood-thinner they developed together called apixaban. Pfizer has said it also plans to apply for approval of its lung-cancer drug, crizotinib, in the first half of this year. The products may reach combined annual sales of $3 billion by 2016, according to the average estimate of analysts surveyed by Bloomberg.
Ken Dominski, a spokesman for Bristol-Myers, declined to comment on the drug-approval figures.
Merck, of Whitehouse Station, N.J., made progress in 2010 launching new products and advancing its drug pipeline, said Ron Rogers, a spokesman. Products to be evaluated this year include boceprevir, a hepatitis C treatment that five analysts project, on average, will have sales of $524.4 million in 2014.
The fate of Benlysta, the first medicine for lupus since 1958, may also be decided this year. The drug was initially granted priority review and a Dec. 9 deadline. While an advisory panel recommended approval of the drug in a 13-2 vote, the FDA said Dec. 3 that it needed three more months to make a decision.
Benlysta is projected to bring in $2.14 billion in sales for Human Genome in 2014, according to the average estimate of five analysts. The Rockville, Md., company is developing the product with London-based Glaxo.