No sweet deals for TOUJEO

SANOFI has launched TOUJEO, its successor to LANTUS (the world’s top selling insulin drug, as well as SANOFI’s top selling drug, which generated $7B in sales last year but lost patent protection in February 2015). SANOFI has announced that they will not discount TOUJEO relative to LANTUS, citing TOUJEO’s data showing it was superior to LANTUS in preventing nocturnal hypoglycaemia episodes. In reality, it seems likely that SANOFI is maintaining TOUJEO at a higher price to contain the revenue erosion caused by generic entry since LANTUS lost exclusivity in February this year.

This brings up the larger issue of product line extension in the pharmaceutical space, where manufacturers try to avoid the adverse impact on revenues that stem from loss of exclusivity as well as the risk of cannibalising their own products in the absence of generic competition. There are several examples of how manufacturers have addressed the challenge to maintain or expand access in an often very competitive space, and seek to fend off the threat posed by generic entry.

One example is BIOGEN’s launch of products for relapsing-remitting multiple sclerosis. PLEGRIDY launched in 2014 as a longer acting version of AVONEX to treat the same patient population with a more convenient administration schedule. With AVONEX likely to encounter generic competition in coming years, and PLEGRIDY serving as a more convenient formulation of a similar molecule, BIOGEN’s hope would be to transition patients from AVONEX to PLEGRIDY over time, rather than losing longtime AVONEX patients to generic beta interferons or other disease-modifying MS therapies. However, in October 2014, combined sales of AVONEX and PLEGRIDY were $745 million, missing Wall Street’s estimates of $767 million. BIOGEN released a statement revealing that the culprit eating into their interferon sales may be one of their own: 40% of patients who switched MS treatments during Q2 2014 had switched to TECFIDERA. Whether this was anticipated or not, considerations of cannibalisation are constant in a space as crowded as MS, forcing manufacturers with multiple products in the space to strategize accordingly.

A future product that will face a similar challenge is JANSSEN’s ARN-509, the successor to ZYTIGA (JANSSEN’s oral prostate cancer therapy that achieved near-blockbuster status in its first year of launch). Currently ARN-509 is under development and expected to be launched in 2018 with a potentially broader indication than ZYTIGA. ZYTIGA’s loss of exclusivity was set for December 2016, but in July 2013 JANSSEN secured a new patent for use of ZYTIGA in combination with prednisone, ensuring that ZYTIGA will not lose exclusivity before ARN-509’s launch. To retain its patients after ZYTIGA’s loss of exclusivity, JANSSEN may be hoping to transition ZYTIGA patients to ARN-509, but while both ZYTIGA and ARN-509 hold patent protection, JANSSEN will have to be mindful of the same cannibalization concerns facing other manufacturers.

In a competitive landscape with both branded and generic therapies, an in-depth understanding of evolving market dynamics and the competitive landscape can help manage the complex strategic choices that manufacturers face. TOUJEO serves as a useful case study to demonstrate the need for careful consideration to ensure that pricing strategy matches access potential and for minimizing exposure to potential access risks. In other cases, manufacturers may willingly choose to cannibalize their own product to fend off generics or rely on strategies including favorable pricing or treatments that allow to retain patients for longer treatment durations to drive increased revenue.