The past week has been a handful of events for the healthcare
sector impacting many healthcare companies under our coverage.
) announced that its largest selling drug Lyrica exhibited similar
efficacy as Levetiracetam, a conventional treatment, in reducing
the most common type of seizures in epilepsy patients. The world's
largest drug maker also announced closure of an R&D facility
along with lay-offs as it continues to trim its R&D costs.
Meanwhile, Roche Holdings (
) received a much anticipated FDA approval for its blockbuster
potential breast cancer drug, Kadcyla, widely known as T-DM1.
Lyrica, a part of Pfizer's central nervous system (
) franchise, is widely used to treat fibromyalgia, a diabetic nerve
pain and neuropathic pain. It is also used as an add-on drug to
treat seizures in epilepsy patients even as Pfizer has been trying
to expand the drug's use as a mono-therapy for epilepsy
Pfizer's plans hit a road block after the drug's
extended-release formula failed to exhibit strong efficacy in 2012.
However, results of a separate clinical study now raise hopes as
immediate-release formula of Lyrica exhibited similar efficacy as
Levetiracetam (Keppra) in treating epilepsy patients whose seizures
have not been adequately controlled by previous treatments.
According to the clinical data, the drug reduced 28-day seizure
rates in patients by at least 50%. The drug currently garners about
$4 billion in revenues each year and we expect sales to keep
increasing gradually mainly due to expansions to other indications
In a separate event, Pfizer announced that it is closing down
CovX operation in San Diego, which will in turn result into lay-off
of nearly 100 employees. The move comes as the drug maker is
striving hard to manage its costs in a flurry of patent expiries.
Pfizer lost patent protection for its largest selling drug Lipitor
in Nov 2011, putting at risk about $10 billion even as it is slated
to lose another $10 billion in next 2-3 years due to upcoming
patent expiries. Due to these patent expiries, the company took
several other measures including increase its focus on core pharma
business and improve pipeline along with reducing staff. Continued
measures like this could lead to an upside in our price estimate as
R&D costs could decline more than we anticipate.
See Full Analysis For Pfizer here
Roche has been investing heavily in its R&D program focusing
mainly on oncology drugs (Read
Roche Defends $47 Value With Strong R&D Pipeline
) and has started to reap the fruits now. After receiving the
regulatory approvals for blockbuster potential drug Perjeta in Q4,
it has secured FDA approval for another major pipeline drug, T-DM1
or Kadcyla. Both of these drugs target HER2-positive breast cancer.
While approval was widely expected, the good news was that the
label allows for use as a front-line drug to treat HER-2 positive
metastatic breast cancer.
The launch of T-DM1 or Kadcyla will further strengthen Roche's
position in the oncology market where it already has a formidable
presence with a range of successful products such as Avastin,
Herceptin, and Rituxan. They are some of the world's
largest-selling cancer drugs with each clocking over $5 billion in
sales. With the strong efficacy exhibited in clinical trials, we
expect the drug to garner more than $1 billion in peak sales and
drive the revenue growth going forward.
See Full Analysis For Roche Holdings Here
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