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Pharma sales 2012: the year of the patent cliff

In the third quarter of 2011, sales of Lipitor peaked at about $2 billion in the U.S. A year later, the world-beating blockbuster had plummeted from these vertiginous heights to about 10% of that figure.

2012 was the year of the ‘patent cliff’, and Pfizer was not the only pharmaceutical company to undergo a heart-stopping free fall of profits. Similar drops were felt by AstraZeneca, Bristol-Myers Squibb and Merck, in respect of their portfolio-leading products Seroquel IR, Plavix and Singulair.

With income from blockbusters drying up, these companies are being forced to seek a new approach to sustain market share.

One such idea is to retail to consumers. Pfizer has joined forces with Diplomat Specialty Pharmacy to mail Lipitor to patients direct, offering generic-level prices for the original branded medicine.

Pfizer has also attempted to negotiate with pharmacy benefit managers, offering discounts to encourage patients to stick with Lipitor instead of switching to a generic.

But as the above chart shows, the impact of these approaches has so far been negligible. Tactics like these may not be sufficient to plug the gaping hole left by the recent round of patent expirations, and a deeper strategic review may be necessary.

Strengthening the pipeline seems to be the only real solution. AbbVie’s new arthritis and hepatitis C treatments have gone some way to calm nerves in anticipation of the patent expiration of Humira. It is also thought that investing in biologic medicines that are harder to replicate will help secure against future shocks.