Not since 1996 has the FDA approved so many new medicines - 41 last year including four for AstraZeneca and three each for Biogen Idec, Eli Lilly and Merck & Co.
In Europe, the market for new drugs is similarly dynamic, with the European Medicines Agency approving 83 new medications in 2014. This number, which includes generic drugs, is up from 79 in 2013 and 57 in 2012.
As the below chart indicates, the number of new approvals is not an isolated peak but part of a trend, heralding the pharmaceutical industry’s emergence from the troubled 2005-2010 period, where approvals were consistently low.
Part of the reason for the current optimism is the quality of the products being approved. These include the PD-1 inhibitors Opdivo from BMS and Keytruda from Merck & Co - new kinds of cancer drug that use the body’s immune system to fight tumors.
While cancer remission rates have dropped, cure rates for infectious diseases such as hepatitis C have increased. AbbVie’s exciting new hep C treatment Viekira Pak is touted to achieve blockbuster status this year due to a pricing agreement with healthcare giant Express Scripts.
These encouraging R&D successes are connected with a suite of new, potentially transformative technologies currently being developed, such as biochips, gene editing, and synthetic biology. It’s hoped that the recent upswing in approvals is a sign that the pharma industry is entering a period of ‘hyper-innovation’ supporting strong clinical and economic results.
Market access and marketing
On the market access side, it’s worth noting that 15 of the approvals were treatments for rare diseases, in line with estimates that the current 3.5% of the market held by orphan drugs will increase to 4.5% by 2016.
While enhanced marketing rights and other government incentives can create a positive access environment for orphan drugs, research has shown that they tend to have more coverage restrictions than non-orphan drugs. Researchers from Tufts also noted that:
“Payer sensitivity to the cost of orphan drugs is rising, particularly in light of recent launches of high-cost products. As a result, orphan drugs are increasingly subject to formulary restrictions.”
The increase in approvals will change the pharma marketing landscape in coming years. While more, and more effective therapies are clearly good for the industry, marketers face a more competitive environment that will put pressure on prices. As one commentator observed:
“In the last 15 years, even marginal drugs…could command strong prices since there were few options…intensifying competition could foster heavy discounting”
In particular, the launch of new treatments for cholesterol, diabetes, hepatitis C, hemophilia, blood cancer, psoriasis, melanoma and obesity will make these markets more congested. The challenge for brand and marketing managers in these therapeutic areas will be finding innovative ways to engage with customers and differentiate their products from the rest.