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Hitting the Mark: Lessons Learned From Blockbuster Drugs That Missed or Exceeded Analyst Expectations

September 17, 2020

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Written by: Paritosh Devbhandari Taylor Zboril Oliver Sussman Nicole Woo

Executive Summary

  • Pharmaceutical products frequently surpass and fall short of blockbuster expectations; a number of considerations beyond the clinical data are often a key factor in these scenarios
  • For example, manufacturer investment in post-launch clinical trials can optimize life cycle management by widening patient benefit and expand sales beyond initial forecasts
  • Moreover, securing a lead position in a competitive market may be the deciding factor for a drug’s uptake due to market dominance and clinical support, rather than having to compete for these advantages in a saturated space
  • Notably, while high-cost therapies may offer life-changing clinical benefits, in some circumstances they may run the risk of shortfalls in sales downstream from launch due to challenges surrounding marketing innovative products in the USA as well as varying willingness-to-pay in ex-USA markets
  • CBPartners Take: Pharmaceutical products can both exceed and fall short of blockbuster sales expectations by considerable margins which can be a result of a number of reasons. Some of these include the value of first-to-market dynamics, supporting real-world evidence to gain a competitive edge, and continual investment in trials for follow-on indications to improve life cycle management. In this article, we analyze selected products with sales that differed considerably from expectations to explore the rational for the differences. The case studies were selected based on key products with 2018 and 2019 sales that differed considerably from 5th year analyst expectations in 2013 and 2014 respectively.

OFEV and ESBRIET: Gaining an Edge in the Face of Head-to-Head Competition

In the case of head-to-head competition, as seen with OFEV and ESBRIET, first-to-market status in external markets and the generation of real-world evidence were able to support ESBRIET’s competitive edge. Both products were indicated for Idiopathic Pulmonary Fibrosis (IPF), granted orphan status by the FDA and EMA, received priority review designation, and were ultimately approved by the FDA on the same day in October 2014. Both products addressed a disease space with a high unmet need showing clinical efficacy in mean forced vital capacity decline from baseline to 1 year. Despite similar FDA approval dates and indicated patient populations, ESBRIET overperformed by 37% compared to a consensus of 5-year analyst sales expectations for 2014 – 2019 while OFEV underperformed by 18%.

 

ESBRIET was able to secure its position as the market leader early after launch due to a number of factors: a milder side effect profile, first-to-market status in the EU and Japan, and a greater body of real-world evidence. ESBRIET and OFEV did launch at similar WAC prices near USD 8,000 per month, with clinical trial data showing similar clinical efficacy. However, with ESBRIET’s momentum from its first-to-market status a full four years before OFEV in the EU, the environment was more favorable for ESBRIET uptake in the short-term which helped secure its position in the USA.

The role of real-world evidence was critical in creating the differential between OFEV and ESBRIET. Although these products have similar clinical trial data, ESBRIET’s approval in the EU in 2011 provided ROCHE years as the only therapy on the market to gather real-world data and establish themselves among pulmonologists before OFEV even had the chance. In the time that ESBRIET was launched and marketed in the EU and Japan, it was able to generate post launch data demonstrating an improvement in the risk of death (48% lower risk of death after 1 year vs. placebo) as well as high rates of real-world adherence which have supported its value as an IPF treatment option.

IMBRUVICA: One Drug, Multiple Indications

Where ESBRIET overperformed expectations by outshining its competitor, IMBRUVICA similarly outperformed analyst expectations through multiple indication expansions beyond those initially considered in sales predictions. Pharmacyclics and Janssen Biotech’s IMBRUVICA outperformed analyst expectations for 2018 U.S. sales by 90%, almost doubling the USD 2.2B figure at USD 4.1B. IMBRUVICA is an oral Bruton’s tyrosine kinase inhibitor that blocks the protein responsible for cancer cell growth. Key to the drug’s success was the continued investment by both manufacturers in over 50 post-launch clinical trials, which supported 9 FDA approvals (through 2018) across 6 indications. Since its November 2013 approval as a second line therapy for Mantle Cell Lymphoma (MCL), IMBRUVICA has seen multiple indication expansions including chronic Lymphocytic Leukemia (CLL) (2014, 2016), Waldenström’s Macroglobulinemia (WM) (2015), Small Cell Lymphocytic Lymphoma (SLL) (2016), Relapsed / Refractory Marginal Zone Lymphoma (2016), and Chronic Graft Versus Host Disease (cGVHD) (2017).

IMBRUVICA’s potential was recognized right away, earning accelerated development, review, and approval under the Breakthrough Therapy Designation Program for its first indication, MCL. The FDA’s endorsement of IMBRUVICA reverberated throughout its successive indication expansions in the form of accelerated approvals and additional Breakthrough Therapy Designations.

The FDA has granted IMBRUVICA 11 FDA approvals through 2020, inclusive of the 2 most recent approvals which are combination (Rituximab and Obinutuzumab) therapies for CLL

For example, IMBRUVICA received 3 approvals for CLL, initially as a second line treatment, then for patients with a 17p chromosome deletion, and in 2016 as first line. With both WM and cGVHD, IMBRUVICA was the first drug approved in these indications and received breakthrough therapy and orphan product designations based on strong preliminary clinical trial data. In 2018 the FDA approved IMBRUVICA plus Rituximab as the first non-chemotherapy combination treatment for WM.

IMBRUVICA is recognized as a “miracle” drug and continues to garner FDA approvals, having received the greenlight for combination treatments with obinutuzumab as the first non-chemotherapy combination option for treatment-naïve CLL and SLL patients in 2019, as well as with rituximab for CLL and SLL treatment-naïve patients in April of this year. In addition to combination therapies potentially being more effective for patients, manufacturer investment in follow-on indications post-launch can support life cycle management and boost sales downstream of launch.

HARVONI: Pricing Pressures

However, “miracle” drugs can sometimes be double edged swords—as was the case with Gilead’s HARVONI. Despite initial enormous success, the hepatitis C drug began to fall behind analyst expectations overall, reaching only USD 312M in 2019 US sales, 92% below its 5th year sales projection. Oddly, HARVONI is a clinical superstar; it boasts a cure rate of around 90%. So why did sales during later stages post-launch differ from the projection so considerably?

Despite the considerable clinical efficacy offered by HARVONI in the treatment of HCV, the price per pill of USD 1,125 resulted in considerable pushback and negative public perception. Payers restricted access to only advanced patients and the launch of Merck’s ZEPATIER at a 40% discount vs. HARVONI increased the downward pricing pressure further. Ultimately Gilead responded by launching authorized generics through a subsidiary Asegua, at around USD 24,000 per course of treatment with the intention of aligning the drug’s costs with its list price. The generic resultantly cannibalized HARVONI’s sales after its early 2019 launch, causing the sharp drop from early analyst sales expectations.

In addition to the challenges that HARVONI faced in the USA, many ex-US payers were also resistant to paying the price, contributing to the overall sentiment towards lowering the price of hepatitis C drugs. Pricing disputes and compulsory licensing in emerging markets such as India, Malaysia, and Chile allowed generic manufacturers to sell the drug at around USD 900 in India, and resulted in HARVONI prices of USD 48,000 and USD 12,000 in Malaysia and Chile respectively, eating away at the expected benefits of patent exclusivity. In the end, Gilead’s wonder drug unfortunately fell short due to highly restrictive access that resulted in a multitude of competitive entries and significant downward pricing negotiations that analysts had not factored into their expectations.

Considerations for why Forecasts Are Not Aligned With Reality

As exemplified by these three case studies, there are several components to a successful launch that are integral to upholding blockbuster sales expectations. When both analysts forecast sales and manufacturers plan a product’s life-cycle, the following items should be accounted for:

  • It may be beneficial for manufacturers when needed to more actively manage analyst expectations to converge assumptions surrounding price, market share, and probability of launch
  • Likewise, manufacturers can also help contextualize analysts expectations with regards to LCM expectations and changes in future market dynamics (i.e., competitors, managed access, clinical evidence)
  • Lastly, manufacturers should caution the use of aggressive life cycle potential messaging to avoid under-performing inflated sales expectations

With these considerations in mind, creating a holistic picture of a drug’s opportunities and challenges, as well as developing strategies to address them can help manufacturers and analysts alike manage expectations for future sales.