The global pharmaceutical industry is a giant, in case you didn't already know it. According to a 2016 report from the International Trade Administration (ITA), global sales of pharmaceuticals are expected to climb from roughly $1 trillion in 2015 to $1.3 trillion by 2020, representing an annual growth rate of 4.9%. The ITA attributes an aging population, a rise in chronic disease rates, increased urbanization and higher disposable incomes, greater government expenditures on healthcare, and the demand for more effective treatments as reasons why drug sales are expected to soar globally through 2020 (and likely beyond).
This steady growth in both volume and pricing power, especially in the highly lucrative U.S. market, has investors seeing dollar signs. After all, if they can ride the coattails of a blockbuster drug higher, investors should be rewarded. Of course, figuring out what drugs have the potential to dominate an indication is easier said than done. Ongoing drug development from competitors could always push a promising drug out of the picture almost overnight.
With that being said, and with the understanding that projections offer no certainties whatsoever, let's take a metaphorical trip into the future and examine five drugs, four of which are currently on pharmacy shelves, which have an opportunity to hold the title of best-selling drug in 2020.
Arguably the most logical choice of the group is AbbVie's (NYSE: ABBV) Humira, an anti-inflammatory medicine that has a whopping 10 Food and Drug Administration-approved indications. Humira has had exceptional pricing power and has moved the needle with label expansion opportunities galore. Last year, global Humira sales nearly hit $16.1 billion, and through the first six months of fiscal 2017, Humira sales are up 15.3% on an operating basis, excluding currency fluctuations, to $8.8 billion. It's certainly not out of the question that Humira sales top $18 billion in 2017, once again setting a record for the highest sales of a prescription drug in a single year.
The challenge for AbbVie could be in fending off biosimilar competition. Biosimilars are copycat versions of biologic drugs that are being marketed by pharmaceutical companies at a discount to brand-name drug list prices. Pretty much every drugmaker developing biosimilars is angling to make one to take on Humira since its patient pool is massive. We've already witnessed weaker global sales for Johnson & Johnson's blockbuster Remicade, which is dealing with biosimilar competition, and it's not out of the question that Humira could suffer the same fate by the time 2020 rolls around.
There are no surefire success stories in the biotech and pharma industries, but Celgene's (NASDAQ: CELG) multiple myeloma drug Revlimid is about as close as it gets. Revlimid, which is projected to generate $8 billion to $8.3 billion in full-year sales in 2017, has been growing by a double-digit percentage for years. The source of its growth ties to longer duration of use, strong pricing power, and a growing number of diagnosed multiple myeloma patients (a result of a growing population and better diagnostic testing). There's even little in the way of immediate competitive concerns, with newly approved therapies in the multiple myeloma space often being administered in combination with Revlimid.
The real nugget of gold for Celgene and investors is that in December 2015, the company settled patent litigation with generic drug producers regarding Revlimid that gives it until Jan. 31, 2026, before generics flood the market. The deal allows a small portion of generic Revlimid to hit the market beginning in 2022, but Celgene essentially secured its cash cow for about a decade with this settlement. Revlimid, assuming it can maintain its first- and second-line multiple myeloma market share, as well as expand into new indications, has a genuine shot at being the best-selling drug in 2020.
Perhaps nothing is hotter in the drug development space right now than cancer immunotherapies. Cancer immunotherapies, like Bristol-Myers Squibb's (NYSE: BMY) Opdivo, work to reverse the immunosuppressant qualities of cancer cells, exposing them to the immune system, while in many cases also supercharging the immune system to attack cancer cells. This focus on bolstering a patient's immune system has led to some intriguing improvements in overall response rates for advanced cancer patients in melanoma, renal cell carcinoma, and non-small cell lung cancer (NSCLC). Through just the first half of 2017, sales of Opdivo are up 50% from the prior-year period to $2.3 billion. It very well could top $10 billion in sales by 2020, if everything goes right.
The concern is that not everything will go right. In fact, last year the CheckMate-026 study in first-line advanced NSCLC patients went very wrong, with Opdivo failing to reach its primary endpoint and actually losing out to the chemotherapy arm in the process. Cancer trials typically have a low success rate, and investors have to understand that even a foundational therapy like Opdivo won't win them all. Unfortunately, losing the first-line advanced NSCLC indication likely cost it $2 billion or more in peak annual sales. Opdivo's ability to expand its label will be the key to whether it has a shot at becoming the best-selling drug worldwide by 2020.
Of therapies that are already approved by the FDA, perhaps Merck's (NYSE: MRK) cancer immunotherapy Keytruda is the greatest wildcard. Keytruda is a direct competitor to Opdivo, and post-launch of both drugs, it appeared that Opdivo would have a leg up on Keytruda. However, in recent quarters that tide has turned in Keytruda's favor. Whereas Opdivo bombed in its first-line advanced NSCLC study, Keytruda easily found the mark in patients whose tumors had at least 50% PD-L1 expression. Having secured this first-line treatment-naive NSCLC market share, sales of Keytruda through the first half of 2017 totaled close to $1.5 billion, which is more than it brought in during the entirety of 2016.
And it may not be done. Keytruda was also the recipient of an FDA first. Keytruda was approved for a specific genetic mutation in solid tumors earlier this year, regardless of cancer type. This marked the first time the FDA had ever approved a cancer drug for global use and not specifically for a site. Then again, a 77% objective response rate in patients with advanced pancreatic, prostate, uterus, and bone cancer is jaw-dropping incredible. If Keytruda can keep expanding its label and occasionally one-upping Opdivo, it could become the best-selling drug by 2020.
Therapies that aren't already approved by the FDA face a massive uphill battle if they hope to become the best-selling drug in 2020, but if there's one clinical-stage drug that could do it, it's Biogen's (NASDAQ: BIIB) early-stage Alzheimer's disease treatment aducanumab. In terms of drug development failure rates, Alzheimer's studies are among the highest. There are just a handful of approved treatments for Alzheimer's patients, and very little in the way of exciting new treatments in recent years. That could change with aducanumab.
Late last year, Biogen reported phase 1b data involving four doses of aducanumab over 54 weeks. With a baseline worsening in Clinical Dementia Rating (CDR) of 1.89 points and a 2.45-point worsening in the baseline Mini-Mental State Examination (MMSE), the highest dose of aducanumab tested (10 mg/kg) showed only a 0.63-point worsening in CDR and 0.55-point worsening in MMSE after 54 weeks. It's not an Alzheimer's cure, but it represents the first really notable reduction in cognitive decline in a long time in clinical studies.
With late-stage studies expected to readout in late 2019, if aducanumab is approved, it's not out of the question that it flies out of the gates and quickly ascends to the top of the pack. A lot will depend on how successful aducanumab is in phase 3 trials.
And the winner is...
So, which drug will take the top honor in 2020? While there's still a lot to be decided, my personal guess is Humira retains its crown despite biosimilar competition, with Revlimid nipping at its heels. However, look for Revlimid to ascend to that top spot by perhaps 2021 or 2022 as patent expirations and biosimilars push Humira out of the top spot.
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