Pharmaceutical Commerce - November/December 2009 - (Page 12)

Business & Finance Getting value From end-of-Life-Cycle Pharmaceuticals A review of 84 branded pharmaceutical products with changed ownership as of 2005 shows that many of them can continue to sell, often with much higher prices By Albert I. Wertheimer, PhD, MBA, Temple University, and Ellen F. Loh, BS, MBA, University of Maryland, Baltimore Approximately ten years ago, a new niche market emerged within the pharmaceutical industry: end-of-life-cycle pharmaceuticals. This phenomenon has risen out of several market factors and continues to grow as a market vehicle for the specialty pharmaceutical firms that sell them. This report describes how this niche market developed and how it is drawing more attention. As big pharmaceutical companies continue to merge and consolidate, the companies become much larger, and the minimum sales volume of interest becomes higher. This leaves numerous products that the companies can no longer devote time and attention to and the decision is made divest. Products with less than $100 million in annual sales in a big firm usually are less desirable and targeted for divesture. Rather than dropping a product from the catalog entirely, there is now the opportunity to sell some long-established branded products to a new firm that will try to extend its market life and boost sales. The originator company receives some payment for turning over the product to another firm and avoids the criticism of dropping a product that some physicians and patients rely on. Some of the products do have growth potential. They are all mature, FDAapproved products getting inadequate attention or promotion. As a result, specialty pharmaceutical companies have come to acquire those products in attempt to make further profit with them. Oftentimes an old $5-10 million product that maintains good brand identification with physicians along with a reputation for effectiveness can be resuscitated and lifted to $20-30 million a year with focused promotion. [2] methodology Products in this study were identified using Pharmacy Times [5] and the 2005 Red Book [6] was used to confirm the current vendor of the products. The year in which the ownership transfer took place was confirmed by telephone inquiries to the originator company and the annual sales figures from 2001 to 2005 were obtained from Wolters Kluwer. 1975, 1980, 1985, 1990 and 1995 were selected as the sample years. A list of the 200 top-selling drugs for each of the years was obtained, resulting in a list of 1,000 drugs for all five years. After screening out the duplicates, 522 unique products remained. Out of these products, only 84 belonged to branded manufacturers other than their original developers in 2005 and these became the subject products. Among these products are some that were prominent when first introduced, such as Ativan (originator: Wyeth-Ayerst; 2005 owner: Novaplus); Librium (Roche; Valeant); Nembutol (Abbott; Ovation Pharma); After screening this list of products, their price data and annual sales figures were collected. The annual sales figures came from Wolters Kluwer and the price data from the Red Book. Original dates of FDA approval of the products were obtained from FDA’s Drugs@FDA online database [7] and dates of ownership transfer were acquired by telephone communication with the relevant companies. List prices for all products were used. Discounts were not considered even though they can have an effect on sales. However, prices in each year were discounted by inflation rates, using prices in 2001 as the baseline price. [8] results There are 84 products included in the data set. Table 2 shows the breakdown by therapeutic category. The average age of the 81 products where data were available is 32.7 years (Fig. 1). The original approval dates of Donnatal (originator: Robins; 2005 vendor: PBM Pharma), Entex LA (Norwich Eaton; Andrx Labs) and Kaon (Warren-Teed; Savage Labs) were not available. The oldest product is Butisol Sodium (McNeil; Medpointe Pharma), which was approved in 1939. Dates of product ownership transfer were obtained from telephone inquiries and product age at the time when ownership transfer took place was calculated (Fig. 2). Bentyl (Merrell-National; Axcan Scandipharma) had the longest life on the market at the time of ownership transfer. It had been on the market for 53.6 years. The average age for the 76 evaluated products was 26.0 years. Full data for eight products were not obtainable. The data reveal that the trend of end-oflifecycle product transaction began in the 1980s (Fig. 3). Since then, the number of products being transferred has increased. Tigan (Roche; Monarch Pharma), which was transferred in June 1980, is the first transfer in the list. Nordette-28 (WyethAyerst; Duramed/Barr), which was transferred in September 2006, is the latest transfer in the sample. The data also show that, in 2005, the sales of the 84 end-of-lifecycle products ranged from $0 to $65.7 million (Fig. 4). The average annual sales figure is around $4 million and the median is $1.1 million. Serax (Wyeth; Faulding Pharma) was the only one with zero sales in 2005; Azmacort (RhonePoulenc Rorer; Kos Pharma) reached $65.7 million in sales and is the top-selling product on the list. The sales figures in 2005 were adjusted for the general inflation rate each year and were Figure 1. Total Number of Years Products Marketed as of 2005 30 40 Figure 2. Product Age in Years at Time of Ownership Transfer Figure 3. Year of Ownership Transfer 35 25 30 25 Number of Products Number of Products Number of Products 10 15 10 18 13 5 17 11 55 10 4 8 1 http://www.PharmaceuticalCommerce.com

Table of Contents for the Digital Edition of Pharmaceutical Commerce - November/December 2009

Pharmaceutical Commerce - November/December 2009
Contents
Editorial
Op-Ed
Top News
Business & Finance
Brand Marketing | Communications
SupplyChain | Logistics
Information Technology
Packaging & Drug Delivery
Legal | Regulatory
Executive Training & Development
Editorial Index | Meetings

Pharmaceutical Commerce - November/December 2009

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