Who Has the Best Pharma Pipeline?

by James Brumley | September 12, 2012 9:05 am

I have no doubt that merely asking the question will stir up a hornet’s nest of, shall we say, “colorful” disagreement? But that’s OK — sometimes a healthy debate is just what the doctor ordered. My posing an answer to the question is an even bigger threat to life and limb (namely my own). Once again, though, sometimes certain things have to be done.

That question: Which major pharmaceutical name has the best-looking drug pipeline right now?

I’ll concede there’s no crystal-clear winner, but after working my way through the industry’s biggest players, I do see one name in particular that’s well-positioned for revenue growth.

First things first: a quick look at each participant on the contest. Just be aware I won’t have room to dissect every single drug in each pipeline, but those drugs have been considered overall.

Novartis AG

Not that it’s the best pipeline out there, but Novartis’ (NYSE:NVS[1]) pipeline might be one of the most underappreciated. It’s cancer-heavy by design. The pillars for the company’s future revenue are Afinitor (breast cancer), which could be a game-changer, but Tasinga (leukemia) and QVA149 (respiratory disease/COPD) also are strong late-stage candidates.

Johnson & Johnson

Despite having 30 drugs in or past Phase 3 testing, Johnson & Johnson (NYSE:JNJ[2]) doesn’t really knock anything out of the park; lots of quantity, but not necessarily a great deal of quality. Among these drugs are Xarelto (anti-coagulant), canagliflozin (type 2 diabetes), Simponi (ulcerative colitis), Zytiga (prostate cancer) and bapineuzumab (Alzheimer’s disease). They’re all respectable developments, though with the exception of bapineuzumab, there’s nothing that’s apt to be a show-stopper.

AstraZeneca

While it wouldn’t be fair to say AstraZeneca (NYSE:AZN[3]) went down the wrong path by choosing to focus on smaller, lower-risk drug developments and acquisitions, it doesn’t exactly make for an exciting pipeline. As evidence of that notion, name one drug it’s working on. Even most seasoned pharma investors can’t name one. While the acquisition of Ardea earlier this year is better than nothing, the pipeline still feels pretty empty.

GlaxoSmithKline

GlaxoSmithKline (NYSE:GSK[4]) is definitely a quiet contender in this race … and it needs some help ASAP, if last quarter’s sales are any indication. It’s currently got 15 items with key Phase 3 data due before the end of the year. Ten of those drug developments have already shown encouraging efficacy and safety profiles (so far). COPD, diabetes and HIV are some of the areas being targeted by these late-stage drugs.

Pfizer

Will anything ever really replace Lipitor now that its patent has expired[5]? Probably not, but that doesn’t mean Pfizer (NYSE:PFE[6]) isn’t going to try. It has got 87 drugs all in the works, with 11 of them in Phase 3 … within sight of the endzone. The flagship drugs in that Phase 3 group include tofacitinib (rheumatoid arthritis), Eliquis (blood thinner) and bosutinib (chronic myeloid leukemia). Tofacitinib and Eliquis could both potentially generate $2 billion (or more) in sales per year.

Merck & Co.

Merck & Co.‘s (NYSE:MRK[7]) pipeline might be the most hotly debated pipeline of the nine in question here. Investors are quick to criticize how small it is, but when you start to do the math, you find Merck’s got 35 drugs in Phase 2 or Phase 3 trials. One of them is a vaccine to treat HPV, and another is odanacetib[8], which improves bone strength. Still, there’s nothing in the pipeline that looks as potent as its asthma and allergy drug Singular, which lost patent protection this year.

Bristol-Myers Squibb

With 46 drugs in the pipeline, Bristol-Myers Squibb (NYSE:BMY[9]) is another dark-horse candidate for the pharma name with the best pipeline. On the other hand, a couple of key problems with the pipeline’s most-watched drugs has to leave you wondering whether more problems are waiting. One of those stumbles was a potential safety issue with BMS-986094, for hepatitis C. That was one of the drugs acquired in early 2012 with the acquisition of Inhibitex, which was largely made because of the strength of the Inhibitex hepatitis C portfolio. Bristol-Myers Squibb also recently pulled the plug on Phase 3 trials of brivanib, as a treatment for hepatocellular carcinoma.

Roche

It might only have 19 drugs in late-stage trials, and there’s little doubt that Roche (PINK:RHHBY[10]) needs at least a few of them to win approval to offset growing concerns about (not to mention looming patent expiration of) breast cancer drug Herceptin … but there’s something compelling here. More than half of the current pipeline consists of drugs being tried in conjunction with currently approved drugs (a ‘companion diagnostic’ arrangement) to make the whole treatment regimen more effective. Such drugs rarely lead to blockbuster-level sales, but there’s a lot to be said for low-hanging fruit.

Sanofi SA

Sanofi (NYSE:SNY[11]) might not have a very deep or wide pipeline, but there are a few sleepers in it. Specifically, it’s developing a cholesterol-lowering drug with Regeneron (NASDAQ:REGN[12]). For the time being, it’s simply called REGN727, though it’s slated to start Phase 3 testing soon. Sanofi also is working on the dengue fever vaccine it acquired with its 2008 purchase of Acambis, and Lemtrada (now for multiple sclerosis) is being developed after it was brought into the fold as part of the Genzyme purchase. Though the company reported its initial effort at a dengue fever vaccine wasn’t great, to design even a semi-effective one is ground-breaking; that’s a potential $1 billion (annually) opportunity. Though Lemtrada hit an FDA snag last month, it’s still viable.

And the Winner Is …

Just for the record, there’s more to the story than simply what you read about the pipelines above. So don’t think I’m making a final decision just on those factoids. But, taking everything into consideration, the best-looking pipeline in pharma right now belongs to (insert drum roll here) …

… Pfizer.

It’s not something I thought I’d be saying a year ago, but having had a chance to dissect its pipeline and compare it to the rest of the industry, Pfizer has the most near-term potential for relatively big, blockbuster-caliber revenue through tofacitinib and Eliquis. It also has a long string of Phase 1 and Phase 2 trials in the lineup that could step into the cash cow role, even if its three flagship drugs can’t.

And what you can’t really see in the pipelines alone is that Pfizer has finally opened up to a collaborative spirit, particularly with the country’s major drug research universities. That’s going to keep the pipeline full for quite some time.

But hey — that’s just one man’s opinion. What do you think? You can chime in below if you’ve got something to add.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

Endnotes:
  1. NVS: http://studio-5.financialcontent.com/investplace/quote?Symbol=NVS
  2. JNJ: http://studio-5.financialcontent.com/investplace/quote?Symbol=JNJ
  3. AZN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AZN
  4. GSK: http://studio-5.financialcontent.com/investplace/quote?Symbol=GSK
  5. now that its patent has expired: http://investorplace.com/2012/06/whats-the-real-impact-of-generic-drugs/
  6. PFE: http://studio-5.financialcontent.com/investplace/quote?Symbol=PFE
  7. MRK: http://studio-5.financialcontent.com/investplace/quote?Symbol=MRK
  8. odanacetib: http://investorplace.com/2012/07/merck-could-have-a-homerun-in-sight/
  9. BMY: http://studio-5.financialcontent.com/investplace/quote?Symbol=BMY
  10. RHHBY: http://studio-5.financialcontent.com/investplace/quote?Symbol=RHHBY
  11. SNY: http://studio-5.financialcontent.com/investplace/quote?Symbol=SNY
  12. REGN: http://studio-5.financialcontent.com/investplace/quote?Symbol=REGN

Source URL: http://investorplace.com/2012/09/who-has-the-best-pharma-pipeline-nvs-jnj-gsk-mrk-pfe-bmy/
Short URL: http://invstplc.com/1fplHRo