A month ago, Pfizer Inc. (NYSE:PFE) felt the sting of a somewhat surprising disappointment. Its biosimilar version of Herceptin, the popular breast cancer drug from Roche Holding AG (OTCMKTS:RHHBY), was rejected by the FDA.Biosimilar drugs are nearly-identical copies of a competitor’s product. It wasn’t great news for Pfizer stock, but it wasn’t tragic either.
It was a blow not just because Herceptin generated sales of more than $7 billion last year, but because it put the viability of Pfizer’s entire biosimilar program into question.
It’s an unnecessary concern for current and would-be owners of Pfizer stock though. In December, a biosimilar version of Remicade, an arthritis therapy as well a drug that can treat some gastrointestinal problems was given the proverbial green light by the FDA.
And, just last week, Pfizer’s biosimilar version of anemia drug Retacrit, from Amgen, Inc. (NASDAQ:AMGN) and Johnson & Johnson (NYSE:JNJ), was approved in the United States. It also has three biosimilars on the market outside of the United States as of the end of last year.
In other words, Pfizer’s biosimilar arm still boasts a pretty impressive track record.
To that end, the best may be yet to come. Here’s a closer look at the company’s top three prospects in its biosimilar pipeline that are presently in phase 3 trials, or in the so-called ‘registration’ phase, a stage near the end of process to win approval for a drug.
Avastin and Pfizer Stock
Avastin, also known as bevacizumab, has earned its stripes as a means of combatting non-small cell lung cancer. The drug, made by Roche subsidiary Genentech, drove $6.7 billion worth of revenue last year.
Granted, sales of the drug peaked in 2014, as alternatives have slowly but surely surfaced. And, the advent of biosimilars other than Pfizer’s will make this a competitive race.
What makes this R&D so interesting, however, is that bevacizumab has shown efficacy as a treatment for colon, kidney, cervical, and ovarian cancer as well, not to mention glioblastomas.
Those are pretty competitive arenas already, but if Pfizer wanted to push its biosimilar to its limits, there’s way of extracting a little more revenue outside of Avastin’s biggest target market.
Rituxan is another product from Roche’s Genentech, although Biogen Inc (NASDAQ:BIIB) also has a hand in its success as a therapy for some types of non-Hodgkin’s lymphoma. It’s also found a place, albeit a relatively small one, as a means of treating lymphocytic leukemia and rheumatoid arthritis.
Perhaps more important to owners of Pfizer stock, Rituxan generated $7.4 billion in sales last year.
Odds are good that will be the drug’s revenue peak, as two biosimilars of it are already approved in Europe, while Pfizer proved its version of the drug worked as a therapy for follicular lymphoma in January of this year. Other indications are forthcoming, from other drugmakers too. Still, all the small revenue streams can add up.
Finally, Pfizer is working on a biosimilar version of Humira, or adalimumab, primarily a treatment for Crohn’s disease and rheumatoid arthritis. But developer Abbott Laboratories (NYSE:ABT) has found a handful of fringe uses for the drug as well.
Though Humira has been something of a punching bag due to expectations of its demise (stemming from a loss of patent protection in the EU) those doubts haven’t been quite as merited as voiced.
The drug should be able to stave off competitors in the United States until 2022. Europe could be enough for now though, and for patient owners of Pfizer stock, Humira’s expected peak sales of near $20 billion by 2023 makes for a very tantalizing prospect (competition or not).
Bottom Line for Pfizer Stock
As for just how big the biosimilar opportunity is for Pfizer and its rivals, it’s a bit difficult to tell. Not only is the very idea still a relatively young and unexplored one, it’s also an idea that’s been thrust into legal uncertainty.
Case in point: Pfizer is actually being sued by Roche for marketing biosimilar Herceptin, while Pfizer is suing Johnson & Johnson, claiming J&J’s deals with insurance companies are unfairly limiting the uptake of its biosimilar Remicade.
If one can look past all the smoke and legal wrangling though (which is mostly meant to keep rivals distracted), one would appreciate the fact that the global market for biosimilars could be as big as $35 billion by 2020.
Or, it could only be worth $10 billion, depending on a myriad of factors.
Pfizer’s current biosimilar pipeline faces a more finite, even if smaller, market of about $7.5 billion, and it’s unlikely Pfizer would capture the bulk of that market.
Then again, the company’s development effort on the biosimilar front is relatively small. As the idea proliferates and the power of biologics expands, Pfizer is well positioned to ramp-up its projects and take a respectable share of this sliver of the pharma market.
It’s still something for people holding Pfizer stock to look forward to, however, as in the grand scheme of things
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.