DefinedHealth

Jeffrey M. Bockman, PhD

Cancer was once a relatively sleepy backwater where a few companies traded in a limited number of modest sized blockbusters by comparison to other therapeutic areas. With the explosion in the understanding of the molecular circuitry underpinning the pathophysiology of cancer, this backwater has become a major port where almost every Big Pharma company, many mid-sized companies, and almost 50% of biotechnology companies are trafficking. In fact, the number of blockbuster compounds has increased to nine products with worldwide sales of over $1 billion (2006). By 2012, the US market alone is expected to double to nearly $30 billion.

Why is everyone in cancer? Is it that turbulent seas after years of easy sailing for pharma make any port in a storm look good?
While some of the largest products will be from established names such as Genentech (Avastin, Rituxan, Herceptin), Novartis (Gleevec) and Bristol-Myers Squibb (Erbitux), newer entrants include products launched in the past year or so by large Pharma players such as Pfizer (Sutent) and Bayer (Nexavar), as well as biotechs such as Celgene (Revlimid), Millennium (Velcade) and BiogenIdec, with several potentially large pipeline compounds. Judging by the deal-making activity in cancer, companies such as Roche, Pfizer, and Merck look to be making significant investments in new anticancer targets and technologies.

As these players gain more of a foothold, will they become the go-to companies for licensing and M&A? Are there non-traditional players that might make good partners (such as for the specialized approaches of cancer vaccines)?

More important, perhaps, is the degree to which companies are developing drugs with similar or the same mechanisms for overlapping indications (tumor types), setting oncology up for another transformation. While probably not happening over the next five years, reverberations over the next 10-15 years are likely to impact: 1) clinical development plans, which become increasingly difficult as the standard of care remains in perpetual flux; 2) the market, which might begin to have for the first time situations that have long been common in other therapeutic categories, such as “me, too” and “fast follower” drugs; 3) pricing — in a world where combination therapy has been the name of the game, pricing will become increasingly difficult for multiple premium priced agents being used simultaneously or even sequentially. In addition, having multiple entrants with possibly similar data could for the first time really drive competitive price pressure.

How are companies strategizing around these possible changes and how is it affecting business models in oncology for large and emerging players? What are the options for building an oncology franchise? How feasible is it for a smaller player to go it alone?

Examples of divergent business approaches include on the one hand Merck, a nascent player, appearing to follow a very high risk strategy of novel targets and undertaking many licensing and M&A deals; and on the other hand Pfizer, another relative newbie that is covering all the bases from cytotoxics to cytostatics to immunotherapy, while also being very active in deal-making.

We invite you to join us as we explore and discuss how entrenched and emergent players are strategizing around: the type of targets, tumors, deal-making and franchise expansion, and what is directing such decisions (sheer financial wherewithal, risk-reward calculations and other considerations).