The appetite for branded pharmaceuticals remained robust in 2020, particularly in cancer, with revenues for top oncology drugs like Keytruda rising significantly from the year before, according to data compiled by S&P Global Market Intelligence.
Merck & Co. Inc.'s blockbuster Keytruda led the oncology race with $14.38 billion in revenue, a 29.7% increase from 2019, followed by Bristol-Myers Squibb Co.'s Revlimid with $12.11 billion. Bristol Myers' Opdivo was one of the rare cancer drugs for which revenue fell in 2020, down 2.9% to $6.99 billion.
But the title of best-selling drug in the world once again fell to AbbVie Inc.'s Humira, an immunology therapy used to treat rheumatoid arthritis and other inflammatory conditions. In 2020 Humira pulled in $19.83 billion in revenue for a year-over-year increase of 3.5%.
The next best-selling immunology product was Stelara from Johnson & Johnson, which made $7.71 billion in 2020.
Revenues for HIV drug Biktarvy from Gilead Sciences Inc. rose more than 53% year over year, and other drugs that saw significant sales increases were Novo Nordisk A/S's diabetes medication Ozempic at 88.8% and Sanofi's immunology drug Dupixent, which saw a 70.4% increase to just over $4 billion in revenue. Sanofi shares Dupixent rights with Regeneron Pharmaceuticals Inc.
The pandemic played a role in keeping established drug brands on top of the revenue charts as patients were less likely to see physicians to switch to newer medications, PricewaterhouseCoopers U.S. Pharmaceuticals and Life Sciences Advisory Leader Greg Rotz said in an interview.
"We saw a significant year-over-year drop from 2019 to 2020 in new brand prescriptions, meaning either patients did not get a new diagnosis and start a new medicine, or they've stayed on the medicine they had, as opposed to perhaps switching to a different medicine as they may have in the past," Rotz said. "It is good news for the incumbent brands."
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With shutdowns imposed to stem COVID-19 infection rates, the industry anticipated lower sales volume of newer therapies, but the reduction lasted longer than analysts predicted, Rotz said.
"The fact that the reduction in volume was sustained throughout the year was a surprise," Rotz said. "It did not bounce back the way that some in the industry had anticipated."
The newer brands will probably remake lost ground from 2020 over time, Rotz said.
"Eventually, as the vaccines roll out, there will be a return to a more normal routine of physician visits and diagnostics, and when we see that, the incumbent brands will need to have really solidified their value proposition," Rotz said. "And you can bet that the new brands that would typically benefit from switching will be coming out with a goal of gaining market share."
The pandemic has driven supply and demand in certain areas like respiratory and vaccines to treat or prevent COVID-19 infections, but that change of direction could play out in unexpected ways, MUFG analyst Andreas Dirnagl said in an interview.
"You have the impact from a vaccine perspective, which is not just the vaccine itself, but it's the time and effort it's taking away from other things," Dirnagl said. "There are companies that are devoting manufacturing capacity to this, and that manufacturing capacity has got to come from somewhere. We don't quite know the full ramifications of that."
The way patients bought drugs also changed revenue timing for some products, Dirnagl said. Patients might be more likely to fill a 90-day prescription to avoid public spaces rather than fill prescriptions each month.
"We saw sales across the board of pharmaceutical products not quite skyrocket, but demonstrably go up in that March through June timeframe, and so we've spent the rest of the year kind of working through those timing differences," Dirnagl said.
The fact that the oncology space saw such large increases, though, was a product of the market dynamics and the continuation of cancer care despite the pandemic, Rotz said.
"If you look at the fundamentals of oncology from a growth perspective, we would see more tailwinds than headwinds," Rotz said. "The tailwinds are the continued incidence of disease and the aging of the population, and with the availability of new innovations, there are now more treatment options with more mechanisms of action to treat more types of cancer than there ever have been before."
Rotz attributed the rate of U.S. approvals in cancer to the space's growth, but he pointed to increased approval of biosimilars — copies of biologic drugs like Humira — as a potential detractor to future sales.
'Significant uptick' in pharma's reputation
The new leadership in the White House has led to speculation that drug pricing may once again be in the regulatory crosshairs, but analysts have said that the pharmaceutical industry's response to the health crisis of 2020 brought about a wave of goodwill toward the industry and could stave off major pricing legislation for the time being.
"We have seen a significant uptick in the reputation of the pharmaceutical industry as a result of the actions they've taken through the pandemic," Rotz said. "Collaborations, innovations, additional investments have all gone a long way to help remind society about the importance of innovative medicines to tackle catastrophic disease."
But that reputation is not a guarantee moving forward even as vaccines and treatments pull the world out of the COVID-19 pandemic.
"That trust and reputation is hard earned and can be lost easily with a few misplaced headlines," Rotz said.
Companies are trying to take a proactive approach to pricing strategy, focusing on the innovation that their products provide and keeping those price increases to smaller percentages, Rotz said.
"The companies that I work with are looking very closely at price and trying to ensure that price reflects the value of the medicines that they're generating," Rotz said. "And obviously, as forces in the market have brought more scrutiny on price, they are revisiting pricing strategies to ensure they are grounded in value, and that there is significant evidence to support those pricing decisions."
Sales for COVID-19 treatments and vaccines have provided a silver lining to the biopharma sector's performance in 2020 and beyond. For instance, Gilead's Veklury pulled in almost $2 billion in just the fourth quarter of 2020, and the COVID-19 vaccine Comirnaty from Pfizer Inc. and BioNTech SE is expected to make $15 billion from government contracts alone in 2021.
Article amended at 11:23 a.m. ET on March 31 to clarify the use of "tailwinds" and "headwinds".