The market for multiple sclerosis treatments is crowded. Serono’s (Nasdaq:SRA) sales of Rebif, launched in the US in March 2002, jumped from $18 million in the third quarter to $34.7 million in the fourth. The jump in sales, attributed to Serono’s marketing agreement with Pfizer (NYSE:PFE), has mainly come at the expense of Biogen’s Avonex, which, like Rebif, is based on interferons. However, Teva’s (Nasdaq: TEVA; TASE:TEVA) Copaxone, the only non-interferon agent to treat the disease, is not immune.
“Serono’s results show an impressive increase in revenue from Rebif in the fourth quarter,” said Nessuah Zannex analyst Haim Israel yesterday. “Rebif accounts for 8.5% of new prescriptions for multiple sclerosis, and is already being used by 13,000 patients, compared with 8,000 in the preceding quarter.
“Serono’s 2002 results exceeded initial forecasts. Sales totaled $71.2 million, compared with initial projections of $60-65 million. This growth mostly affected Biogen, but Teva was hurt, too. We can see that 525 of Rebif’s 13,000 patients were new, who did not previously use other treatments. 48% transferred from other treatments, of whom 55% used Avonex, 24% used Teva’s Copaxone and 21% Schering-Plough’s (NYSE:SGP) Betaseron. In other words, Teva lost 1,500 patients to Rebif. That’s not too bad, and in line with expectations.”
As noted above, Biogen, which dominates the multiple sclerosis treatment market, has lost ground. “A comparison of Serono’s results with those of Biogen, published two weeks ago, shows that Rebif’s launch had a major impact on Biogen. Avonex sales in 2002 totaled $10.4 billion, including $728 million in the US and $253 million in the US in the fourth quarter,” adds Haim Israel. “Biogen is pessimistic about 2003. They now predict 0-2% growth, compared with their previous forecast of 5-6%, even as they predict that the US market will grow by 8-9% in 2003.”
Biogen did not explicitly mention Serono’s Rebif as the cause of their lower forecast, stating onlythat the market had become more crowded. Schering-Plough’s Betaseron and Teva’s Copaxone may also be taking bites out of Avonex’s market share, but Rebif is clearly the main offender. “Serono’s strength in the fourth quarter is derived from its agreement with Pfizer,” notes Haim Israel. “It was the test quarter for the agreement. This was the first time that the Pfizer agreement showed results and it will clearly be a significant factor for growth.
“To sum up, in the fourth quarter of 2002, Teva accounted for 28% of new prescriptions, Biogen 43.7%, Serono 8.5% and Schering-Plough 20.8%. In the third quarter, Teva had 29.6%, Biogen 48.9%, Serono 5.4% and Schering-Plough 16.1%. Biogen can clearly be seen losing market share, but Teva is also slipping, while Schering-Plough is gaining ground. Although the Betaseron molecule is also interferon-based, it is different from Biogen and Serono’s drugs, and may be profiting from the struggle between the two.”
Teva had hoped that Rebif’s launch would lead to abattle between it and Avonex, with the result that Copaxone could become the market leader. That may yet happen, but meanwhile Copaxone’s market share has declined from 33% to 27% since Rebif’s launch. “Teva is not immune. They are feeling the strong market competition. However, the effect on them has been minor, compared with the blow to Biogen’s Avonex,” concludes Haim Israel.
“Globes”: What is your prognosis for the multiple sclerosis market in 2003?
Haim Israel: “Copaxone will have a 28.4% market share, Betaseron 26.1%, Avonex about 40%, and Rebif 5.8%. I refer to market share, not new prescriptions. Rebif will account for 15-16% of new prescriptions, Copaxone 26-27%, Avonex will fall to 35%, and Betaseron will have 22-24%.
“In 2002, Copaxone had a 25% market share, Betaseron 27.6%, Avonex 43.2% and Rebif 4.2%. This means that Copaxone can expect to increase its market share, despite the decline in new prescriptions, because patients receiving interferon treatments, especially Biogen’s Avonex, will transfer to Copaxone.”
How much do you think the market will grow?
“Total sales in 2002 were $1.7 billion, and I predict they will be $1.83 billion in 2003.”
Why don’t you expect Rebif sales to take off, considering the agreement with Pfizer?
“Pfizer allocated 300 sales reps for 1,000 neurologists, while Teva has 100 sales reps. I think that Pfizer and Serono allocated too may sales reps, which might cause a backlash. The ratio is crazy. Teva has the right proportion. It invests less in sales reps and more in market education and finding new markets. I think that Rebif’s sales will grow for another quarter or two and then level off.”
What are your forecasts for Copaxone sales in the US and Europe in 2003?
“Copaxone was launched in Europe a year ago, and is doing very well, mostly at the expense of Rebif, which dominates that market. I estimate [that Teva will report] Copaxone sales in Europe of $126 million in 2002, and they will rise to $173 million in 2003. In the US, Copaxone sales will be $415 million forlast year, rising to $519 million in 2003. Altogether, Copaxone sales in 2003 will be $687 million, compared with $541 million in 2002.”
Is the ethical multiple sclerosis drug market open to attack by the genericdrug makers?
“I’m less concerned about that. The status of the four players in themarket is quite strong. Nevertheless, there might be changes, mainly due to the penetration of oral drugs that will replace injections. Biogen and Elan Corp. (NYSE; Dublin:ELN; LSE:ELA) are developing such a treatment. It won’t be launched in the coming year, or probably in the next two years, but it might become ablockbuster.
“People are still deterred by injections. In practice, 70% of treatable multiple sclerosispatients, about 208,000 people, use existing injections. The treatment quite simply affects the quality of life, which is why an oral drug has such potential. Teva is still trying to develop such a drug, despite poor results in clinical trials. Teva’s development partner, H. Lundbeck A/S, apparently thinks the drug has little chance. Serono is also developing an oral drug, but the first company to develop one, assuming the clinical trials succeed, will be Biogen.”
When will it be launched?
“If things go according to plan, I think it will be launched in 2006, and, as I said, it might change the market.”
Another factor that will change the multiple sclerosis treatment market is the proposed changes in the US health system. The reform’s basic purpose is to increase the number of people insured, which will increase drug use, especially of generic drugs.
“As expected, one of the most important subjects President George W. Bushtalked about in his speech were his plans for health reform,” says IBI analyst Elah Alkalay.
The US views strengthening and improving healthcare as the federal government’s most important task after economic growth and job creation. President Bush emphasized the need to improve and strengthen health plans for the elderly to cover prescription drugs, and announced an immediate $400 billion 10-year budget increment for Medicare.
“We’re talking about tens of millions of people. Over 16% of the US population lacks health insurance that helps cover the cost of drugs taken outside hospitals. The plan is expected to increasegovernment spending on prescription drugs, which is naturally good for the pharmaceutical companies. We think the generic drug sector will be the main beneficiary.”
Published by Globes [online] - www.globes.co.il - on February 4, 2003