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Barry Cohen
Barry Cohen
Articles (195) 

Pharmas Seeking to Overcome Patent Expirations

Takeda, Amgen among those losing exclusivity on key drugs

In two previous articles in GuruFocus, I looked at what’s propelling sales - now and in the next several years - at the companies ranked 1st through 5th and 6th through 10th by ElaluatePharma's list of the top 15 pharma companies for 2020. Now, we'll take a look at the companies ranked 11th through 15th.

Takeda Pharmaceuticals Inc. (TAK)

  • Estimated 2026 sales: $35.26 billion
  • 2019 sales: $29.76 billion (estimate)
  • 2019-26 CAGR: 2.45%

Takeda's $59 billion Shire buyout vaulted it into the world’s top 10 pharma companies in 2019, according to FierceBiotech. However, the Japanese company may be pushed down the list due to acquisitions and faster growth at others. That may be a good thing because it frees up the firm to concentrate on five primary areas: gastroenterology, rare diseases, oncology, neuroscience and plasma-derived therapies. To eliminate distractions, Takeda is lopping off some assets that don’t fit with its strategy, a move that will cut about $10 million in revenue.

The company will continue to ride its best-selling drug, Entvivo, which treats bowel disease. For the twelve-month period ending in March, sales of the treatment were about $3.25 billion, up nearly 30% year-over-year. As Entvivo is introduced in additional countries, Takeda will be working to get regulatory okays for a more convenient form of the drug.

The biggest seller that came along with Shire is the eating disorder drug Vyvanse, which racked up $2.55 billion in revenue last year. With patent protection challenges to Vynase and Entvivio on tap, Takeda is counting on new medications and has twelve in the pipeline. One in the latter stage is a potential treatment for Covid-19. All told, Takeda thinks the twelve meds could achieve a combined total of $10 billion in sales at their peak.

Takeda trades at $17.20 as of July 16. Its 52-week range is $12.43 to $20.93.

Eli Lilly and Co. (LLY)

  • Estimated 2026 sales: $29.81 billion
  • 2019 sales: $20.09 billion
  • 2019-26 CAGR: 5.8%

Faced with an aging portfolio, Eli Lilly has made strides in refocusing around new drugs. Now, the company says it’s positioned for “top-tier” growth in the coming years.

Evalaute predicts that Eli Lilly's sales will grow at a compound rate of 5.8% through 2026, which ranks 4th place among the top 15.

One of Lilly’s older products is the erectile dysfunction medication Cialis, which has lost patent protection. The good news is Lilly is already reaping the rewards of several new launches, with outstanding performances turned in by diabetes drug Trulicity, immunology treatment Talltz and Emgality for migraines.

In fact, while five years ago nearly all Lilly sales came from older products, its drugs that were approved in the past six years made up more than half of its sales in the first quarter of the year.

Lilly has also gained some valuable assets the acquisition route with buyouts of Loxo Oncology and Dermira.

At $164, Lilly is selling at $6 off its 52-week peak as of July 16.

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Amgen Inc. (AMGN)

  • Estimated 2026 sales: $28.37 billion
  • 2019 sales: $22.2 billion
  • 2019-26 CAGR: 3.56%

Amgen sales sank 2% to $23.4 billion last year as it suffered loss of exclusivity on several drugs. The company is looking forward to getting back on track this year as expands its own biosimilar business and introduces new treatments, including the best-in-class migraine treatment Aimovig.

Analysts are predicting Amgen will achieve more than 3.5% average annual sales growth through 2026. The company will be relying heavily on its psoriasis pill Otezla, which could reach blockbuster status down the line.

A prominent member of Amgen’s pipeline is an oncology drug that is being tested in a type of lung cancer. Among Amgen’s growth products already being sold are migraine prevention drug Aimovig's, whose sales reached $306 million last year, and Parsabiv, Prolia, Repatha, Blincyto and Nplate. All achieved growth in the double digits in 2019.

Amgen stock is up more than 45% in the past twelve months to $253 as of July 16.

Novo Nordisk (NVO)

  • Estimated 2026 sales: $27.32 billion
  • 2019 sales: $18.3 billion
  • 2019-26 CAGR: 5.9%

Novo’s Ozempic diabetes treatment earned blockbuster status—and more—in 2019, hitting sales of $1.65 billion. That feat helped the Danish firm record a 6% sales increase to $18 billion, which was all the more impressive due to issues with top-seller Victoza.

The company’s predicted growth of 5.9% through 2026 bested all but Bristol-Myers Squibb and AstraZeneca in the top 15. To hit that mark, Novo is banking heavily on its oral diabetes drug Rybelsus, which was approved by the FDA in September. The treatment has blockbuster written all over it.

Novo also has a promising obesity medication in the pipeline, semaglutide, which scored well in a phase 3 trial. Novo already markets the obesity drug Saxenda, which brought in revenues of $855 million last year. The company is shooting to double obesity sales by 2025.

Novo’s insulin business went south last year, falling 3% as pricing pressures weighed on its line.

Novo trades $3 off its year high of $68.72 as of July 16.

15. Gilead Sciences Inc. (GILD)

  • Estimated 2026 sales: $22.3 billion
  • 2019 sales: $21.7 billion
  • 2019-26 CAGR: 0.4%

Gilead Sciences is forecast to grow at a miniscule rate of 0.4% through 2026, by far the lowest percentage of any among the top 15. So, what’s the problem?

A great deal of it is the projected slowdown in the company’s HIV line of products, which has been Gilead’s mainstay.

On the brighter side, Gilead’s antirheumatic drug filgotinib, which is under FDA review, could hit sales of more than $1.25 billion by 2024, the bulk of it in the U.S., according to FierceBiotech. The company thinks the medication will be approved for five indications in the next several years, as recent data shows filgotinib is better than methotrexate alone and may be better than an edge over AbbVie Inc.’s (ABBV) blockbuster Humira.

A big disappointment is the company’s Kite acquisition, which has failed to deliver sales Gilead was counting on. Things became so bad that Gilead took two major Kite-related write-downs worth more than $1.6 billion.

Raymond James analyst Steven Seedhouse wrote in a note that the charge is a “reminder of a deal that most view as overpriced.”

Despite disappointment with Kite, Gilead may have to go down the acquisition path again to help generate revenue. Rumors that the company was going to merge with AstraZeneca (AZN) have all but disappeared.

Trading at $76.27 on July 16, Gilead shares are up 25% in the past year.

Disclosure: The author holds positions in Takeda, Gilead Sciences, Eli Lilly and Amgen.

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About the author:

Barry Cohen
Barry Cohen has nearly 40 years experience in communications and marketing, the majority in senior positions at large international health care companies, including Abbott Laboratories and Bayer Inc.

He has contributed to a number of financial websites, writing primarily about the stocks of health care companies.

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