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Johnson & Johnson’s Recent Acquisition Of Novira Is A Play In A Small Market
Johnson & Johnson’s recently agreed to acquire Novira Therapeutics, which develops therapies to treat chronic Hepatitis B viral infections. [1] The company doesn’t have a marketable drug yet, which suggests that J&J has strong confidence in the clinical data for Novira’s developmental stage drugs. So, the obvious question is, how significant is this move? We believe while it may be worthwhile investing in novel therapies, the overall market opportunity for Hepaitis B treatment is quite limited. This appears to be, at best, a small incremental move.
Novira Acquisition Appears To Be A Relatively Minor Play
J&J is interested in Novira’s antiviral compounds which are currently under development. One such candidate is NVR 3-778, which is a small molecule drug intended to treat patients with Hepatitis B virus through oral administration. The drug works by inhibiting HBV core (or capsid protein) which is an important drug target, as well as a novel technique. Nevertheless, the global Hepatitis B market is expected to reach just around $3.5 billion by 2021, according to some estimates. [2] This means that the incremental value addition from a successful drug is likely to be limited. So, why is the market opportunity smaller than some of the other strains of Hepatitis virus such as Hepatitis C? The diagnosis and treatment rates remain low as the condition is generally asymptomatic. The current drugs are serving the market reasonably well, and there is threat from generic competition too.
However, J&J Needs New Drugs To Replace Some That Will Go Off Patent Soon
Having established that the market opportunity is limited, the move is still incrementally beneficial as J&J gradually needs to strengthen its pipeline to increase the likelihood of successful drug launches. Some of its key drugs are likely to go off patent in the next couple of years.
We expect J&J’s oncology division to face increased competitive pressures, and believe that sales of its key cancer drugs Zytiga and Velcade may decline in the coming years. Cancer drugs constituted nearly 15% of J&J’s pharma business last year, which is not a small figure by any means. Zytiga has more than 30% share of the metastatic castrate resistant prostate cancer market in the U.S. Last year, this figure showed meaningful quarterly sequential growth, but this year’s quarters have been different. The impact of growing competition from other branded drugs is visible and Zytiga’s market share has declined slightly from its peak value. The drug’s composition of matter patent expires at the end of 2016 and, by 2017, we expect a meaningful impact of Zytiga’s sales from competition from generics. Velcade is already under strong competitive pressure. The drug’s sales declined slightly in 2014 and a court ruling has overturned Velcade’s patent which means generic versions can enter the market in 2017. Together, these drugs brought nearly $3.85 billion in revenues in 2014.
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发表于 2015-11-10 13:33
