Pharma-biotech partnerships take on new urgency as patent cliffs loom

A glance at the 2022 top selling drugs for the biggest pharma companies reveals how dependent many large pharmas are on a small basket of products – most acquired through partnerships or acquisitions – that are nearing loss of exclusivity.

According to figures from the Healthcare Research & Data Analytics team at Clarivate, the top three best-selling products for Pfizer, AbbVie, Merck/MSD and Bristol Myers Squibb contributed more than half their revenue in 2022, ranging from 53.3% of AbbVie’s $51.8 billion in revenue to a whopping 67.2% for Bristol Myers Squibb’s $44.7 billion.

Dependency on dealmaking

Pharma has always relied on external innovation, through partnerships, licensing or acquisitions, to access the forefront of innovative technologies and biologics.

AbbVie’s biggest selling drugs all came to the company through in-licensing or acquisitions:

  • HUMIRA® (adalimumab) was developed by U.K. biotech Cambridge Antibody
  • SKYRIZI® (risankizumab) was part of a 2016 deal with Boehringer Ingelheim
  • IMBRUVICA® (ibrutinib) was originally invented by Celera Genomics.

Bristol Myers Squibb’s top three products are all the fruits of acquisition. Its co-developed blood thinner ELIQUIS® (apixaban) came in through DuPont Pharmaceuticals, while cancer products REVLIMID® (lenalidomide) and OPDIVO® (nivolumab) were first developed by Celgene and Medarex, respectively, and both were acquired by BMS. Together, these three drugs made $29.8 billion in 2022.

Pharma M&A activity was muted in 2022, coming in at its lowest level since 2013 – something of a surprise, given the looming patent cliff and pharma’s past reliance on M&A and biopartnering as a quick fix for revenues lost to generics and biosimilars competition. According to BioWorld data, biopartnering deal values for 2022 were the second-highest recorded, while the number of transactions was the lowest since 2018. Pharma is placing bigger bets on a smaller number of therapeutics and technology platforms.

Diversify to mitigate risk and fuel growth

This reliance on a few large blockbusters has lent urgency to efforts by large pharmas to diversify into emerging modalities like antibody-drug conjugates (ADCs), cell therapy, artificial intelligence, and RNA to replenish pipelines and develop the next generation of medicines.

In this development phase for personalized medicines, inking a deal with the right partner is essential. Using a resource such as Cortellis Deals IntelligenceTM, a company can identify experienced industry innovators that can bring complementary expertise and resources to the table, based on criteria of interest (e.g. therapeutic area, mechanism, technology, or stage of development).

Bristol Myers Squibb will lose exclusivity on its three top products within the decade. The company, with two deals in 2022’s top ten, committed the third-largest amount to biopartnering deals in 2022, at $18.1 billion across eight transactions.

BMS’s commitment to cell therapy is evident – it tripled down on its expanded relationship with the immunotherapy drug discovery company Immatics, first initiated by Celgene before it was acquired. Utilizing Immatics’ gamma delta T cell-derived, allogeneic Adoptive Cell Therapy platform, ACTallo, and a suite of next-generation technologies developed by Bristol Myers Squibb, the companies will develop two programs with both companies having an option to develop up to four additional programs each.

Of the biggest spenders in 2022, Merck/MSD opened its wallet the widest. Merck/MSD  will lose market exclusivity for KEYTRUDA® (pembrolizumab), the third largest selling drug after Humira and the COVID-19 vaccine Comirnaty, in 2028. While Bristol Myers Squibb is looking to cell therapy to fill the gaps in its revenue sheet, Merck/MSD is betting on ADCs, a field that is coming of age despite historical setbacks, through its deals with Mersana Therapeutics and Kelun-Biotech, the latter of which could reach a max value of $9.3 billion based on seven preclinical ADC candidates.

Pfizer is set to lose patent exclusivity on 11 drugs by 2030, including best-selling breast cancer therapy IBRANCE® (palbociclib). Its March 2023 deal to buy Seagen for $43 billion complements its cancer portfolio with ADCs and, unlike many other preclinical deals in 2022, a late-stage development program.

Often in dealmaking, there is a disconnect between perceived asset valuations. This has been starker than ever in the last year, where the swift depreciation of biotech companies has triggered a shift in dynamics. Formerly well-funded biotechs now face challenging times and pharma can wield considerable influence in their partnership.

Cortellis Deals Intelligence patented predictive analytics can forecast deal value at each stage of drug development. Our unique analytics tool looks at multiple deal traits across 124,000-plus deals in Cortellis Deals Intelligence and queries 20+ years of data to generate a projected deal value.

The rising tide of innovation means that pharma, as it continues to adjust to its personalized future, must find partnerships that allow diversification, both in therapies and on its balance sheet.

For a deeper dive into biopharma investment, read the Clarivate report Where pharma is investing for the future of medicine: Biopharma Dealmaking in 2023.