Saturday, October 16, 2021

Bayer pharma chief admits to unfillable revenue gap despite potential blockbuster launches

The top concern for Bayer’s pharma business is the looming patent cliff for its two best-sellers—blood thinner Xalreto and eye drug Eylea. The blockbuster meds will leave a revenue gap that the company’s pipeline program won’t be able to fill in the next few years.

Together, Xarelto and Eylea chalked up €6.62 billion ($8.0 billion) in 2019 revenues after double-digit growth. It would be “mathematically impossible” for growth from newer drugs to compensate for their loss of patent protection, Bayer pharma chief, Stefan Oelrich, told reporters Wednesday, according to The Financial Times.

“No company in the world … would be able to fill such a gap just at once,” he was quoted as saying. Both Xarelto and Eylea lost key active ingredient patents in 2020 in China, with other territories soon to follow. Johnson & Johnson is Bayer’s U.S. partner on Xarelto, and Regeneron handles Eylea in the U.S.

Bayer does have three potential blockbuster launches on the horizon, as Oelrich noted at the annual J.P. Morgan Healthcare Conference. These include androgen receptor antagonist Nubeqa, first approved by the FDA in non-metastatic castration-resistant prostate cancer in mid-2019.

A potential first-in-class treatment for menopausal symptoms came to Bayer through its $425 million upfront acquisition of KaNDy Therapeutics last year, and it’s expected to enter phase 3 trial this year.


Beleaguered Bayer adds $1.8B to cost-cutting goal amid COVID-19 slowdowns

Finally, finerenone aced a phase 3 heart disease trial in patients with chronic kidney disease and Type 2 diabetes. It will mark Bayer’s return to the U.S. cardiovascular field, and for that Bayer plans to establish a new marketing and sales organization, which is “well underway in its buildup,” Oelrich said at JPM.

A fourth drug that also holds blockbuster potential is vericiguat, which recently showed it could help patients with heart failure with reduced ejection fraction in a phase 3 trial. But Bayer shares that drug with Merck & Co., so that leaves the German drugmaker with roughly €500 million, according to Oelrich.

With its humdrum internal drug pipeline, Bayer has spent much of the past two years striking deals to beef up its offerings. Channeling resources to investing in external R&D is part of Bayer’s strategy in CEO Werner Baumann’s restructuring plan.

In 2020 alone, the pharma department signed more than 20 transactions ranging from equity investments and licensing agreements to outright acquisitions.


mRNA latecomer CureVac recruits Bayer to speed COVID-19 vaccine to market

Besides KaNDy, Bayer last year bought gene therapy pioneer Asklepios BioPharmaceutical in a deal worth up to $4 billion. Combining that with induced pluripotent stem cell specialist BlueRock Therapeutics, which Bayer bought in 2019, the German company has formed a cell and gene therapy platform, offering its capabilities to potential partners.

Bayer still has the firepower to do more transactions, Oelrich said. “Do we have capacity to do more [deals]? Yes,” he said at JPM. “Do we want to do the exact amount that we’ve done in the last year? Not necessarily, because it depends on what fits our strategic direction.”

After its ill-fated megamerger with Monsanto, Oelrich said Bayer will “clearly prioritize pharma moving forward” in terms of capital allocation.

“I think that’s a great advantage for us as we move forward because we can then finally capitalize on the initial idea of bundling the capital allocation capabilities of the whole group and focus them on one business as we’ve demonstrated especially in 2020 of our pharma business,” he said.

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