David's New Book

Friday, November 3, 2017

The Broken Antibiotics Market Claims Another Victim


What happens when the antibiotics market remains broken? Companies get out of the antibiotic business – that’s what happens.  The latest example is The Medicines Company. Their anti-infectives business in 2016 consisted of intravenous minocycline for Acinetobacter infections and oritavancin for Gram-positive infections.  In 2016 the sales for those two products were $8.6 and $16 million respectively according to their annual report.

The Medicines Company just saw the approval of meropenem-vaborbactam (Vabormere) for the treatment of serious antibiotic-resistant Gram-negative infections. In spite of this, they are getting out of the business. Obviously, the company no longer sees a future in the antibiotics business. This move, apparently, will help them trim their staff from its current 400 employees down to around 90.  The market greeted this news with enthusiasm. And who can blame them?

The anti-infectives core of The Medicines Company came from Rempex who discovered and developed Vabormere.  They have always landed on their feet in the past and I am hoping that this will be nothing more than a speed bump for them.  They have some interesting early stage compounds in their pockets that deserve, someday, to see the light of day. But in today’s environment – who knows?

What company will be next?  I have my eyes on Allergan.  Unlike The Medicines Company, Allergan has no antibiotic discovery effort. They have assets that they sell including Aycaz or ceftazidime-avibactam, dalbavancin and ceftaroline in their stable.  Their rights to Aycaz and ceftaroline are limited to the North American market.  In 2016 they sold around $36 million of Aycaz, $134 million of ceftaroline and $39 million of dalbavancin. This is not too bad given that two are sold only in North America and that they all fit in the hospital antibotics market. But none of these are blockbusters and all three together account for a tiny proportion of their $5 billion annual revenues. Will Allergan stick with the antibiotics they have and continue to fight it out? Or will they follow The Medicines Company, AstraZeneca and so many others?

The problem is obvious to everyone who knows anything about antibiotics today.  The market is broken. Compared to billion dollar sellers in the fields of diabetes, neurosciences and cardiovascular medicine, antibiotics just don’t stack up. If we don’t fix this broken market using a combination of push and pull incentives (like market entry rewards), we can expect to see a parade of companies, both large and small, exiting the field.  This could be the worst exodus from the area since the great departure during the first few years of this century. With such an abandonment by companies, investors will quickly follow.  The future of biotech, start-ups and even academic research will all be threatened. We cannot let this happen. And we know what to do to prevent it. Are we just going to sit on our hands and watch while Rome burns?