Bayer Faces Unfillable Revenue Gap as Xarelto and Eylea Lose Patent Protection

Compiled by Fan Dongdong

Currently, the most pressing concern for Bayer’s pharmaceutical business is the impending expiration of patent protection for its two blockbuster products: the blood thinner Xalreto and the ophthalmic drug Eylea. The resulting “patent cliff” for these two major drugs will create a revenue gap for Bayer. The head of Bayer’s pharmaceutical division has stated that the company’s existing pipeline projects will be unable to offset this decline in revenue over the coming years.

Following over 10% growth in sales of Xarelto and Eylea, total revenue reached $8 billion in 2019. According to the Financial Times, Stefan Oelrich, head of Bayer’s pharmaceuticals division, told reporters on Wednesday that it was “mathematically impossible” for revenue growth from new drugs to offset the decline caused by loss of patent protection. Oelrich stated, “No pharmaceutical company in the world can fill such a substantial revenue gap in a short period of time.”

In 2020, Xarelto and Eylea lost their key active ingredient patents in the Chinese market, with patent protections in other countries and regions also nearing expiration. However, as Oelrich pointed out at the recent annual J.P. Morgan Healthcare Conference, Bayer currently has several potential blockbuster drugs that are expected to offset, to some extent, the revenue losses from Xarelto and Eylea. These include Nubeqa, a new drug for prostate cancer, which was approved by the U.S. FDA in July 2020 for the treatment of patients with non-metastatic castration-resistant prostate cancer (nmCRPC).

Last July, Bayer announced that its drug finerenone had become the first non-steroidal selective mineralocorticoid receptor antagonist proven to reduce the risk of renal and cardiovascular events in patients with type 2 diabetes (T2D) and chronic kidney disease (CKD). In the Phase III FIDELIO-DKD trial, the combination use of finerenone reduced the risk of the composite primary endpoint comprising CKD progression, kidney failure, and renal death. Another potential blockbuster drug from Bayer, vericiguat, is an oral, once-daily, first-in-class soluble guanylate cyclase (sGC) stimulator for the treatment of heart failure and is currently under priority review by the FDA.

In addition, last August, Bayer acquired a novel non-hormonal oral therapy from KaNDy Therapeutics for improving menopausal symptoms with an upfront payment of $425 million. NT-814 is a first-in-class, non-hormonal, once-daily oral neurokinin-1 and -3 receptor (NK1R/NK3R) antagonist expected to enter Phase III clinical trials in 2021. Analysts predict that, upon approval, NT-814 could achieve global peak sales exceeding €1 billion.

As part of CEO Werner Baumann’s restructuring plan, Bayer has incorporated external R&D investments into its corporate development strategy. In 2020 alone, Bayer’s Pharmaceuticals Division concluded more than 20 transaction agreements, spanning equity investments, licensing agreements, and direct acquisitions. In addition to KaNDy, Bayer acquired Asklepios BioPharmaceutical, a pioneer in gene therapy, last year for up to $4 billion. In 2019, Bayer acquired BlueRock Therapeutics, which focuses on developing engineered cell therapies in neurology, cardiology, and immunology using its proprietary induced pluripotent stem cell (iPSC) platform.

In this regard, Oelrich stated at the J.P. Morgan Healthcare Conference that Bayer remains capable of pursuing additional transactions in the future, though not necessarily matching the scale of last year’s deals, as transaction decisions are primarily driven by their alignment with Bayer’s strategic direction. Oelrich indicated that Bayer will “prioritize impact on and development of its pharmaceutical business” in its capital allocation.

Reference Source: Bayer Pharma Chief Admits to Unfillable Revenue Gap Despite Potential Blockbuster Launches