Market Report Source

Overview

Introduction
The upper GI market, defined as gastroesophageal reflux disease (GERD), peptic ulcer disease (PUD) and dyspepsia indications, achieved sales of just over $19 billion in 2006, with minimal growth since 2005. All major PPI brands will lose patent protection in the next 10 years, resulting in a major increase in generics and a declining market value.

Scope of this report

• This report focuses on drugs used to treat upper GI disorders, with indication- and country-specific sales forecasts to 2016
• Assessment of current and future opportunities and threats in the upper GI disorder market across the seven major markets
• Identification of future market events expected to impact on the upper GI disorder market over the next decade
• Case study analysis of successful lifecycle management strategies, including those used by AstraZeneca for Nexium and TAP Pharmaceuticals for Prevacid

Research and analysis highlights
The next ten years will see all the major PPI brands go off patent and the market will experience significant genericization. Pipeline products will help to partially offset the erosion caused by generics, but currently marketed product sales are expected to decrease by 42% from around $23 billion to $13 billion over the forecast period.

Direct-to-consumer (DTC) advertising was crucial to the success of Nexium in the US. In 2005, AstraZeneca spent around $225m on its DTC advertising campaign. DTC advertising is an important strategy, but smaller companies can compete with Big Pharma by gaining a favorable formulary status, and concentrating on targeted detailing.

Well executed lifecycle management strategies of marketed products will be essential in order to compete in this market. Offering multiple formulations, head-to-head to trials, targeting of niche patient populations and indication expansion will provide revenue potential.

Key reasons to read this report

• Quantify the future size of the upper GI disorder market, in terms of value, in each of the seven major markets
• Assess the impact of future events such as patent expiries, indication expansions, and new product launches on the sales of key marketed brands
• Identify key lifecycle management strategies

Table of Contents

CHAPTER 1 EXECUTIVE SUMMARY 3

Objective of the analysis 3

Datamonitor insight into the upper GI disorder market 3

Market forecast summary 6

Contributing experts 7

Related reports 7

CHAPTER 2 MARKET DEFINITION AND OVERVIEW 9

Market definition for this report 10

Current market situation 14

The upper GI disorder market achieved a value of almost $20 billion in 2006 15

The US continues to dominate the upper GI disorder market 16

In the EU, Italy and Spain showed good growth, whereas the UK and Germany exhibited a decline in sales 17

Upper GI disorder markets in Italy and Spain experienced good growth due to increased sales of PPIs 17

Cost-cutting measures forced down the sales value of the market in Germany 18

Prevacid patent expiry affected the entire UK upper GI disorder market 18

Japan experienced a decline in the sales value of the upper GI disorder market 18

Proton pump inhibitors continue to dominate the upper GI market 19

PPIs accounted for 84% of total sales in the upper GI disorder market in 2006 19

Only Nexium and Aciphex demonstrated growth in the upper GI disorder market to 2006 20

AstraZeneca’s Nexium accounted for 27% of all sales in the upper GI disorder market in 2006 21

Sales of Prevacid have declined from 2005 to 2006 23

AstraZeneca leads the way in the upper GI market 24

Strategic scoping and focus 26

CHAPTER 3 COUNTRY MARKET ASSESSMENTS 27

Summary of environmental issues affecting upper GI disorder market size 27

Seven major market opportunities and threats 30

Opportunities 30

Treatments for the PPI unresponsive population remains a serious unmet need 30

Increase in the size of the GERD and dyspepsia patient population 30

Better definition of dyspepsia in ROME III will ultimately lead to improved treatment of this disease 31

Development of fixed combinations of NSAIDs and PPIs 31

Threats 33

The incidence of H. pylori infection is decreasing and there are very effective eradication regimes 33

The upper GI market will face increasing threat from generics and over-the-counter drugs 33

Surgery may be as cost-effective as treatments for GERD 35

US: opportunities and threats 36

Opportunities 36

An opportunity for generics to increase market share 36

Growth in Medicare Part D coverage has driven sales of PPIs in the US 38

Threats 39

With the availability of cheaper alternatives many insurance companies are cutting expensive PPIs from their coverage plans 39

Parallel importation given the go-ahead, but still faces opposition 40

FDA is reviewing the long-term safety of proton pump inhibitors 41

Increasing pressure to restrict DTC advertising and a moratorium on DTC advertising of new products will affect PPI sales 42

Japan: opportunities and threats 43

Opportunities 43

Growing shift towards the use of PPIs over H2 antagonists in Japan 43

Approval of PPIs in the large non-erosive reflux disease population 45

Threats 46

Biennial price cuts will continue to pose a threat 46

Increasing shift towards the used of generics will affect brand sales 47

France: opportunities and threats 49

Opportunities 49

The Internet is recognized as a source of high-quality medical information by consumers in France 49

Threats 49

France seeks to save money from more cost-effective PPI prescribing and greater use of generics 49

Germany: opportunities and threats 51

Opportunities 51

Medicines assessment agencies in the UK and France to share information with German counterpart 51

Threats 52

Introduction of jumbo reference pricing 52

Italy: opportunities and threats 53

Opportunities 53

Innovative drug development rewarded with premium price and 100% reimbursement 53

Negligible impact of generics 54

Italy is the largest growing of all the upper GI disorder markets 55

Threats 59

Ongoing cost-containment measures 59

Implemented price reductions and AIFA payback system restricts market access and limits potential revenue 59

Spain: opportunities and threats 60

Opportunities 60

Spanish national formulary will allow health professionals to make better educated treatment decisions 60

Threats 60

Introduction of reference pricing will force the price of drugs down 60

Healthcare reforms will promote the use of generics 61

Potential for entry of generics into the market prior to patent expiry 62

UK: opportunities and threats 64

Opportunities 64

NICE recommendations will ensure continued opportunities for PPIs and gastroprokinetics 64

Threats 65

Generic erosion of branded drugs will be extensive in the UK 65

The National Audit Office insists that doctors should prescribe efficiently to help lower NHS spending 67

CHAPTER 4 FORECAST ANALYSIS 68

Key events 68

New product launches in the US and 5EU 70

Dexlansoprazole (TAK-390MR) 70

S-tenatoprazole-Na 71

Pylera 72

ADX-10059 73

New product launches in Japan 74

Pylera 74

Dexlansoprazole (TAK-390MR) 74

S-tenatoprazole-Na 75

ADX-10059 75

Additional indications 75

Omeprazon (omeprazole) approval for symptomatic GERD in Japan 75

Gaster (famotidine) approval for non-erosive reflux disease in Japan 77

Eisai seeks approval for Pariet (rabeprazole) in non-erosive reflux disease from Japanese authorities 80

Pariet (rabeprazole) wins approval for eradication of H. pylori in Japan 80

Nexium (esomeprazole) line extensions will result in increased brand sales 80

Generic erosion and pricing assumptions 82

Seven major market generic erosion and pricing assumptions 82

PPI brand erosion in the US 82

PPI brand erosion in France 83

PPI brand erosion in the UK 84

PPI brand erosion in Italy 84

PPI brand erosion in Germany 85

PPI brand erosion in Spain 86

Patent expiries 87

Losec (omeprazole) 88

Prevacid (lansoprazole) 89

PrevPac (lansoprazole, clarithromycin and amoxicillin) 90

Aciphex (rabeprazole) 91

Protonix (pantoprazole) 93

Nexium (esomeprazole) 96

Zegerid (omeprazole + bicarbonate) 98

Data definitions, limitations and assumptions 100

Standard units 100

Japanese market data 100

Derivation of sales forecasts and pricing trends 100

Forecasts 100

Forecast methodology 101

CHAPTER 5 COMMERCIAL IMPACT AND LIFECYCLE MANAGEMENT: CASE STUDIES 102

Introduction 102

Strategies to compete in the crowded PPI market 103

Innovation within the brand is essential for mature products, but standard capsules should be the initial formulation 103

Uptake of Zegerid in the US was poor due to initial suspension formulation proving that capsules are the preferred option 106

Prevacid leads in terms of brand innovation, but sales still fall short of Nexium in the US 108

Protonix was the fourth PPI to reach the US market, but drove innovation with the first iv formulation 112

Eisai has not innovated within the Aciphex brand but are investigating an extended release formulation 114

Promotional spend propelled Nexium to market leadership, but is it possible to compete with the might of AZ? 114

PPIs were second highest promoted drug class in the US in 2005 114

DTC advertising has been key to the success of Nexium 115

Companies should consider increasing e-marketing of PPIs 120

Without a massive DTC advertising spend, what can you do to compete in the upper GI market? 121

Targeting niche patient populations to gain market share in the crowded market 125

There are a number of GERD subpopulations 125

A number of market players already target nighttime GERD patients 126

Opportunities in the extraesophageal reflux disease population exist 129

TAP Pharmaceuticals is targeting Prevacid towards the pediatric population 130

PPIs, cancer and chemotherapy: opportunities for new indications 132

Head-to-head trials will continue to help competitive positioning 133

AstraZeneca performed large-scale, comparator clinical trials for Nexium 133

Aciphex will go head-to-head with Nexium 135

Future market entrants need to show superior efficacy to Nexium 135

Head-to-head: brands versus generics, is there scope for such trials? 136

Cost analysis 138

AstraZeneca priced Nexium above all other PPIs in the US 138

Pricing of pipeline products 139

Taking advantage of market changes will help to fuel sales 141

Increase in the use of PPIs in inflammatory conditions treated by NSAIDs in the wake of Vioxx withdrawal and COX-2 class cardiovascular side-effects 141

Future PPI entrants should aim to get an indication for the treatment and prevention of NSAID-associated ulcers 143

BIBLIOGRAPHY 145

Journal papers 145

Websites 149

Datamonitor reports 157

Other sources 157

APPENDIX A – MAJOR BRAND KEY FACTS 158

Key marketed products 158

APPENDIX B – MARKET FORECAST DATA 162

Seven major markets 162

M5EU 164

US 166

Japan 168

France 170

Germany 172

Italy 174

Spain 176

UK 178

APPENDIX C 180

Contributing experts 180

Report methodology 181

About Datamonitor 181

About Datamonitor Healthcare 181

About the Immune Disorders and Inflammation analysis team 182

Disclaimer 183

List of Tables

Table 1: Datamonitor’s definition of upper GI disorders 11

Table 2: Key players in the upper GI disorder market 24

Table 3: Summary of environmental issues in upper GI disorder market across the seven major markets, 2007 27

Table 4: Summary of opportunities and threats in the US and Japan upper GI disorder markets, 2007 28

Table 5: Summary of opportunities and threats in the 5EU upper GI disorder markets, 2007 29

Table 6: Fixed combinations of PPI + NSAID in development for osteoarthritis, 2007 32

Table 7: Advantages and disadvantages of step-down and step-up treatment 35

Table 8: Volume (SU) market share of PPIs split by brand and generics, 2003-06 38

Table 9: Datamonitor’s new product launch dates for upper GI disorders in the US and 5EU, 2007-2016 70

Table 10: Datamonitor’s new product launch dates for upper GI disorders in Japan, 2007-2016 74

Table 11: Nexium line extensions in the US and EU, 2007 81

Table 12: Brand erosion of Losec (omeprazole) in France, 2003-06 84

Table 13: Brand erosion of Losec (omeprazole) in Spain, 2001-03 87

Table 14: Patent expiry dates for the in the seven major markets, 2007-2016 87

Table 15: Cost of oral tablet formulations of PPIs in the US, 2006 138

Table 16: Nexium: key facts 158

Table 17: Prevacid: key facts 159

Table 18: Aciphex: key facts 160

Table 19: Protonix: key facts 161

Table 20: Datamonitor’s forecast of upper GI disorder drug sales ($m) in the seven major markets, 2006-16 162

Table 21: Datamonitor’s forecast of upper GI disorder drug sales ($m) in the five major EU markets, 2006-16 164

Table 22: Datamonitor’s forecast of upper GI disorder drug sales ($m) in the US, 2006-16 166

Table 23: Datamonitor’s forecast of upper GI disorder drug sales ($m) in Japan, 2006-16 168

Table 24: Datamonitor’s forecast of upper GI disorder drug sales ($m) in France, 2006-16 170

Table 25: Datamonitor’s forecast of upper GI disorder drug sales ($m) in Germany, 2006-16 172

Table 26: Datamonitor’s forecast of upper GI disorder drug sales ($m) in Italy, 2006-16 174

Table 27: Datamonitor’s forecast of upper GI disorder drug sales ($m) in Spain, 2006-16 176

Table 28: Datamonitor’s forecast of upper GI disorder drug sales ($m) in the UK, 2006-16 178

List of Figures

Figure 1: Datamonitor’s upper GI disorder-market forecast across the seven major markets, 2006-16 6

Figure 2: Percentage of total sales split by indication in the seven major markets, 2006 13

Figure 3: Key events impacting the upper GI disorder market, 1999-2007 14

Figure 4: The upper GI disorder market value ($ billion) in the seven major markets, 2005-06 15

Figure 5: Performance of the upper GI disorder market in the seven major markets, 2005-06 16

Figure 6: Upper GI disorder-specific sales of PPI drug class across the major five EU markets ($m), 2003-06 17

Figure 7: Sales in the upper GI disorder market across the seven major markets split by drug class, 2006 19

Figure 8: Performance of key PPI brands for upper GI disorders in the seven major markets, 2005-06 20

Figure 9: Upper GI disorder-specific sales of Nexium (esomeprazole) across the six major markets, 2005-06 22

Figure 10: Upper GI disorder-specific sales of Prevacid (lansoprazole) across the seven major markets, 2005-06 23

Figure 11: Sales ($billion) and volume (SU) of branded and generic PPIs in the US, 2003-06 37

Figure 12: Total sales of PPIs in the US 2005-06 39

Figure 13: Upper GI disorder-specific sales of PPIs and H2 antagonists in Japan, 2003-06 44

Figure 14: Time to approval of PPIs for non-erosive reflux disease in Japan, 2004-09 46

Figure 15: Cost per standard unit ($/SU) of PPIs in Japan, 2003-06 47

Figure 16: Sales of PPIs in France ($m), 2005-06 50

Figure 17: Upper GI disorder-specific sales ($m) and volume (SU million) of the PPI drug class in Germany, 2003-06 53

Figure 18: Upper GI disorder market in Italy split by drug class, 2003-06 55

Figure 19: Upper GI disorder-specific sales of Takepron (lansoprazole) and lansoprazole generics in Italy, 2003-06 57

Figure 20: Total sales ($ billion) of PPIs in Italy, 2006-16 58

Figure 21: Upper GI disorder-specific sales of Prevacid (lansoprazole) and lansoprazole generics in Spain ($m), 2003-06 63

Figure 22: Sales of gastroprokinetics for GERD and dyspepsia indications in the UK ($m), 2005-06 65

Figure 23: Upper GI disorder-specific sales of Lanzo (lansoprazole) and lansoprazole generics in the UK ($m), 2004-06 66

Figure 24: Impact of key events on the upper GI disorder market in the seven major markets, 2007-2016 69

Figure 25: Diagnosis value ratio for omeprazole in the US and Japan, 2006 77

Figure 26: Upper GI-specific volume (SU, billion) of Losec (omeprazole) in the US, 2001-06 83

Figure 27: Upper GI disorder-specific sales of Takepron (lansoprazole) in Italy, 2003-06 85

Figure 28: Upper GI disorder-specific sales of Takepron (lansoprazole) in Germany, 2003-08 86

Figure 29: Upper GI disorder-specific sales ($m) of Losec (omeprazole) in Italy, 2006-2016 88

Figure 30: Upper GI disorder-specific sales ($ billion) of Prevacid (lansoprazole) in the seven major markets, 2006-2016 90

Figure 31: Sales of Prevpac (lansoprazole + amoxicillin + clarithromycin) in the US ($m), 2006-2016 91

Figure 32: Upper GI disorder-specific sales of Aciphex (rabeprazole) in the seven major markets ($ billion), 2006-2016 93

Figure 33: Upper GI disorder-specific sales of Protonix (pantoprazole) in the US ($ billion), 2006-2016 95

Figure 34: Upper GI disorder-specific sales of Nexium (esomeprazole) in the US and 5EU, 2006-2016 98

Figure 35: Upper GI disorder-specific sales of Zegerid (omeprazole + sodium bicarbonate) in the US ($m), 2006-2016 99

Figure 36: PPI formulation launch timeline, 1999-2007 104

Figure 37: Best strategy for launch of formulations of PPIs during a product’s lifecycle 105

Figure 38: Upper GI disorder-specific sales ($m) of Zegerid in the US, 2003-06 107

Figure 39: Different Prevacid (lansoprazole) formulations in the US, 2007 109

Figure 40: Upper GI disorder-specific sales ($ billion) of Prevacid (lansoprazole) in the US split by formulation, 2001-06 110

Figure 41: Upper GI disorder-specific sales ($ billion) of Protonix (lansoprazole) in the US split by formulation, 2001-06 113

Figure 42: Breakdown of total promotional spend for PPI drug class in the US, 2005 115

Figure 43: Spending ($m) on DTC advertising and total brand sales in the US, 2005 118

Figure 44: Upper GI disorder-specific sales for Nexium and Prevacid in the US, 2003-06 119

Figure 45: Total promotional spend for Nexium and Prevacid in the US, 2004-06 120

Figure 46: Potential patient co-pay savings 122

Figure 47: Upper GI disorder-specific sales of Protonix and Nexium in the US, 2003-06 123

Figure 48: Santarus’s marketing strategy for Zegerid, 2007 124

Figure 49: Total promotional spend ($m) for Zegerid in the US, 20040-6 125

Figure 50: Analysis of the homepage for Protonix, 2007 127

Figure 51: Screenshot of the Zegerid homepage directed towards healthcare professionals, 2007 128

Figure 52: The Prevacid homepage, 2007 131

Figure 53: Sales of PPIs for inflammatory conditions treated by NSAIDs in the seven major markets, 2003-06 142

Figure 54: Fprecast of sales of PPIs for inflammatory conditions treated by NSAIDs in the seven major markets, 2006-2016 143