Patent Cliffs in the Era of Complex Therapies and Biologics

The rise of new product classes such as biologics and complex molecules over the past two decades have brought to light some of the unique market dynamics that such products face. While we have seen and experienced the inception, growth and expansion phase of such products, the ongoing incumbent decline due to loss of exclusivity (LoE) is yet to be fully experienced. This raises the question of how one may go about modelling such a scenario given that forecasting the expected erosion curves accurately can ensure full brand value is retained for pharmaceutical companies.

This research looks to analyze the 'patent cliff' across varying product classes and, in doing so, understand the drivers behind the different market dynamics post-LoE for traditional molecules, complex molecules and biologics.

An extensive list of molecules across various therapeutic areas succumbing to loss of patent exclusivity between 2014 and 2019 were categorized according to product class, and sales data were analyzed to reveal trends across different product classes.

The analysis of sales behavior of these compounds revealed distinct tendencies in terms of sales erosion across the various product classes. The largest determinant for the behaviour of a prescription drug post-LoE is the degree of generic competition, which in turn is primarily influenced by the barriers to entry. This research details some of the key challenges relating to regulatory, legal and manufacturing aspects that distinguish biologics and complex molecules from traditional small molecules and ultimately lead to different market dynamics post-LoE.

Unlike for traditional small-molecule generics where originator manufacturers have limited options to fend off generics, the greater degree of 'brand-brand' competitive dynamics seen in the biologics and complex generics space allows manufacturers of originators to protect market share. This analysis represents a meaningful addition to understanding LoE across various class types and thus highlights the importance of strategic decision making that pharmaceutical companies need to take at LoE.