BMS sees sharper hep C competition in Japan in Q3

The increasingly competitive reimbursement market in Japan for leading-edge pharmaceuticals saw Bristol-Myers Squibb ($BMY) experience a sharp quarter-to-quarter drop in the hepatitis C segment in the third quarter.

BMS CEO Giovanni Caforio

The stage was set in the second-quarter call when Giovanni Caforio, in his first earnings call as CEO, noted that in May, Gilead ($GILD) won reimbursement for Sovaldi in the patient market of the estimated half-million people with the type of hepatitis C the drug treats.

BMS was the first to market a next-gen hepatitis C treatment in Japan through combo NS5A inhibitor Daklinza and the NS3/4A protease inhibitor Sunvepra since last fall and had enjoyed building sales for several quarters until the Sovaldi approval.

However, in the second quarter, the extent of the fall was not available. But in the third quarter, Chief Financial Officer Charlie Bancroft put a number on it--and the drop was a bit more than 25%.

"So in Japan the sales were $175 million and that's down from about $235 million, if I recall, in the second quarter," he said on the Oct. 27 third-quarter earnings call.

Bancroft had said earlier in the call that business in Japan "continued to do reasonably well in the quarter, but we do see an increasingly competitive landscape there, which will impact our business going forward."

BMS is the latest company this quarter to turn the focus to Japan for key products by multinationals with reimbursement an important factor. Japan is shaking up its regulatory system with an aim to get the domestic drug industry to innovate with an indirect benefit for multinational firms seeking approvals.

BMS Worldwide Markets head Murdo Gordon

Murdo Gordon, head of Worldwide Markets, added that getting to reimbursement in Japan or other markets outside the U.S. was still touch-and-go.

"I think when we go outside of the U.S., it's going to obviously take a little longer, because it will take time to secure reimbursement."

Barron's reported in May that Japan had 29% of the world's hepatitis C patients, or 1.1 million, and counts 216,050 with genotype-2 hep C, the specific type of the disease treated by Sovaldi.

Nikkei at the same time however used different numbers, and said Japan has about 2 million people with the virus, and nearly one-third of them have the gen-2 type treated by Sovaldi.

But in Japan, the most common form of hepatitis C is genotype 1, which is a key point for Viekirax. Other treatments approved in Japan include Merck's ($MRK) Vanihep and Janssen's Sovriad used with pegylated interferon and ribavirin.

Mitsubishi Tanabe's Telavic, licensed from Vertex Pharmaceuticals ($VRTX), is approved for genotypes 1 and 2.

- here's the release