|GSK CEO Andrew Witty|
As if dealing with a full-fledged Chinese bribery probe wasn't enough for GlaxoSmithKline ($GSK), the company has had a week of whiplash so far at the hands of U.S. regulators. Just after the FDA published draft guidance that would make it easier for generic drugmakers to produce copycat versions of Glaxo's Advair, the agency assembled a panel of experts who voted to endorse a new lung therapy from the British drugmaker. But even with the bit of good news, GSK still has its hands full.
Yesterday ended on a high note for Glaxo, as along with partner Theravance ($THRX), it pinned down an 11 to 2 panel vote in favor of bringing new COPD combo therapy Anoro Ellipta to market. Provided the FDA approves Anoro later this year, analysts predict the drug could top the $1 billion blockbuster threshold; Bloomberg reports the average estimate for projected peak sales at $1.4 billion.
Still, that revenue mark would fall far short of the $7.7 billion put up last year by top-seller Advair, the asthma treatment that may have just gotten a whole lot easier to copy. Monday, the FDA issued guidance for the development of generic copies of combination inhaled drugs that required only relatively basic preclinical tests and a short clinical trial. Glaxo's hard-to-copy Diskus inhaler technology has put off generics makers in the past. Without creating a fully substitutable version of Advair, generics have had to compete with the treatment as other branded drugs might. Now, however, that could all change, and with about 20% of Glaxo's annual sales at stake, the news pushed shares down by as much as 3.6%, Bloomberg said.
And then there's the bribery scandal. All of the respiratory ups-and-downs this week have come against the backdrop of allegations that Glaxo funneled $489 million in bribes and favors to Chinese doctors and officials through a travel agency. An ongoing investigation has taken its toll on business for GSK and other drugmakers in China, and the country's authorities have alluded to "astronomical" fines that may await the company.
So what's next for the British pharma giant? As far as its respiratory franchise goes, it could find itself battling it out with Advair competitors by 2016 or 2017. Mylan ($MYL), considered a frontrunner to produce a generic, saw shares spike nearly 5% on Tuesday, Marketwatch reports. Glaxo will need to rely on new products Breo Ellipta, approved in May, and Anoro, which could arrive on the market soon. But even Anoro will likely have competitors following close behind it, with companies like Boehringer Ingelheim and Novartis ($NVS) looking for play in a COPD arena Citigroup estimates will hit $14 billion in 2018.
In terms of China, the future is a little bit murkier. Recent reports suggest that the scandal's drain on business has Glaxo weighing whether to pull out of the Chinese market altogether. And while so far, CEO Andrew Witty has blamed problems on individual company members, recent reports in Chinese media claim the bribery went all the way up to Glaxo's top execs. The company could face prosecution from the U.S. Department of Justice and the U.K. under anti-corruption laws, especially if investigators uncover that top employees were involved. "Since the investigation in China began, we have proactively reached out to relevant regulators," spokesman David Mawdsley recently told Reuters."This includes the DoJ, and we have been in an ongoing dialogue with them."
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