AZ, Lilly, BMS face steepest patent cliff

AstraZeneca, Eli Lilly and Bristol-Myers Squibb will be facing the biggest patent losses over the next few years, according to a report by Bernstein Research analyst Dr. Tim Anderson. He predicts the results of generic competition could have an even bigger impact on Pharma's bottom line than Wall Street expects. That's because companies rarely disclose their biggest drugs' pre-tax income, making it hard for industry watchers to accurately judge how significant the revenue loss will be.

"Our work yields a very important finding: just how much a small collection of major brands can fund the operations of the rest of the company, and how they enable things like the heavy investment in research and development, and other expensive endeavors," says Anderson, as quoted in Reuters. "What, then, will happen as these sources of funding dry up?" For example, he estimates that Plavix's contribution to BMS's pre-tax income will plummet from $2.93 billion in 2009 to $156 million in 2015. Likewise, he sees Lilly's Zyprexa dropping to $518 million in 2015 from $3.81 billion in 2009.

Anderson adds that while companies like Pfizer and Merck are also facing patent losses (on Lipitor and Singulair, respectively), they've done a better job of preparing their business for the impending revenue loss.

- read the Reuters report