Bayer's Xarelto squeeze rolls on as cancer newcomer Nubeqa gains steam

After a tough showing earlier this year, Bayer has logged another Xarelto downturn in the second quarter. The aging blood thinner continues to feel the squeeze from an aggressive drug discounting program in China.

For the second three months of the year, Xarelto pulled down sales 1.11 billion euros (about $1.1 billion), slipping roughly 6% from the 1.16 billion euros it snagged over the same stretch in 2021, Bayer said Thursday in an investor report.

Chalk it up to “volume-based procurement in China that weighed on price and volumes,” not to mention a Xarelto patent expiration in Brazil, Bayer’s chief financial officer, Wolfgang Nickl, said on a call with investors Thursday.

In the U.S., meanwhile, Xarelto is still growing. Johnson & Johnson markets the drug in the States and recorded $609 million in second-quarter Xarelto revenues, a 7% increase.

When old drugs are included in China’s VBP framework, they go through an intense bidding process where local generics often undercut them by 50% or more. Major pharmaceutical companies often lose their contracts under the scheme.

Bayer’s oral anticoagulant blockbuster was included in the aggressive discounting program last year after losing exclusivity in China in 2020. More than 20 drugmakers competed for the Xarelto business, with contracts of different strengths eventually awarded to more than 10 developers.

The VBP fallout caused Xarelto to suffer a rare decline in 2022’s first quarter as the med charted growth in all regions except China.

Still, there’s potential yet for a Xarelto rebound in 2022’s second half, Bayer’s pharmaceutical head Stefan Oelrich said on the company’s earnings call.

“We’re seeing the Xarelto VBP effect in the second half mechanically going away because we will have it annualized then,” Oelrich said during the call.

Xarelto’s rough patch came amid lackluster growth for the company’s pharma unit overall, which increased revenues 2.1% to 4.18 billion euros. Bayer touted the successful launches of newcomers Nubeqa in prostate cancer—which doubled sales for the period—and Kerendia, which was approved last July to treat chronic kidney disease associated with Type 2 diabetes.

It wasn’t all bad in China, either, where sales of Bayer’s heart disease drug Adalat rose 11.2%.

Eye med Eylea performed well, too, generating second-quarter sales of 807 million euros ($820 million), a 12% increase. Bayer has clocked 1.58 billion euros in Eylea sales for the year so far.

Still, like Xarelto, the Regeneron-partnered blockbuster’s days are numbered. Roche's new eye drug Vabysmo is applying pressure, while biosims to Roche's older Lucentis may start to gain a foothold in the market.

“I don’t have a crystal ball, but there will be obviously some new elements coming in,” Oelrich said in response to a question about incoming Eylea competition. “The launch of competition, on the one hand, and also generic or biosimilar Lucentis that will be coming into play … could put some pressure on pricing in the future,” the Bayer pharma chief said.

Prostate cancer med Nubeqa largely stole the show where pharmaceutical earnings were concerned. The med is enjoying its second quarter among Bayer’s roster of its top 15 best-selling drugs. Specifically, Nubeqa doubled sales for the period, hitting 105 million euros ($106.7 million). 

All told, the German conglomerate reaped group sales of about 12.82 billion euros (about $13 billion), a 9.6% increase. While Bayer raised its financial guidance for the remainder of the year, it did so citing the strength of its crop science and consumer health arms. Pharma’s performance for the quarter was a bit drearier.