GlaxoSmithKline's upward trajectory faces a £750M knock with Advair copies. What can fill the gap?

Amid a Street-beating fourth-quarter report, GlaxoSmithKline quantified the hit that it’s been bracing for: Advair generics. If copycats launch midyear, as their makers hope, Glaxo figures its lead drug will lose half its U.S. sales.

Mylan and Novartis' Sandoz business are first in the wings with their Advair versions, biding their time for final FDA approvals whose dates are “difficult to predict,” as Novartis' new CEO Vas Narasimhan said on the company's fourth-quarter earnings call. Partners Hikma and Vectura are behind, locked in a dispute with the FDA.

And yet predictions have been made, and analysts figure the copies will roll out midyear—that’s why GSK has prepped investors for the impact. That percentage hit means Advair would sink to just £750 million in the states, down from £1.6 billion in 2017. And it means a 25% cut to Advair’s global sales of £3.1 billion last year. The drug is sold under the brand name Seretide in international markets.

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And those expectations are lower than those GSK rolled out last year, when it anticipated Advair knockoffs to launch in the first half. Despite those rollouts—stalled by FDA rejections—Glaxo had forecast £1 billion in Advair sales stateside last year. With the British pound higher against the dollar these days, the difference is a little more than $200 million.

That’s likely because Advair’s sales have already begun to slide, partly because of payer pressure, partly on new competition from other brands, and partly because of an authorized generic launched by Teva last year.

Glaxo has been building up its respiratory franchise over the past several years, hoping newer drugs can absorb the impact from Advair’s downfall. It now markets a suite of medication that share the same inhaler technology, and it’s counting on that large Ellipta portfolio—which includes drugs in “every category”—to help bolster use of the individual medication, Cheryl MacDiarmid, company SVP of primary care, told FiercePharma last year.

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The latest? Trelegy, a “closed triple” drug that was approved in September to blockbuster-plus sales predictions at peak. Jefferies analysts are expecting Trelegy to pull in $1.5 billion a year by then.

Evercore ISI analyst Josh Schimmer thinks Glaxo will look to position Trelegy Ellipta at the forefront of its respiratory franchise. Will that franchise together reach Advair’s heights? With payer pressure—and loads of competition in the field—the company will have a tough job fueling that kind of rise. Over its lifetime, Advair’s lifetime sales haul totted up to $101 billion as of last fall, according to EvaluatePharma research, topped only by AbbVie’s Humira and Pfizer’s Lipitor.