
The winners, and losers, in the ugly 2016 race for new drug approvals
We’ve known for a few months now that 2016 was going to be a disappointing year for new drug approvals. So it was no great surprise that the final tally at the FDA rang up at a meager 22.
Last year at this time, though, we were heralding a generation-high score of 45 OKs, and it doesn’t take a math genius to see how bad the drop was.
Does this signal the end of biopharma as we know it?
Of course not. Science is pointing the way to some of the greatest innovations known in drug R&D. Much of this is being advanced by smaller biotech companies backed by the billions of dollars invested in new companies — through the public market and VCs — over the past three years. So the overall pipeline remains large.
Is it just a temporary stumble that we can quickly jump past in 2017?
Not so fast. And maybe you should think twice before accepting some of the soothing suggestions that 2016 was just a temporary aberration we can all overlook now that we’ve begun a new year.
New drug approvals are likely to surge back up in the this year, if for no other reason than some of the delays we saw on manufacturing are likely to get cleared up, allowing for a green light to some big drugs, while pipelines get a chance to eclipse a notably awful year. It won’t take much to clear this hurdle.
But a year this bad underscores a glaring weakness in the industry. The top 10 pharma giants, which account for about $70 billion in annual R&D costs and maintain a dominant position in late-stage development, scored only eight OKs. Eli Lilly, Merck and Roche accounted for six of those. Sanofi and Pfizer each got one. (The full list of NDAs as tracked by the FDA can be found below.)
Novartis, AstraZeneca, GlaxoSmithKline, J&J and Bristol-Myers Squibb didn’t make the list.
Again, that’s not the end of the world. Eli Lilly made it through one of the ugliest R&D droughts in industry history to see some significant new approvals in 2016. And they’re not finished. Roche saw some landmark approvals, which will be crucial to staring down generic competition for its flagship. And early next year they can look to Ocrevus — one of those 2016 delays — for more help.
But when you go through a year-long industry drought, as we just did, you get a good look at the cracked foundations once hidden by rising waters. Put another way, when you’re already losing a race, blowing a year will leave you much, much further behind at many of the most dominant players. Catching up to a profitable pace just got harder.

Time after time the tally of drugs this year includes a new arrival in a crowded field. One of the few true innovative meds, Biogen’s Spinraza, will cost $750,000 for the first year. That’s the exception that proves the rule for pack drugs, where multiple contenders cluster in the late-stage pipeline. Rivalry will help keep costs reined in, but as megafranchise drugs are going out the door into generic territory, many of these new arrivals are trying to bite off a slice of the market. And this new, mini wave of drugs comes with a set of questionable blockbusters that may never rise to their sell-side projections.
The industry’s top companies are also clearly bad at crushing it.
Eli Lilly execs once boasted they like to hit safe singles and doubles in the game of drug R&D, mixed with some home run swings. And how did its home run strategy work out? They just whiffed on solanezumab for the third time. The year before, it was evacetrapib. And when you have a Major League R&D budget, you should be able to make some big league plays regularly.
Keep in mind, this is all playing out eight years after much of the Big Pharma world embraced open R&D ecosystems, launching global reorganizations aimed at unlocking research silos and opening them to outside innovation, which was supposed to trigger a plethora of new drugs. Eight years is clearly enough time to develop an entirely original pipeline. But that machine has developed some obvious mechanical issues.
For many big companies, the remedy for R&D weakness has been to keep shoving through annual or semi-annual price hikes on aging franchise drugs while the clock ticks away on patent protection. That strategy, taken to its logical extreme, gave us Turing, Valeant, Mylan and an unending stream of congressional hearings for execs looking to game the system. And the bright light on drug prices is likely to put increased pressure on the pricing gambit, kicking away one of the legs that supports an ailing set of Big Pharma companies.
Even as new drug approvals increase, there’s no sign that Big Pharma has learned to get R&D right. The ROI, as we know from Deloitte’s recent analysis, is awful at the big companies and getting worse. Even at a higher number of new approvals, the ROI was bad. So you shouldn’t think a return to what’s considered more normal for approvals in 2017 will fix what ails this industry.
Curiously, the woeful NDA numbers were supposed to help trigger a big wave of M&A deals. But that never happened, with 2016 coming in well behind expectations. The pressure can only grow more intense in 2017, adding to the upward pressure on valuations for late-stage assets. It’s going to cost more than ever to do less. And for the big players, structural weaknesses in R&D will continue to put incredible pressure on large research organizations, many of which have been in a near permanent state of reorganization for more than five years, while others — including Sanofi’s moribund French R&D organization — are stuck in neutral.

I asked Bernard Munos, who’s been tracking R&D trends for years, to give me his thoughts on the year’s numbers. It’s worth providing almost all of it intact. Munos has his own formula for counting new approvals, but the bottom line is still remarkably bad. His thoughts:
My total for 2016 show 22 approvals. This includes 20 drugs approved by CDER (excluding two imaging agents) plus 2 rDNA drugs (for hemophilia) approved by CBER. Similar add-up for 2015 was 51. So, we are looking at a 57% drop! It may be a fluke, but not likely. FDA has said little, except that it cannot approve drugs that have not been submitted. It did acknowledge accelerating 5 approvals due in 2016, and shifting them to 2015. But even after adjusting for this still leaves us with a 41% drop.
I looked at the data from various angles. There is not much difference between 2015 and 2016 in the profiles of drugs approved:
Pct of approvals going to historic big pharmas: 38% (2016); 41% (2015)
1st-in class: 41% (2016); 41% (2015).
NBEs, however, are up significantly–52% (2016); 39% (2015)–extending the trend of recent years. The pattern of approvals in both years is roughly similar: uniform throughout the year with a bit of a surge in Q4/15, which did not repeat in 2016.
There is a difference, however, in the companies that got approvals. The best performers of recent years (JNJ, GSK, NVS) did not show up. Neither did AMGN, BMS, AZN, and BAY. That’s 7 of the 13 historic big pharmas. These 13 companies got 21 approvals in 2016, but only 8 in 2016. I don’t see it as an aberration, but as a reflection of the difficulty to keep hyper innovating. [Emphasis added.] This is a concern because the traditional big pharma model carries enormous structural costs, and needs hyperinnovation to pay for them.(At the moment, hyperinnovation is ~2NMEs per year consistently). Without hyperinnovation, it destroys value. Deloitte’s recent study estimates returns to R&D at 3.7%, well below the cost of capital for pharma (7.7%) and biotech (9.2%). So most companies are already destroying value at a hefty clip. They’ve been covering that to some extent with robust price increases, but if Trump is to be believed, this may be harder to do in the future. What’s going to give?
The growing approvals of last few years had fueled the hope that the industry was riding out of its funk. This year is a reminder that we still have work to do. Some companies are in much better shape than others, but the industry’s average performance is still not sustainable, even if 2016 were to be an exception.
Here’s the full breakdown on the FDA’s list of new drugs approved in 2016:
1. Zepatier
Experimental name: Elbasvir and grazoprevir
Company: Merck {$MRK}
Disease: Hepatitis C
Peak sales estimate: $2 billion
Approval date: January 28
Snapshot: Merck wasn’t the first to the hep C party, but it helped cut the price of admission for patients. At the time the FDA handed down its OK for Zepatier, Merck was the third biopharma company to make its arrival, following the pioneering Gilead and then AbbVie. At that point, this combo was truly needed by only a small slice of the market, but Merck helped overturn the marketplace, offering new discounts that went a long way to eliminating payers’ outrage at Gilead. It also helped cast a long shadow over the franchise as the initial torrent of cash was reduced to a more modest flow. These days, megablockbusters come, and megablockbusters go, in record time.
2. Briviact
Experimental name: brivaracetam
Company: UCB {$UCB}
Disease: Epilepsy
Peak sales estimate: N/A
Approval date: February 19
Snapshot: When UCB won this approval, the FDA spotlighted its ease of use, noting that patients experiencing a partial onset seizure could get a full dose immediately, without having to gradually escalate the dosage for a therapeutic effect. As an add-on, it was presented as one more tool in a physician’s tool chest for handling uncontrolled bouts of epilepsy, which have a serious effect on patients who suffer from this condition.
3. Anthim
Experimental name: obiltoxaximab
Company: Elusys Therapeutics
Disease: Anthrax
Peak sales estimate: N/A
Approval date: March 18
Snapshot: This was one of a string of new bioterror therapies developed with the help of BARDA. The antibody neutralizes toxins spurred by B. anthracis and was approved based on animal studies.
4. Taltz
Experimental name: ixekizumab
Company: Eli Lilly {$LLY}
Disease: Psoriasis
Peak sales estimate: $2.7 billion
Approval date: March 22
Snapshot: Lilly has had a poor R&D record over the past decade, but it’s been making waves with Taltz. While not the first IL-17A drug for psoriasis — that distinction went to Novartis for Cosentyx — it is one of the most important new drugs in a wave that promises to completely disrupt the multibillion-dollar market for psoriasis, with a new approval in the works for psoriatic arthritis. And J&J is likely to add to the competition with a near-term approval likely for its IL-23 drug guselkumab, now under review. Merck, meanwhile, is bringing up the rear with MK-3222 while Valeant is pushing ahead with AstraZeneca’s castoff, brodalumab. Less expensive alternatives allowed Express Scripts to keep Taltz off its formulary, part of the new game of hardball payers have begun in order to leverage big discounts. And with its diabetes franchise under pressure and solanezumab all but dead, big discounts are what Eli Lilly has been trying to avoid. In the meantime, peak sales estimates have begun to drop as analysts factor in a tough marketplace.
5. Cinqair
Experimental name: reslizumab
Company: Teva {$TEVA}
Disease: Asthma
Peak sales estimate: $300 million
Approval date: March 23
Snapshot: Teva’s win here was GlaxoSmithKline’s loss as analysts bill this one as a showdown with Nucala for severe uncontrolled asthma. But Nucala hit the market first, is easier to administer and is widely picked as the likely winner. Also, don’t forget that Novartis is busy on this market front with Xolair and AstraZeneca is trying to jump in with the IL-5 contender benralizumab after posting data from two positive Phase III studies. The loser in this competition: Roche, which had to release terribly flawed data for lebrikizumab, virtually killing its chance to make a splash in this kind of market.
6. Defitelio
Experimental name: defibrotide sodium
Company: Jazz Pharmaceuticals {$JAZZ}
Disease: Severe hepatic VOD
Peak sales estimate: N/A
Approval date: March 30
Snapshot: Initially rejected more than five years ago, Jazz got ahold of this drug in a $1 billion buyout of Gentium back in 2013. The March approval at the FDA, though, followed a green light in Europe in 2015. The therapy is targeted at rare cases of hepatic veno-occlusive disease (VOD) with additional kidney or lung abnormalities after a hematopoietic stem-cell transplantation procedure. Like many new rare disease drugs, it comes with a steep price: $140,000 per course. But it has a long way to go before Jazz can recoup its investment. Third quarter US sales were $7.1 million and EU sales hit $21 million.
7. Venclexta
Experimental name: venetoclax
Company: Roche {$RHHBY}, AbbVie {$ABBV}
Disease: Chronic lymphocytic leukemia
Peak sales estimate: $2 billion
Approval date: April 11
Snapshot: This is exactly the kind of drug that the FDA likes to reward with a quick OK. The drug targets the B-cell lymphoma 2 (BCL-2) protein and helps patients with a chromosomal abnormality called 17p deletion, crippling a protein that helps keep their tumor cells from dying. The agency handed out three breakthrough drug designations for the program and AbbVie has big plans to match it up with Imbruvica after gaining a 50% stake in the drug with its $21 billion buyout of Pharmacyclics.
8. Nuplazid
Experimental name: pimavanserin
Company: Acadia {$ACAD}
Disease: Hallucinations and delusions for Parkinson’s
Peak sales estimate: $1 billion
Approval date: April 30

Snapshot: Like several other developers on this year’s winners list, Acadia had a lengthy quest to complete before gaining an approval. And the 5-HT2A -targeting drug never really shed its rep as a troublesome drug that may never live up to the $1 billion-plus peak sales forecast that has been laid out by certain analysts. By the time the initial approval did arrive in April, though, it was almost a foregone conclusion. The drug won a recommendation from a panel review handily, but also earned a black box for its link to a higher rate of death in clinical studies. More recently Acadia has been touting data for Alzheimer’s dementia, but this time around analysts are even more skeptical that a drug with a safety issue will be given the red carpet treatment for a big disease like Alzheimer’s. The drug’s impact on target symptoms fell behind Parkinson’s and there was a key secondary failure for psychosis that damped down enthusiasm for a label expansion anytime soon.
9. Tecentriq
Experimental name: atezolizumab
Company: Roche {$RHHBY}
Disease: Cancer
Peak sales estimate: $3B-plus, depending on extensions
Approval date: May 18
Snapshot: Depending on your perspective, Roche was either the third player to arrive at the checkpoint market or the first to appear with a PD-L1 drug. Either way, this was another big win for Roche, which is reaping some very big approvals from its big Genentech subsidiary. Like Merck and Bristol-Myers Squibb, which got there first, Roche has big plans to build a new franchise out of its first checkpoint, a major breakthrough in treating cancer by freeing a full immune system attack on cancer cells. Just weeks ago Roche reported that combining Tecentriq with its MEK inhibitor Cotellic along with the BRAF inhibitor Zelboraf delivered an 83% overall response rate in their Phase Ib, with 3 of 24 — out of 29 total previously untreated patients with BRAF mutation-positive melanoma — seeing complete responses. Tecentriq was recently OK’d for use in second-line non-small cell lung cancer, which followed its approval for bladder cancer. Look for Pfizer and AstraZeneca to arrive at an approval in the near future, with each adding rival programs and ambitious expansion plans.
10. Zinbryta
Experimental name: daclizumab
Company: Biogen {$BIIB}, Abbie {$ABBV}
Disease: Multiple Sclerosis
Peak sales estimate: $600 million
Approval date: May 27
Snapshot: Like a variety of multiple sclerosis drugs, Zinbryta has been linked to serious adverse events, including potentially fatal liver damage, which earned a black box warning. And that is keeping this drug as a third- or fourth-line therapy, in reserve for when patients have already tried leading therapies to control this disease. Biogen has better MS drugs already on the market, and Roche is widely expected to add an OK for Ocrevus in the new year.
11. Ocaliva
Experimental name: obeticholic acid
Company: Intercept Pharmaceuticals {$ICPT}
Disease: Primary biliary cholangitis
Peak sales estimate: $1.6 billion by 2020
Approval date: May 31
Snapshot: Ocaliva was the first new drug to come along for PBC in about 20 years, and regulators were happy to speed it along under accelerated approval rules. FDA advisers felt that data on a single biomarker for the disease — using alkaline phosphatase (ALP) as a surrogate endpoint for transplant-free survival — was enough to warrant an approval. Data on another key biomarker, total bilirubin — which could come from a confirmatory study — were largely absent in the biotech’s NDA. The panel also backed starting the dose at 5 mg and then titrating up to 10 mg in order to achieve a response while guarding against side effects. That point was picked up by the agency, which included the dosing regimen in the label. And many felt that there are enough data to support the use of OCA as a monotherapy for a small number of patients who can’t tolerate ursodeoxycholic acid. A European OK followed in the fall.
12. Axumin
Agent: fluciclovine F 18
Company: Blue Earth Diagnostics
Disease: Prostate cancer
Peak sales estimate: N/A
Approval date: May 27
Snapshots: Diagnostics like Axumin don’t get much attention, but they can make a big difference in treating patients. “An imaging agent with sufficient diagnostic performance to adequately detect and localize recurrent prostate cancer can provide referring physicians with actionable information to guide biopsy and inform management decisions for their patients,” David M. Schuster, MD, a Georgia Research Alliance Distinguished Cancer Scientist, Associate Professor of Radiology and Imaging Sciences, and Director of the Division of Nuclear Medicine and Molecular Imaging at Emory University School of Medicine said on the occasion. “The fluciclovine molecule in Axumin was originally developed at Emory by Mark Goodman, PhD, and detects the upregulation of amino acid transport that occurs in prostate cancer and can potentially identify recurrent prostate cancer more reliably than conventional imaging techniques. The product will be convenient for patients and imaging facilities, as it can be made widely available and the entire imaging procedure can typically be completed in less than 30 minutes.”
13. Netspot – Diagnostic agent
Agent: gallium Ga 68 dotatate injection
Company: Advanced Accelerator Applications {$AAAP}
Disease: Rare neuroendocrine tumors
Peak sales estimate: N/A
Approval date: June 1
Snapshot: This radioactive probe will help locate tumors in adult and pediatric patients with the rare condition somatostatin receptor positive neuroendocrine tumors (NETs).
14. Epclusa
Experimental names: sofosbuvir and velpatasvir
Company: Gilead {$GILD}
Disease: Hepatitis C
Peak sales estimate: N/A
Approval date: June 28
Snapshot: Gilead took another step down a long R&D Odyssey on hep C that started with Sovaldi when it won an OK for Epclusa. This new combo (of Sovaldi and velpatasvir) offered a pan-genotype drug that addressed a broad patient population, making it easier still to cure this disease. Perhaps the most important element in this OK was that Gilead pushed through a new wholesale discount price to position its new hep C entry against the competition. That helped turn down the volume on the vocal criticism Gilead faced with Sovaldi and Harvoni, while also further blunting its cash flow from the disease.
15. Xiidra
Experimental name: lifitegrast ophthalmic solution
Company: Shire {$SHPG}
Disease: Dry eye disease
Peak sales estimate: $1 billion plus
Approval date: July 12
Snapshot: This was a key win for CEO Flemming Ornskov, who added a focus on ophthalmology when he took over as CEO. An FDA delay didn’t help things, but Ornskov’s team remained absolutely committed to making this new drug for dry eye disease into a blockbuster. Once the subject of an AbbVie takeover attempt, which was scuttled by new federal rules designed to derail tax inversions, Ornskov wants to make Shire into a global biopharma force to be reckoned with. And Xiidra will play a big role in determining his ability to greatly expand sales. In this case, Shire will have to contend with Brent Saunders and Allergan, which earned more than a billion dollars last year for the leading dry eye treatment on the market, Restasis (cyclosporin). The bulk of that money came from the big US market.
16. Adlyxin
Experimental name: lixisenatide
Company: Sanofi {$SNY}
Disease: Diabetes
Peak sales estimate: $900 million
Approval date: July 28
Snapshot: Sanofi has a hard time when it comes to winning anything on its own. Case in point: Adlyxin. The pharma giant has been struggling for years to get this diabetes therapy on the US market. And once it accomplished that in July, analysts immediately highlighted its runner-up status to Eli Lilly’s Trulicity and its less-than-stellar comparison with Novo’s dominant GLP-1 drug Victoza, which scored promising cardio outcomes in a recent study. The diabetes sector, in general, has been fading for all the big players, making this highly competitive field even more difficult for Sanofi.
17. Exondys 51
Experimental name: eteplirsen
Company: Sarepta {$SRPT}
Disease: Duchenne muscular dystrophy
Peak sales estimate: Varies
Approval date: September 19
Snapshot: The label on Exondys 51 includes this: “A clinical benefit of Exondys 51 has not been established.” That point was the subject of an internal war at the FDA over whether the agency should have approved it for marketing. And a large group of payers are adding coverage restrictions and in some cases simply refusing to reimburse for the drug at all, saying they don’t cover experimental therapies. Janet Woodcock, though, was able to override heated objections at the FDA to get this one on the market for a rare, fatal disease. The question now is how severely the restrictions placed on its use will choke revenue as the company starts selling this at about $300,000 a year.
18. Lartruvo
Experimental name: olaratumab
Company: Eli Lilly {$LLY}
Disease: Soft tissue sarcoma
Peak sales estimate: N/A
Approval date: October 19
Snapshot: Eli Lilly was able to benefit from the FDA’s eagerness to push new cancer drugs out into the market, winning an accelerated approval based on data from a small mid-stage trial. The drug targets PDGF receptors which cause tumor growth, offering some hope to a group of patients who can’t be treated by radiation or surgery and in a group with a type of STS that can be treated with the chemo anthracycline. The approval also offered new evidence that Lilly had finally overcome the R&D drought that plagued the pharma giant for years. And it softened the blow when solanezumab failed yet another late-stage study for Alzheimer’s.
19. Zinplava
Experimental name: bezlotoxumab
Company: Merck {$MRK}
Disease: C. Diff infections
Peak sales estimate: N/A
Approval date: October 23
Snapshot: This one did not come easy for Merck. Originally in-licensed about seven years ago, the antibody had been part of a pair of programs. But a trial failure forced Merck to dump the complementary program and zero in on an approval here for Zinplava. Back in June, an FDA panel of outside experts voted 10 to 5 to approve the drug, with the 5 ‘no’ voters raising pointed concerns that Merck never made the pivotal study large enough to identify which patients would be most likely to benefit from it.
20. Eucrisa
Experimental name: crisaborole
Company: Pfizer {$PFE}
Disease: Atopic dermatitis
Peak sales estimate: $2 billion
Approval date: December 14
Snapshot: Pfizer bagged the non-steroidal topical PDE4 inhibitor when it acquired Anacor Pharmaceuticals last May for $5.2 billion. If the drug can earn anything close to what the analysts have been saying, that will be a steal. But most people in this field have been fixed on the program for dupilumab at Regeneron and Sanofi, which has produced stellar data from a broad range of studies. Still, there should be plenty of patients to divvy up among themselves for this serious unmet medical need.
21. Rubraca
Experimental name: rucaparib
Company: Clovis Oncology {$CLVS}
Disease: Ovarian cancer
Peak sales estimate: $750 million to $1 billion
Approval date: December 19
Snapshot: One of the big ironies in the field of PARP inhibition is that Clovis got this drug from Pfizer when the pharma giant was reorganizing its pipeline. Then earlier this year the pharma giant picked up a rival PARP with its $14 billion Medivation buyout. The Clovis approval put the biotech in direct competition with AstraZeneca’s Lynparza, which was the first PARP to make it to the market with an accelerated OK. But analysts expect plenty of new rivalry coming up as trials line up fresh data for different patient populations. Clovis won boasting rights to its first marketed product after a humiliating setback with rociletinib, where it was forced to correct some shady data on tumor responses. That drug was rejected by the FDA, which allowed Clovis to organize a midnight burial rather than try to sell a troubled drug.
22. Spinraza
Experimental name: nusinersen
Company: Biogen {$BIIB}, Ions {$IONS}
Disease: Spinal muscular atrophy
Peak sales estimate: $2 billion – $3 billion
Approval date: December 23
Snapshot: One of the few groundbreaking new approvals this year, Biogen earned a badly needed accelerated approval just days ago for rare cases of spinal muscular atrophy. Using the Hammersmith Functional Motor Scale Expanded report card for patients’ motor functions, the drug arm witnessed a mean 4.0 improvement on scores while the placebo arm dropped by 1.9 points, a 5.9 point overall spread in the drug’s favor. Biogen, which is seeing its MS revenue from the flagship Tecfidera flatten out, decided to price this at $750,000 for the first year, with a $375,000 per year followup. AveXis, though, has been getting a lot of attention since it announced plans to shoot for an approval of its SMA therapy after a small, single-arm study sanctioned by the FDA. That could present Biogen with a major competitor for this small market, though the rival still has to navigate a perilous development program.