A leading pharmaceuticals intelligence consultancy is predicting a sharp rise in the value of cancer therapy sales, and its chief forecaster recently told IAM of an ongoing “gold rush towards oncology” among life sciences companies. A key strategic focus for pharmaceuticals innovators, this increasing emphasis on cancer treatments is already shaping patent transactions and looks sets to have a growing influence on life sciences deal-making in coming years.

IAM recently spoke exclusively to Antonio Iervolino, head of forecasting at EvaluatePharma – a life sciences industry intelligence provider – about key trends in the pharmaceuticals space, and how they might impact on patent strategy. The former Mundipharma strategist highlighted a pronounced move towards investment in cancer treatments by pharmaceutical innovators. “There is certainly a fashion trend in this area, primarily justified by the large unmet needs, as well as the spur of novel technologies, such as immunotherapies and CAR-T. We are already witnessing a gold rush towards oncology,” Iervolino stated.

The rapidly growing importance of cancer therapies is made plain by research shown in EvaluatePharma’s July 2017 Data Kit. It shows that worldwide oncology sales have been increasing in recent years, while other areas, such as cardio-vascular and central nervous systems treatments, have been stagnating. More significantly, it forecasts steep increases in the value of oncology sales in the next few years: a 10% compound annual growth rate is expected between 2009 and 2022, compared to -3% in cardio-vascular, 1% in central nervous system treatments and 3% in systemic anti-infectives. EvaluatePharma predicts that annual oncology sales will reach almost $200 billion by 2022 – far higher than any other life sciences treatment area.

This has serious implications for business priorities in general, and patent strategy in particular, creating powerful incentives for pharma innovators to strengthen their presence in cancer therapy, especially given pricing pressures and a “second patent cliff” that threatens up to $194 billion worth of sales between 2017 and 2022.

While increased focus on oncology R&D is likely be part of the response to this trend, the difficulty, risk and expense of developing increasingly complex biologic drugs means that patent in-licensing, transactions and joint ventures will also have an important role to play.

EvaluatePharma’s September 2017 Licensing Snapshot shows that the number and value of oncology in-licensing deals has been greater than in other therapy areas since 2013. Also, several recent headline-grabbing deals seem to have been driven by the desire to consolidate oncology pipelines: Novartis’s $3.9 billion agreement to buy French radiopharmaceuticals firm Advanced Accelerator Applications, for example, is aimed at further strengthening the Swiss company’s position in oncology, especially by acquiring the promising Lutathera treatment. Moreover, Pfizer is said to be considering a major buy-out of Bristol-Myers Squibb to bolster its own place in the cancer therapy arena.

Iervolino qualified his oncology “gold-rush” remarks by pointing out that there are limits to the resources that pharma companies have on hand to invest in this booming area. But this could itself provoke patent deal-making aimed at raising additional capital to pour into cancer therapies.

Indeed, the desire to raise funds for expansion in oncology seems to be giving rise to divestments of non-core business units – and their patents. As IAM reported previously, Pfizer and Merck have recently announced that they are considering such sales in order to free up resources for investment in cancer treatments; while AstraZeneca’s ‘new oncology’ specialisation is said to be one of the drivers of its idiosyncratic patent out-licensing strategy.

The growing value of cancer assets has led to a shift in the types of patent deals now being done, notes Iervolino: “When the demand increases, prices – in this case the valuation of small-mid size biotech companies - usually follow the same trend. However, as the competition increases around oncology deals, we are also witnessing a growing focus on earlier stage deals.” Indeed, EvaluatePharma data shows that the number of potentially riskier pre-clinical oncology patent in-licensing deals exceeded those for clinical products every year since 2013: 11 to 8 in 2013, 18 to12 in 2014, 36 to 18 in 2015 and 22 to 11 in 2016.

The projected surge in the value of cancer treatment sales relative to other therapy areas has the potential to accentuate these trends over the next few years, leading to a spate of oncology-focused deal-making. This depends on several other factors of course: Iervolino is keen to stress that US tax reform – passed by the House and currently being debated by the Senate – may be needed to trigger a significant jump in transactional activity. But, whether or not the number of patent deals increases in coming years, we can expect the sector’s growing focus on oncology treatments to shape those transactions that do occur.