Fitch: FDA Drug Approvals Up for Breakthrough Entities, Biologics

Link to Fitch Ratings' Report: Global Pharmaceutical R&D Pipeline (Breakthroughs, Biosimilars and a Blockbuster)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=790708

An increase in new molecular entities (NME), helped by additional breakthrough therapy approvals, is a positive sign for global drug growth, according to Fitch Ratings. The number of NME approvals by the FDA during the first nine months in 2014 was up from the first nine months of 2013. The FDA cleared 33 novel medicines for U.S. marketing during the first five months of 2014, compared with 17 in 2013. The FDA has approved seven breakthrough therapies year to date in 2014, more than twice those approved last year.

The breakthrough therapy designation was enacted in July 2012, a year in which no such approvals occurred. Fitch views this trend as positive because of shorter approval and development timelines compared with drugs not granted breakthrough status.

The approval of biologic drugs is also playing a big role in the higher number of NME approvals. So far in 2014, the FDA has approved nine biologic drugs, compared with only two in the 2013 period. Based on the pipeline of new drugs in development, Fitch expects that biologics will play an increasingly important role in global drug development.

The relatively high cost of biologic drugs is an important driver of growth in healthcare costs, particularly in the U.S., making the development of a workable regulatory pathway for biosimilars a key interest for healthcare payors and consumers. A regulatory pathway was established in the U.S. in 2012, but so far, no biosimilars have been approved.

Sandoz is the first to test the pathway, with its biosimilar version of Amgen's Neupogen. The FDA is expected to decide on Sandoz's application in spring 2015. If the results are constructive, Fitch expects more applications through the pathway, especially since many of the drugs with U.S. patient expiration dates in 2015-2016 are biologics.

Additional information is available on www.fitchratings.com.

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.

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