Health

Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

In pharma, imitation is an extremely irritating form of flattery. 

The market to sell immuno-oncology (IO) drugs, which boost the immune system to fight cancer, has for a while now been a two-company race between Bristol-Myers Squibb and Merck. Bristol has dominated because its drug Opdivo can be prescribed without a biomarker test for the best-suited patients; Merck's Keytruda needs such a test.

Flattened
Bristol's stock has suffered from blows to its cancer-drug dominance

But Bristol's drug, which had looked unstoppable to many (including me!), failed a pivotal trial in August in newly diagnosed lung-cancer patients, two months after Merck's succeeded.

Now Roche is suddenly in the mix, with a chance to catch Bristol from behind. On Thursday it announced positive trial results for its IO drug Tecentriq in helping lung-cancer patients who have previously been treated by other drugs, where Bristol and Merck are already approved.

It's the latest sign investors may need to rein in expectations Bristol will run away with the bulk of the IO spoils. 

Narrowing Gap?
Opdivo is still seen as the dominant drug in immuno-oncology, but how long will that last?
Soruce: Bloomberg

Bristol still has a big head start; analysts expect Opdivo will outsell both Roche and Merck's drugs combined by nearly $1 billion in 2020. But its lead may be fading, and it may have to share more of the market with its rivals.

One of Opdivo's big advantages -- the fact it can be prescribed without screening patients first -- is becoming less important. Testing will be required for newly diagnosed lung cancer patients, which is the biggest market. And after seeing Merck's good results in patients with a higher level of the biomarker and seeing Bristol's trial in a broader group fail, doctors may be generally more inclined to test.

And if Roche's drug ends up with a label that doesn't require testing -- a real possibility based on its trial results -- doctors who want to prescribe a drug without the hassle or delay of testing will have another option besides Opdivo. 

The big unknown that could really swing market share from Bristol is how pharmacy benefit managers -- drug middlemen that combine the negotiating power of their many clients -- react. They've shown they can force companies to lower drug prices in crowded markets. Something similar could happen soon in IO, now that there are multiple drugs with similar results -- and given the six-figure price tags on such drugs.  

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Source: Companies, Pembroke Consulting

A broad Roche approval to treat previously treated lung cancer patients could be a testing ground for how competition will affect prices in the space. And as more of these drugs come along (AstraZeneca and Pfizer have their own on the way) and rack up overlapping approvals, price cuts and market share splits will become a near-certainty.

Companies see this coming and are working on differentiating their drugs by testing them in combination with other medicines. Bristol is a leader here with a combo of two IO drugs already on the market for treating melanoma. 

But AstraZeneca is hot on Bristol's heels, or running alongside it, with similar combos in late-stage testing. Every company with one of these drugs is going combo crazy with a variety of different approaches. It's hard to see Bristol as the surefire winner.

This market isn't one race, but a series of them. Bristol has shown it can stumble, and competitors and middlemen alike are ready to take advantage. Analysts' sales forecasts have yet to catch up fully.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Max Nisen in New York at mnisen@bloomberg.net