OREANDA-NEWS. Deceleration of the pharmaceutical patent cliff, combined with expectations of a patent 'slope' for biologics, will support innovative drug manufacturers' U.S. sales, according to the first report in Fitch Ratings' 'Navigating the Pharmaceutical Channel' series, published today.

The patent cliff hit innovative drug manufacturers hard in 2011, 2012 and 2014, when the availability of lower-priced generic substitutes affected $22 billion, $36 billion, and $25 billion in sales respectively.

'Biologic patent expiries likely won't present as large of a threat to sales as small molecule drugs given the uncertainty of the U.S. biosimilar market,' says Bob Kirby, Director.

Lack of clarity around biosimilars' ease of substitution, physician and patient acceptance, and pricing may slow their adoption relative to biologics, creating a patent slope rather than a cliff.

Fitch believes biologics will be important contributors to overall pharmaceutical industry growth in the medium term. Without the threat of a significant patent cliff from biosimilars, their durability and pricing flexibility will create an attractive long-term opportunity for the industry. As a result, R&D will remain critical as manufacturers focus on new therapeutics to generate revenue.

As the number of new drugs in the pipeline increase, and manufacturers face growing patent expiry risk, transformative mergers and acquisitions will become less necessary. Fitch expects larger manufacturers, with the exception of Pfizer, to pursue targeted acquisitions, while partnerships become more attractive.

Fitch's 'Navigating the Pharmaceutical Channel' report series explores how pharmaceutical sub-sectors shape the complex, dynamic and increasingly global drug channel. The series provides succinct analysis of the trends affecting innovative pharmaceutical manufacturers, generic pharmaceutical manufacturers, contract research organizations (CROs), pharmaceutical distributors, pharmacy benefit managers & mail-order pharmacies, and retail & institutional pharmacies.