Multiple references to topical pain gels in both the Annual Report and the AGM CEO Address suggest that the company views this product as its best chance for generating nearer term revenue. Comments by Ross Murdoch include:
We intend to enhance our pain portfolio further by exploiting the considerable existing data we have… our commercial agreement around Novartis in India for Voveran® 1% Diclofenac Gel…give(s) me great hope that we can move more rapidly here.
I believe TPM®/Diclofenac gel presents a great opportunity for us….although future work is required, the technical, regulatory and commercial risk profile for a product such as this is very favourable and much lower than starting from scratch. Work on this has already started.
….the Novartis arrangement and the accompanying marketing material remain one of the strong endorsements for the TPM® technology. We will continue to look for opportunities to expand this or other similar arrangements globally
… the success of our diclofenac formulations and our ability to apply TPM® to other drugs, such as ibuprofen and lidocaine, gives the pain portfolio a number of potential commercialisation opportunities.
….We remain confident that a diclofenac arrangement for regions beyond India will be achieved
….We continue to have discussions about expanding our formulation into other regions and remain optimistic of consummating commercial arrangements relating to this or similar diclofenac products during 2015.
Therefore it’s relevant to ask –What evidence is there that topical pain gels represent an area of genuine opportunity? Looking to potential licensees, are there other major players and products in this space (beyond GSK/Novartis and Voltaren)?
Is OTC topical analgesia an area of genuine opportunity?
If Phosphagenics wants to (a) move more rapidly and (b) sell a TPM NSAID pain gel globally, its product will need to be aimed at the OTC market.
Global OTC sales growth has been outpacing prescription pharmaceuticals since 2008. (1) Pharma interest in the OTC market is therefore high, but it also means that the market has become more competitive. Figures I’ve found suggest that pain products represent between 15% and 22% of total global OTC sales and that the topical analgesics market segment is worth > $4 billion.
Using the UK as an example of a western market, research indicates that topical pain relief products have a high rate of acceptance and are the best performing segment of the OTC market there. The UK’s National Institute for Health and Clinical Excellence (NICE) guidelines were the first to recommend topical over oral NSAIDs as first-line therapy for osteoarthritis. (2) With a sales growth rate of 12.2% in the UK, topical analgesics are certainly outperforming the broader OTC market (which has 2.2% growth). Voltarol (Voltaren) diclofenac gel is the UK’s biggest selling OTC topical pain relief brand. It is sold with various line extensions and Novartis launched its 12hr Voltarol emulgel formulation in 2013 with a high-spend advertising campaign. Novartis claims that more than 2 million people purchased a Voltarol gel product in the UK in 2013. Interestingly, Novartis also estimated that half a million people in the UK tried a Voltarol gel product for the first time in 2013. The topical NSAID, Nurofen gel (ibuprofen, Reckitt Benckiser), was also introduced into the UK market in 2013 (in 4 variations) as a competitor to Voltarol gel. Reckitt Benckiser claim that Nurofen gel was designed to meet what it claimed to be the “Number 1 consumer need” in the UK topical pain products market – “speed of relief”. (3)
OTC topical pain relief products are also experiencing above average growth in the United States. Growth in the category during 2014 averaged 8.1%, with 5 of the top 10 selling topical pain products recording growth in excess of 20%. (4) These are all non-NSAID - there are currently no topical NSAID products approved for OTC sale in the United States.
One reason to explain the outperformance of OTC topical analgesics is a growing body of research that not only provides mounting evidence of the efficacy of topical NDAIDs but also casts doubt about the safety and efficacy of some of the world’s most popular OTC oral analgesics. Recent studies and reviews have found:
That topical NSAIDs are equally effective to oral NSAIDs in the management of both acute and chronic localised pain (which was not previously believed to be the case), and that topical NSAIDs have a better safety profile than oral NSAIDs. (5,6,7)
That even OTC oral NSAID products (diclofenac, ibuprofen and naproxen) carry increased risk of high blood pressure, heart failure, heart attack and stroke. (8)
That OTC oral diclofenac carries increased risk of liver damage. (8)
That acetaminophen (paracetamol) is ineffective in the treatment of lower back pain and provides minimal short term benefit for osteoarthritic pain. (9)
That patients who take acetaminophen are nearly 4 times more likely to have abnormal results on liver function tests. (9)
That acetaminophen carries the risk of rare but serious skin reactions that can be fatal. (10)
That acetaminophen is the current leading cause of liver failure in the United States. (11)
That, contrary to previous thinking, the data do not support the use of aspirin as a preventive medication by people who have not had a heart attack, stroke, or cardiovascular problems. In these people, the benefit has not been established, and risks, such as dangerous bleeding into the brain or stomach, are still present. (12)
That topical products containing methyl salicylate and menthol can cause serious skin irritation or burns and that there is limited evidence of efficacy of these products in the treatment of pain. (13, 14)
Regulatory authorities are noting and responding to these findings. For example, Australia’s TGA issued a warning on OTC oral NSAIDs late last year and early this year the UK suddenly reclassified all oral forms of diclofenac from OTC to prescription only. (15)
Who are major players and products in this space?
Current global leaders for OTC pain products appear to be Bayer (which acquired Merck Consumer Health last year), GSK (which last year merged its Consumer Health division with Novartis OTC), J&J (one-time OTC leader), Pfizer, Perrigo (which acquired Omega for $4.5 bn last year) and Reckitt Benckiser. The list could soon change again. There is current speculation that Mylan will acquire Perrigo and that Mylan, in turn, will be acquired by Pfizer
.
Some current leading OTC analgesic brands (oral and topical) are:
GSK Oral: Panadol, Voltaren Rapid, Pain-eze, ExcedrinTopical: Voltarol/Voltaren Gel
Bayer Oral: Aspirin, AleveTopical: Myoflex cream
J & J Oral: Tylenol Topical: Bengay cream and gel
PfizerOral: Advil
Reckitt BenckiserOral: NurofenTopical: Nurofen gel
In summary, growth in the OTC health sector is substantially outstripping prescription pharmaceuticals. Consequently, the OTC area is becoming more competitive. Topical analgesics is the fastest growing segment within the large OTC pain relief sector. This trend is likely being driven by safety and efficacy concerns over the most popular OTC oral analgesics, namely diclofenac, acetaminophen (paracetamol) and aspirin. Safety and efficacy concerns have also been raised for non-NSAID topical pain relief products.
All major global players in OTC pain relief products have brands which may be impacted by these concerns.
The current environment would seem favourable for OTC topical pain products, especially those that can demonstrate either superior pain relief, faster action, longer duration or reduced skin irritation. Other than GSK/Novartis, which markets leading brand Voltaren, other global OTC pain companies are Bayer, J & J, Pfizer and Reckitt Benckiser.
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