Robust research and development pipeline
Akorn’s (AKRX) robust research and development (or R&D) pipeline is comprised of branded and generic drugs with a total addressable market value of approximately $9.2 billion.
The above diagram shows the breakdown of Akorn’s R&D pipeline across categories as well as specialties. Of the total 86 pending Abbreviated New Drug Applications (or ANDAs), 60 are being actively reviewed by the FDA (U.S. Food and Drug Administration). This was confirmed by the complete response letters or information requests received by the company related to those ANDAs.
Akorn is confident that it may receive approval for 25 of those ANDAs by March 2017. That would enable the company to target market opportunity worth $1 billion. According to data collated by IMS Health, 15 of these drugs have been earning around $500 million in revenues annually. Additionally, there are limited substitutes for these drugs available, as there is only the branded drug or only one more generic version available for commercialization.
Additionally, Akorn is already preparing for the launch of a few generic drugs in 2016. Its R&D pipeline’s output rate can be better understood by comparing Akorn’s research expenses with those of other generic pharmaceutical players.
Akorn spent around $39.2 million in the last 12 months. Peers such as Teva Pharmaceutical (TEVA), Perrigo (PRGO), and Mylan (MYL) reported research expenses of around $1.6 billion, $180.5 million, and $686.2 million, respectively, in the same period.
Akorn has further planned to increase its R&D investment by increasing the number of research facilities. The company is currently involved in setting up a facility in Cranbury, New Jersey, which will become operational in 4Q16. With a talent pool of around 40 scientists, Akorn will actively develop alternate dosage form generics at this facility.
In 2016, Akorn has planned to file 20 new ANDAs. This may boost the company’s share prices as well as those of the PowerShares Dynamic Pharmaceuticals ETF (PJP). Akorn makes up around 3.5% of PJP’s total portfolio holdings.
In the next part, we’ll look at Akorn’s guidance for 2016.