Ophthalmic Pharmaceutical Market Outlook To 2016-201109

The Ophthalmic Pharmaceutical Market Outlook to 2016
Competitive landscape, pipeline analysis, and growth opportunities
Reference Code: BI00042-019 Publication Date: September 2011
About the author

Business Insights has a team of in-house pharmaceutical and regulatory analysts drawn from consulting, R&D and competitive intelligence life sciences backgrounds. Our analysts specialize in providing detailed insight into the future of therapeutic drug markets and emerging pharmaceutical markets and have extensive analytical, forecasting and research experience in the pharmaceutical, biotech and outsourcing sectors. Our team maintains regular contact with industry executives to track market developments and base their market models on a wide range of proprietary drug sales, pipeline and epidemiological databases to provide up to date, accurate strategic insight on the future of the pharmaceutical market.
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Table of Contents
About the author
Disclaimer
2
2
Executive summary
Introduction to the ophthalmic market Glaucoma Dry eye syndrome Retinal diseases Other ophthalmic indications Key company profiles
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12 12 13 14 14 15
Chapter 1 Introduction to the ophthalmic market

Summary Overview of the global ophthalmic market
Ophthalmic market by country/region Ophthalmic market by drug class Revenue forecasts for the ophthalmic market Revenue forecast of key brands Causes of blindness Ophthalmic sector: Five forces analysis Competitive rivalry moderate Buyers power high Suppliers power moderate Threat of substitution high Threat of new entrants low
16
16 17
17 17 19 20 20 22 22 23 23 23 24
Market trends
Changing demographics present significant opportunities 3
25
25
Increased focus on combination therapies Emerging markets to substantially contribute in the industry growth
25 26
Ophthalmic pipeline
27
Chapter 2 Glaucoma
Summary Overview Diagnosis, treatment and management
Epidemiology Forecast epidemiology
29
29 30 31
34 35
Market landscape
Key marketed products Xalatan (latanoprost) Pfizer Travatan (travoprost) Novartis Lumigan (bimatoprost) Allergan Cosopt (dorzolamide/timolol)/Trusopt (dorzolamide) Merck & Co. Alphagan (brimonidine) Allergan Tapros (tafluprost) Santen/Merck & Co. Key events in the glaucoma market Pfizer and pSivida to start Phase II trial of bioerodible eye implant Merck & Co. file tafluprost in the US following positive Phase III results Efficient diagnosis may expand the glaucoma market
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38 38 38 39 40 40 41 41 41 41 42
Research and development

Recently approved and filed drugs Saflutan (tafluprost) Merck & Co./ Santen Late-stage glaucoma compounds DE-111 (tafluprost/ timolol maleate) Santen Brinzolamide/Brimonidine tartrate combination Novartis
42
42 42 43 43 43
Forecast of key products
44
Chapter 3 Dry eye syndrome

4
45
Summary Overview Diagnosis, treatment and management

Epidemiology Forecast epidemiology
45 46 46
47 49
Market landscape
Key marketed products Restasis (cyclosporine) Allergan Hyalein (hyaluronic acid) Santen Key events in the dry eye market ISTA pharmaceuticals Remura failed to achieve co-primary endpoints in Phase III Celtic Therapeutic and Resolvyx partnered for developing RX-10045
50
50 50 51 51 51 52
Otsuka filed rebamipide for dry eye syndrome in Japan, undergoing Phase II trials in the US 52

Recently approved/filed drug Diquas/Prolacria (diquafosol tetrasodium) Santen/Merck & Co. Mucosta (rebamipide) Otsuka/ Acucela Late stage dry eye compounds RX-10045 Resolvyx/ Celtic Therapeutic Remura (bromfenac ophthalmic) ISTA
53
53 53 53 53 53 54
Chapter 4 Retinal diseases

Summary Age-related macular degeneration
Diagnosis, treatment and management Epidemiology Forecast epidemiology of dry AMD Forecast epidemiology of wet AMD
55
55 56
56 57 59 61
Diabetic retinopathy and diabetic macular edema

Diagnosis, treatment and management Epidemiology 5
62
63 63
Market landscape Key marketed products Lucentis (ranibizumab) Roche/Novartis Macugen (pegaptanib) Pfizer Visudyne (verteporfin) Novartis Research and development Avastin (bevacizumab) Roche/Genentech Eylea/VEGF Trap-Eye (aflibercept) Bayer/ Regeneron Iluvien (fluocinolone acetonide intravitreal insert) Alimera/ pSivida Ozurdex (dexamethasone) Allergan NT-501 Neurotech
65 65 65 66 67 68 68 69 72 73 74
Chapter 5 Other ophthalmic indications

Summary Cataract
Diagnosis, treatment, and management
75
75 76
76
Ocular anti-allergics
Key marketed products Patanol/Pataday Bepreve (bpotastine) ISTA
77
77 77 78
Ophthalmic anti-infectives and anti-inflammatory preparations

Key marketed products Research and development Moxeza (moxifloxacin) - Alcon Luveniq (voclosporin) Lux Biosciences DE-114 (epinastine HCl) Santen Humira (adalimumab) Abbott Laboratories Myfortic/ Decortin H combination Novartis/ STZ eyetrial
78
78 80 80 80 81 81 81
Chapter 6 Key company profiles

Summary
6
83
83
Introduction Novartis
Overview Financial performance Marketed product portfolio R&D pipeline analysis Strategic and growth analysis
84 84
84 85 85 86 87
Allergan
88
88 88 89 91 92
Pfizer
94
94 94 94 95 96
Santen Pharmaceutical
97
97 98 98 99 101
Merck & Co.

Overview 7
103
103
Financial performance Marketed product portfolio R&D pipeline analysis Strategic and growth analysis
103 104 105 105
Emerging ophthalmic companies

ISTA Pharmaceuticals Overview Marketed product portfolio R&D pipeline analysis Strategic and growth analysis Regeneron Overview R&D pipeline analysis Strategic and growth strategies Alimera Sciences Overview R&D pipeline analysis Strategic and growth analysis
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106 106 106 107 108 108 108 108 109 110 110 110 110
Appendix
Scope Methodology
Market size methodology Epidemiology Market forecast
112
112 112
112 113 113
Glossary/Abbreviations Bibliography/References
Prevalence of glaucoma Prevalence of AMD Prevalence of dry eye 8
113 116
116 116 117
Prevalence of diabetic retinopathy
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Table of figures
Figure 1: Figure 2: Figure 3: Figure 4: Figure 5: Figure 6: Ophthalmic market by region, 2010 The global ophthalmic market by drug class ($m), 2010 Leading causes of blindness worldwide (%), 2006 Ophthalmic sector: Five forces analysis Open-angle glaucoma Stages of progression of diabetic retinopathy 17 18 21 22 30 62
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Table of tables
Table 1: Table 2: Table 3: Table 4: Table 5: Table 6: Table 7: Table 8: Table 9: Table 10: Table 11: Table 12: Table 13: Table 14: Table 15: Table 16: Table 17: Table 18: Table 19: Table 20: Table 21: Table 22: Table 23: Table 24: Revenue forecast for the global ophthalmic market by drug class ($m), 201016 Forecast sales of key marketed products ($m), 201016 Global ophthalmic pipeline by indication and stage of development, July 2011 Target intra-ocular pressure and degree of glaucoma Glaucoma management strategies Prevalence of open angle glaucoma in the 7MM, 2010 Forecast epidemiology of open angle glaucoma in the 7MM, 2010 Forecast sales of key glaucoma products ($m), 2010-16 Prevalence of dry eye in the 7MM, 2010 Forecast epidemiology of dry eye in the 7MM, 2010 Prevalence of advanced dry AMD in the 7MM, 2010 Prevalence of drusen>125 m in the 7MM, 2010 Prevalence of neovascular AMD in the 7MM, 2010 Forecast epidemiology of advanced dry AMD in the 7MM, 2010 Forecast epidemiology of drusen>125 m in the 7MM, 2010 Forecast epidemiology of wet AMD in the 7MM, 2010 Global prevalence of diabetic retinopathy and diabetic macular edema, 2010 Leading players of the ophthalmic market, 2010 Novartis ophthalmologic pipeline portfolio, July 2011 Allergan leading eye care brand sales , 2010 Allergan's ophthalmologic pipeline portfolio, July 2011 Pfizer's ophthalmologic pipeline portfolio, May 2011 Santen ophthalmologic pipeline portfolio, March 2011 Fiscal year end of the companies profiled 19 20 27 32 33 34 35 44 48 49 57 58 58 59 60 61 64 84 86 89 91 95 101 112
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Executive summary
Introduction to the ophthalmic market
The global ophthalmic market was valued at $16.2bn in 2010 and is expected to reach $21.1bn, at a CAGR of 4.6% during 201016. The US was the largest market for ophthalmic drugs, accounting for 40% of the global market. The 5EU nations formed 18% of the global ophthalmic market. Glaucoma was the largest segment in the global ophthalmic market and accounted for 35% share in 2010. The aging population among other trends will drive increases in the prevalence of ophthalmic indications. There is also great potential in emerging markets. Age-related macular degeneration represents the main area of R&D interest for pharmaceutical companies, with a 109 compounds in various stages of development. Glaucoma has the richest late stage pipeline with eight products in Phase III development and four pending approval.
Glaucoma
Glaucoma is the largest segment within the ophthalmic market, with sales of $5.6bn in 2010, which will grow at a CAGR of 2.5% to 2016. The leading players in the glaucoma market are Pfizer, Novartis, Allergan, Merck & Co., and Santen. Prostaglandin analogues (PGAs) have overtaken beta-blockers as the preferred first-line therapy for the management of glaucoma. Three prostaglandin analogues: Xalatan/Xalacom, Travatan, and Lumigan, accounted for over 50% of the anti-glaucoma market in 2010.
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Pfizers Xalatan was the market leader in the glaucoma market in 2010. However, Xalatan sales are eroding in the US since its patent expiry in March 2011. Xalatan has been filed for a pediatric extension in Europe; if granted the brand will remain protected until January 2012.
The patent expiry of Xalatan has also affected the sales of the other leading brands in the segment including Travatan and Lumigan.
The pipeline of glaucoma compounds is relatively weak and companies are resorting to extended indications and line extensions for lifecycle management.
Dry eye syndrome

Changing lifestyles in the form of increased use of contact lenses and computers has led to increase dry eye syndrome (DES) in younger age groups. Artificial tears are ocular lubricants intended to treat dryness, irritation and tear deficiency associated with DES. The artificial tear market was valued at $1.9bn in 2010 and is expected to be static to 2016. Currently, a broad spectrum of formulations is available as artificial tears and ocular lubricants. Most products, however, offer only symptomatic and short-term relief. Allergans Restasis is the only approved prescription product for the treatment of dry eye. Other drug formulations prescribed for dry eye management, are intended to maintain the tear film and provide symptomatic relief. The most common ingredients used in these artificial tear preparations include aqueous polymers such as carboxymethyl cellulose (CMC), hydroxymethyl cellulose, propylene glycol and glycerin. Allergan aims to extend Restasis life cycle, by developing new version, Restasis X, which contains a different preservative.
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Retinal diseases
The retinal disease segment which includes age-related macular degeneration (AMD), diabetic retinopathy (DR), diabetic macular edema (DME) and retinal vein occlusion (RVO) was valued at $3.5bn in 2010, and will be the fastest growing area with a CAGR of 14.1% to 2016. The advanced AMD population will grow by 11% to 3.3m in the 7MM between 2010 and 2016 due to the aging population. Lucentis (Novartis, Roche) is indicated for the treatment of wet AMD and accounted for 83% in the retinal disease market with 2010 sales of $2.9bn. Off-label use of Roche/Genentechs Avastin for wet AMD is impinging on Lucentis sales. The pipeline compounds Avastin (Phase III) and Eylea (filed) pose significant threat to market leading position of Lucentis. While Avastin scores in terms of lower pricing over Lucentis, Eylea offers a less frequent dose of bi-monthly injection than monthly injection of Lucentis. The current standard of care for diabetic retinopathy and diabetic macular edema (DME) involves laser photocoagulation, as well as adjuvant dietary and glycemic control measures. However, physicians also use off-label intravitreal treatment to suppress pronounced edema in patients for whom laser therapy cannot be performed. Novartiss Lucentis was the first product to gain approval for the treatment of visual impairment due to diabetic macular edema (DME). Lucentis was granted approval for the treatment of DME in January 2011 in the Europe. AMD has a rich pipeline; key products include Avastin, Eylea, and Iluvien.
Other ophthalmic indications

Cataracts are the leading cause of blindness globally (although this does not hold in developed countries). There are no pharmaceutical treatments for cataracts, and surgery is the most effective method for their management
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Ocular anti-allergic drug preparations are used to manage allergic manifestations in the eye, or ocular allergies. Although there are several types of allergies associated with the eye, the most common and severe are those associated with the conjunctiva, such as conjunctivitis.
Alcon's Patanol/Pataday (olopatadine) was among of the leading anti-allergic product with combined sales of $539m in 2010, at a Y-o-Y growth of 9.9%.
Antibiotics dominate the ophthalmic anti-infectives segment owing to the higher incidence of infections caused by bacteria compared with those caused by viruses. Fluoroquinolones are the preferred antibiotics due to their broad spectrum of activity and the reduced propensity to cause microbial resistance.
Key company profiles

Novartis was the leading company in the ophthalmic market with 2010 sales of $4.4bn. Novartis' leading sales-generating segment in 2010 was anti-AMD preparations or ocular ANV products, owing to the robust sales of Lucentis, which it co-promotes with Genentech/Roche. Lucentis generated total sales of $2.9bn, of which 51.7% was contributed by Novartis. Strong sales of Lumigan, Restasis, and Ganfort have propelled Allergan to become one of the leading players in the ophthalmic market. Although, combined sales of the Alphagan franchise declined in 2010 due to the generic competition in the US, the sales of Alphagan P 0.1% and Combigan showed modest growth. Merck & Co.'s traction in the global ophthalmic market revolves around Trusopt and Cosopt. The success of Cosopt owes to the greater reduction in IOP it achieves compared with the individual constituents. Sales of these brands are declining rapidly due to their loss of market exclusivity in October 2008. Pfizer was the largest anti-glaucoma preparations marketer in terms of sales until 2010 with Xalatan and Xalacom brands, however the sales of the brand have started to decline following Xalatans patent expiry in March 2011. In Q1 2011, the brands sales declined by 7% on the previous year. 15
Chapter 1 Introduction to the ophthalmic market

Summary
The global ophthalmic market was valued at $16.2bn in 2010 and is expected to reach $21.1bn, at a CAGR of 4.6% during 201016. The US was the largest market for ophthalmic drugs, accounting for 40% of the global market. The 5EU nations formed 18% of the global ophthalmic market. Glaucoma was the largest segment in the global ophthalmic market and accounted for 35% share in 2010. The aging population among other trends will drive increases in the prevalence of ophthalmic indications. There is also great potential in emerging markets. Age-related macular degeneration represents the main area of R&D interest for pharmaceutical companies, with a 109 compounds in various stages of development. Glaucoma has the richest late stage pipeline with eight products in Phase III development and four pending approval.
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Overview of the global ophthalmic market

The following section of the chapter provides an overview of global ophthalmic market by drug class, and country/region. It also provides five forces analysis of the ophthalmic industry.
Ophthalmic market by country/region

The global ophthalmic market in 2010 was valued at $16bn. The market was led by the US with a $6.5bn in sales, accounting for a share of 40%. However, countries outside of the seven major markets and Asia (rest of the world) also feature prominently, with a 22% market share accounting for $3.6bn in sales. These include large markets for ophthalmic products including Brazil, South Korea, Canada, and Russia. Showing Y-o-Y growth of 5.3%, Japan accounted for 14% ($2.3bn) of the global ophthalmic market in 2010. The five major European markets (Germany, the UK, France, Italy, and Spain) accounted for 18% of the market equating to $2.9bn sales in 2010.
Figure 1:
Ophthalmic market by region, 2010

RoW 22%
US, 40% Asia, 6%
Japan, 14% EU5, 18% Total market = $16bn

Source: Company reports, Business Insights
BUSINESS INSIGHTS
Ophthalmic market by drug class

The ophthalmic market has shown strong growth in the last decade due to the increase in demand particularly in Eastern European region, Asia, and Russia among others. The aging population, changing lifestyle, growing healthcare awareness, increasing prevalence of eye disorders due to change in work patterns, and lack of exercise is expected to fuel the growth in these markets. These regions will continue to
17
drive the global ophthalmic market in the near term and the percentage share of the developed regions will decline.
Figure 2:
The global ophthalmic market by drug class ($m), 2010

Others, 1,945 Anti-inflammatory 450 Anti-infectives 1,371 Anti-allergics 1,371
Glaucoma 5,582
Artificial tears 1,939
Retinal diseases 3,500
Total market = $16bn

BUSINESS INSIGHTS
Glaucoma was one of the largest and fastest growing segments in the global ophthalmic market and accounted for $5.6bn in sales (34.5%) in 2010. Xalatan is one of the key products for the treatment of glaucoma but its sales are eroding following its patent expiry in March 2011. The other major products in this therapeutic category are Travatan (Novartis), Lumigan (Allergan), Cosopt (Merck) and Alphagan (Allergan). The retinal disease segment which includes age-related macular degeneration (AMD), diabetic retinopathy (DR), diabetic macular edema (DME) and retinal vein occlusion (RVO), was valued at $3.5bn in 2010. Lucentis, accounted for the major share in the retinal disease market with 2010 sales of $2.9bn. Lucentis is indicated for the treatment of AMD and is marketed by Novartis and Roche. The retinal disease market is expected to show strong growth in the forecast period due to the increasing prevalence of diabetes and the associated diseases. Artificial tears accounted for 12% of the global ophthalmic market with sales of $1.9bn in 2010.
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Ocular anti-allergic and anti-infectives products together accounted for 17% of the global ophthalmic market. The Other segment includes eye tonics and vitamins, anti-cataractogenics, mydriatics, cycloplegics and local anesthetics, among others. This segment accounted for 12% of the total market and was valued at $1.9bn in 2010.
Revenue forecasts for the ophthalmic market

The global ophthalmic market was valued at $16.2bn in 2010 and is forecast to grow at a CAGR of 4.6% from 2010 to 2016. The market is forecast to be worth $21.1bn in 2016. Revenue growth is expected to be driven by retinal diseases and glaucoma segments. Table 1 represents the sales forecast for the global ophthalmic market from 201016.
Table 1: Revenue forecast for the global ophthalmic market by drug class ($m), 201016
Drug class
Sales 2010 ($m) 5,582 3,500 1,939 5,137 16,158
Sales 2011 ($m) 5,665 3,995 1,916 5,056 16,632
Sales 2012 ($m) 5,806 4,560 1,912 5,060 17,338
Sales 2013 ($m) 5,951 5,204 1,907 5,063 18,125
Sales 2014 ($m) 6,099 5,940 1,903 5,067 19,009
Sales 2015 ($m) 6,251 6,779 1,899 5,070 19,999
Sales 2016 ($m) 6,406 7,738 1,895 5,074 21,113
CAGR 2010 16 (%) 2.5 14.1 -0.2 0.1 4.6
Glaucoma Retinal diseases Artificial tears Anti-infective and others Total
BUSINESS INSIGHTS
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Revenue forecast of key brands Table 2: Forecast sales of key marketed products ($m), 201016
Products
Company
Sales 2010 ($m) 2,931 1,749 621 586 483 441 237 164 86 74 66 26
Sales 2011f ($m) 3,202 1,216 682 621 455 489 171 178 106 34 43 60
Sales 2012f ($m) 3,459 927 718 636 432 490 148 186 120 24 39 91
Sales 2013f ($m) 3,641 878 747 626 412 502 126 191 131 14 36 117
Sales 2014f ($m) 3,861 842 538 613 393 457 107 196 141 12 35 136
Sales 2015f ($m) 3,958 744 297 544 373 296 90 200 150 9 33 162
Sales 2016f ($m) 4,171 705 181 483 353 212 74 203 158 8 32 178
CAGR 2010 16 (%) 6.1 -14.1 -18.6 -3.2 -5.1 -11.5 -17.6 3.6 10.7 -31.0 -11.4 37.5
Lucentis Xalatan/ Xalacom Restasis Travatan Cosopt/ Trusopt Lumigan franchise Alphagan franchise Combigan Ganfort Zymar Visudyne Ozurdex
Novartis /Roche Pfizer Allergan Novartis* Merck Allergan Allergan Allergan Allergan Allergan Novartis Allergan
* Includes Travatan, Travatan Z, and Travatan APS. 2010 also includes Alcon revenue
Source: PharmaVitae
BUSINESS INSIGHTS
Causes of blindness
Conditions related to blindness are major drivers behind the growing demand for ophthalmic products. Medical management of blindness depends on factors such as the nature of the disorder (congenital, genetic, accidental or pathologic), the age of the patient, the part of the eye affected and the extent of visual impairment. Although pharmaceutical options may not provide a complete cure, they often offer symptomatic relief while decelerating the progression blindness. According to the World Health Organization (WHO), globally there are around 314m visually impaired people across the world, of which 45m are blind. Around 90% of visually impaired individuals are from low-income countries, and the overwhelming majority of these 20
are over 50 years in age with women are more at risk. 80% of all types of visual impairment are avoidable with cataracts being the leading cause of blindness globally. Visual impairment due to infectious diseases is on the decline, age-related blindness continues to rise. Figure 3 lists the major causes of blindness worldwide.
Figure 3:
Leading causes of blindness worldwide (%), 2006

Others, 13% Onchocerciasis, 1% Trachoma, 4%
Childhood blindness, 4% Cataract, 47% Diabetic retinopathy, 5% Corneal opacities, 5%
AMD, 9% Glaucoma, 12% AMD= Age-related macular degeneration

Source: WHO
BUSINESS INSIGHTS
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Ophthalmic sector: Five forces analysis
Figure 4:
Ophthalmic sector: Five forces analysis
Competitive rivalry
Moderate
Threat of substitution
High
Low
Threat of new entrants
Ophthalmic market
d Mo
Hi gh
er at e
Buyers power
Suppliers power
Source: Business Insights
BUSINESS INSIGHTS
Competitive rivalry moderate The ophthalmic pharmaceutical market is controlled by a small number of companies. Novartis, Merck, Allergan, Pfizer, and Roche, collectively accounted for over 70% of market share in 2010. The competitive rivalry in ophthalmic market is moderate. The ophthalmic industry has started to undergo consolidation with two major acquisitions in 2011: Alcon by Novartis and Inspire by Merck. The entry of generics combined with increasing government concern over rising medical expenditures is driving pharmaceutical companies to focus more on niche drug treatments. Within the specialty pharmaceutical segment, eye care and vaccines 22
are the key growth areas, with significant commercial opportunities due to favorable demographics adding to growing prevalence of ophthalmic diseases. In the backdrop of less crowded market coupled with high entry and exit barriers the market attractiveness of the ophthalmic sector will grow and the competitive rivalry is likely to increase. Buyers power high Similar to pharmaceutical industry the buyers for the ophthalmic products are physicians, drug wholesalers, independent and chain drug stores, pharmacies, and commercial optical chains. The bargaining power of Buyers in ophthalmic market is predominantly driven by the alternate drug therapies available for various indications. For certain indications such as ocular allergy, inflammation, and glaucoma, multiple undifferentiated products are available which increases the bargaining power of the buyers. While for AMD there is only one approved drug available, Lucentis thus the bargaining power of buyers is lower in the AMD segment. Consolidation in the drug retailing industry has led to a small number of large wholesalers, which have higher bargaining power than the local pharmacies. Suppliers power moderate Suppliers in the ophthalmic industry primarily include raw materials and intermediates manufacturers, third party suppliers and co-marketing companies. Bargaining power depends on the supplier type and its prominence in the value chain. The bargaining power of suppliers in ophthalmic market is moderate; however it is slightly higher than in the pharmaceutical industry. Large multinational companies can always employ a backward or forward integration strategy, if suppliers become highly unreasonable. The bargaining dynamics may change if the company is highly dependent on one supplier. For instance, ISTA is dependent on Senju for bepotastine besilate, the active ingredient in Bepreve, Regis Technologies for bromfenac active ingredient in Bromday and Xibrom, and Bausch & Lomb for commercial manufacturing of Bromday, Bepreve, Istalol and Xibrom. Threat of substitution high The threat of substitution is high in the ophthalmic market. The principal threat for the ophthalmic industry is the generic drugs and the surgical procedures for the treatment of eye disease. The impending patent
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expiries of anti-glaucoma, ocular anti-allergic and anti-infective/anti-inflammatory products will cause significant sales erosion during the forecast period. Market exclusivity of Cosopt/Trusopt and Xalatan have expired and generic versions of the products have launched. The downward trend in sales will further be accentuated by the patent expiry of Alcon's Travatan in late 2012 and subsequent generic competition. In the ocular anti-allergic segment, the expiry of patents covering Alcon's Patanol will also lead to substantial generic erosion, because the therapeutic potential of the drug represents a significant commercial opportunity for generic players. Moreover, many governments are also promoting generic drug usage to control the rising healthcare costs. The use of surgery for the treatment of eye disease is also gaining traction, with surgery being the only available option for the treatment of a certain eye diseases such as cataract and DME. As most eye diseases are not curable, and only the progression can be managed with continued medication, patients may prefer surgical intervention rather than maintaining lifelong daily eye drop treatment regimen. Moreover, no approved drug was available for the treatment of DME until recently although physicians were using off-label treatments. Threat of new entrants low The threat of new entrants is low due to the high R&D investment and strict regulatory environment for commercial and manufacturing operations of ophthalmic products. Established pharmaceutical companies in the ophthalmic space have successfully mitigated risk and reduced their R&D costs by adopting the strategy of partnerships and acquisition of smaller research based companies. The ophthalmic market is also characterized by a high degree of brand loyalty and physicians are reluctant to shift therapies mid-treatment. This makes it even more difficult for new entrants to establish brand equity with doctors. Moreover, the majority of the ophthalmic products are reimbursed by federal and state government authorities, private health insurers, and other health maintenance and managed care organizations. Thirdparty payors analyze the cost of the drug and often challenge the prices. In addition, the interest in managed care organizations is growing, particularly in the US. These factors may result in increased negative pricing pressure and narrowing the profitability limiting the entry of new players in this segment. 24
Market trends
Changing demographics present significant opportunities
The aging population and changing lifestyles will present substantial opportunities for the companies operating in the ophthalmic pharmaceutical space. Most ophthalmic diseases occur after the age of 40 years and the aged population is expected to grow faster than the younger population. According to the US census bureau forecast, in the US, the 040 years population is expected to grow at a CAGR of 0.8% during 2010 16, the 40+ years population to grow at a CAGR of 1.2% while the 60+ years population is forecasted to grow at a CAGR of 2.9% during 201016. AMD which is primarily seen in those over 60 years is believed to have affected over 1.8m people in the US according to National Eye Institute estimates (NEI) and the patient population is expected to grow to 3m by 2020. The changing lifestyle with lack of exercise combined with the consumption of high calorie diets has led to growing prevalence of lifestyle disorders including diabetes. Diabetic retinopathy, a major cause of vision loss occurs due to diabetes-related changes in the eye. In the US, diabetic retinopathy affects approximately 4.1m while the vision-threatening retinopathy is estimated to affect 899,000 people.
Increased focus on combination therapies

The use of fixed-combination treatment for glaucoma, which includes the beta-blocker timolol maleate and dorzolamide, brimonidine, or latanaprost is growing. The combination therapy is believed to improve the compliance and washout effect by reducing the number and frequency of eye drop application. In addition, it also reduces the exposure to the benzalkonium chloride preservative. According to Peter Galloway, a Consultant Ophthalmologist in the UK, a combination therapy should be given as a first line treatment in patients with high level of intraocular pressure, where monotherapy may not be very effective. However, there are safety concerns related to the use of combination therapies and thus no combination drug excluding Cosopt is approved in the US. The increased focus on combination therapies for age-related macular degeneration (AMD) is evident from the number of combination pipeline compounds under development. According to MedTrack, there are around 17 combination molecules being evaluated for the treatment of AMD. The multiple mechanisms of action involved in combination therapy are expected to 25
reduce inflammation, choroidal neovascularisation possibility, and lessen VEGF expression. Presently, Roche/Novartis are investigating a combination of ranibizumab or bevacizumab with verteporfin photodynamic therapy (V-PDT) with and without a steroid for the treatment of wet AMD.
Emerging markets to substantially contribute in the industry growth

The growth rate of global ophthalmic market is expected to differ in various geographies, with the US and Europe expected to show single digit growth while emerging markets including China, Russia and India expected to show double digit growth in the near term. The demographics, lifestyle, improved medical infrastructure, increase of patients' awareness and economic growth are the main growth drivers. The population of over 65s in Asia is expected to increase by 179% during 20102040. The population in China is aging rapidly with around 12.9% of the total population above the age of 60 in 2010 which is projected to reach 16% by 2016. The prevalence of glaucoma in China in adults aged above 40 years is around 3.6%, however this increases significantly with age and is estimated to be around 9.5% in population aged over 70 years (Wang et al,. 2010). According to a study conducted in rural area in northern China (Wang et al,. 2009), a very high prevalence of 43.1% was reported for diabetic retinopathy while the prevalence of proliferative DR, and macular edema was 1.6% and 5.2% respectively. The high prevalence, coupled with increasing aging population presents huge opportunities for pharmaceutical companies. The prevalence of AMD is also on a rise in India due to the increase in life expectancy, and growing prevalence of diabetes in younger people. With 76% of the diseases going untreated in India, the Indian market presents a huge untapped market potential for pharmaceutical manufacturers (Bausch + Lomb's Indian alliance preludes expansion in other emerging markets, SCRIP July 2011). The key pharmaceutical companies operating in the ophthalmic market have started to establish their base or expand their presence in emerging markets. Santen established its local subsidiary in China in 2005 to initiate manufacturing and direct sales in the Chinese market. In August 2011, Santen announced the establishment of its Indian subsidiary, Santen India Private Limited. In June 2011, Bausch & Lomb announced plans to enter the Indian pharmaceutical market through an alliance with Micro Labs. Bausch & Lomb intends to capture the growing ophthalmic market in India, poised to reach over $300m by 2016. 26
According to the agreement, the two companies intend to launch six new pharmaceutical eye drops: Moxisurge, Aquasurge, Aquasurge Max, Bromvue, Ketovue, and Moxisurge-KT. The companies also aim to use the alliance to market products in other countries in Asia Pacific and build R&D and manufacturing capabilities in emerging markets.
Ophthalmic pipeline
The following table illustrates the number of compounds featured in the R&D pipeline across major indications in the ophthalmic disorders area by stage of development.
Table 3: Global ophthalmic pipeline by indication and stage of development, July 2011
Indication Age-related macular degeneration Glaucoma Dry eye syndrome Diabetic macular edema Diabetic retinopathy Others Total
Source: MedTrack, July 2011
PC 41 24 7 2 20 56 150
Phase I 22 10 4 4 5 4 49
Phase II 40 28 25 15 3 34 145
Phase III 4 8 6 8 1 18 45
Pending approval 1 4 2 2 1 3 14
Total 109 74 44 31 30 115 403
BUSINESS INSIGHTS
Age-related macular degeneration represents the main area of R&D interest with an estimated 109 compounds in various stages of development. With an aging population, AMD clearly poses one of the most serious and onerous challenges to the healthcare systems of both developed and developing countries. The number of agents currently in late stage trials is relatively small, but the early to mid-stage pipeline is broad, both in terms of the number of developers and the variety of therapeutic approaches. With around 74 drugs under development, glaucoma forms the second most popular indication of research under ophthalmic disorders. Glaucoma has the richest late stage pipeline with eight products in Phase III development and four 27
pending approval. The pharmaceutical companies have also increased their focus in developing biological drugs for treating various eye conditions, with investigational biological drugs accounting for approximately 20% of the products under development. Within the AMD market, the bulk of research is being conducted on evaluating the potential of vascular endothelial growth factor (VEGF) inhibitors. In the glaucoma space, research activities are focused on prostaglandin F2 alpha (PGF2 alpha) receptor agonist, with around 14 compounds being developed with this mechanism of action. In the DME and DR categories the glucocorticoid receptor (GR) agonist and superoxide dismutase (SOD) mimetic products lead the developmental pipeline. Allergan, Santen and Alcon had the largest number of pipeline compounds in the development until the acquisition of Alcon by Novartis, following which Novartis became the leading company in terms of products under development. Other players which are active in the research and development of ophthalmic treatment include Alimera Sciences, Genentech, Pfizer, and Merck & Co.
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Chapter 2 Glaucoma
Summary
Glaucoma is the largest segment within the ophthalmic market, with sales of $5.6bn in 2010, which will grow at a CAGR of 2.5% to 2016. The leading players in the glaucoma market are Pfizer, Novartis, Allergan, Merck & Co., and Santen. Prostaglandin analogues (PGAs) have overtaken beta-blockers as the preferred first-line therapy for the management of glaucoma. Three prostaglandin analogues: Xalatan/Xalacom, Travatan, and Lumigan, accounted for over 50% of the anti-glaucoma market in 2010. Pfizers Xalatan was the market leader in the glaucoma market in 2010. However, Xalatan sales are eroding in the US since its patent expiry in March 2011. Xalatan has been filed for a pediatric extension in Europe; if granted the brand will remain protected until January 2012. The patent expiry of Xalatan has also affected the sales of the other leading brands in the segment including Travatan and Lumigan. The pipeline of glaucoma compounds is relatively weak and companies are resorting to extended indications and line extensions for lifecycle management.
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Overview
Glaucoma is a group of conditions characterized by progressive damage to the optic nerve which if left untreated can cause vision loss and blindness. It is the second leading cause of blindness globally. The disease can strike at any age, but is most common in those over 60 years. Although the exact cause of glaucoma is unknown, elevated intraocular pressure (IOP) is known to be the primary cause of the optic nerve damage that typifies the disease. IOP buildup is mostly caused by an increased production of aqueous humor or due to the improper functioning of the drainage system (trabecular meshwork) that facilitates outward filtration. Glaucoma is classified into three types: primary open-angle glaucoma, angle-closure glaucoma and glaucoma due to developmental abnormalities of the anterior chamber. In open-angle glaucoma, although the angle between the cornea and the iris remains open, partial obstruction in the trabecular meshwork reduces the rate of fluid outflow, causing fluid buildup. This fluid build up elevates the pressure inside the eye and may damage the optic nerve, which can result in loss of vision. Figure 5 depicts how an open-angle glaucoma damages the optic nerve. In angle-closure glaucoma, the fluid buildup results from a reduction of the drainage angle due to the bulging of the iris towards the cornea. Developmental disorders mainly arise from genetic disorders.
Figure 5:
Open-angle glaucoma
Source: National Eye Institute
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Although the symptoms depends on the type of glaucoma, primarily it is a non-symptomatic disease with no visible symptoms at the start of the disease, however as the disease progresses patients may experience gradual loss of peripheral vision in cases of primary open-angle glaucoma. The symptoms of acute angleclosure glaucoma include, severe eye pain, nausea and vomiting (accompanying the severe eye pain) Sudden onset of visual disturbance, often in low light blurred vision Halos around lights Reddening of the eye.
Diagnosis, treatment and management

The diagnosis of Glaucoma is done through multiple tests including Tonometry an initial screening test for glaucoma that measures intraocular pressure inside the eye. Visual acuity test measures the resolution of sight. Visual field test The test determines the effect of glaucoma on the peripheral vision. Dilated eye exam The test uses an eye drop to dilate the eyes and retina and optic nerve is examined using a magnifying lens to detect the damage and other problems. Pachymetry test This test measure the thickness of cornea. An ultrasonic wave is used to measure the thickness of cornea in numbed eyes. Gonioscopy It is used to distinguish between open-angle glaucoma and angle-closure glaucoma and uses a lens to detect the drainage angle. Tonography Tonography measures the speed of fluid drainage from the eyes.
Treatment aims to slow progression Glaucoma is not curable, and treatment strategies mostly aim to reduce IOP and decelerate the progression of vision loss. Although the damage caused by the disease is irreversible, loss of vision in early-stage subjects can be prevented by treatment. In current ophthalmic practice, anti-glaucoma drugs form the firstline of intervention for glaucoma and employ two chief approaches towards the management of elevated IOP: reducing aqueous humor production and increasing its drainage. Topical agents used for the 31
management of glaucoma include miotics (pilocarpine), beta-adrenergic blockers, an alphaadrenergic agonist (apraclonidine), and steroids. Oral agents that may be used include carbonic anhydrase inhibitors (CAIs) and hyperosmotics. Hyperosmotics and CAIs may be administered intravenously. Table 4 describes the target IOP for anti-glaucoma therapies suggested by the Delphi Panel, 2002.
Table 4: Target intra-ocular pressure and degree of glaucoma
Degree of glaucoma Mild glaucoma Moderate glaucoma Severe glaucoma Glaucoma suspects
Target IOP (mmHg) 18 16 12 22
Recommended minimum IOP reduction (%) 25 30 35 20
Source: Delphi Panel Recommendations, Hawaii Eye Meeting, 2002
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If drug therapy is ineffective, surgical interventions are used. Surgical correction of glaucoma includes the use of lasers (trabeculoplasty), guarded filtration (trabeculectomy) and shunting using tube implants. Of the pharmaceutical options available, the demand for combination products is rising. Combination products present two major advantages compared to single-ingredient formulations. Firstly, they improve patient compliance by avoiding separate instillations and facilitating co-administration of drugs. Secondly, they eliminate the five-minute interval between two consecutive administrations intended to prevent the washout effect of the second instillation.
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Table 5 lists glaucoma management strategies in practice.
Table 5: Glaucoma management strategies
First-line Beta blockers*: Timolol (Betimol, Timoptic) Betaxolol (Betoptic) Levobunolol (Betagan) Metipranolol (OptiPranolol) Prostaglandin-like compounds Latanoprost (Xalatan) Bimatoprost (Lumigan) Travoprost (Travatan) Second-line Alpha agonists: Apraclonidine (Iopidine) Brimonidine (Alphagan) Carbonic anhydrase inhibitors: Dorzolamide (Trusopt) Brinzolamide (Azopt) Third-line Miotic or cholinergic agents: Pilocarpine (Isopto Carpine, Pilopine) Carbachol (Isopto Carbachol) Epinephrine compounds: Dipivefrin (Propine) Fourth-line Surgical intervention: Trabeculoplasty (laser) Trabeculectomy (surgery) Tube implants (shunting) * In current ophthalmic practice beta-blockers are generally used as combination therapies with PGAs
Source: Mayo Clinic; Lee, David A., et al., 2005
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Epidemiology
The prevalence of glaucoma is difficult to estimate due to the extensive examination procedures required to diagnose the disease. Due to the growing aging population, the number with open angle glaucoma (OAG) is estimated to increase by 50% in 2020 (Friedman et al., 2004). Table 6 below gives the epidemiological data for glaucoma across the seven major markets in 2010.
Table 6: Prevalence of open angle glaucoma in the 7MM, 2010
Country France Germany Italy Spain UK Total EU US Japan 7MM total
Prevalence (000s) 461 675 839 484 430 2,890 2,668 2,706 8,263
Prevalence (%) 0.7 0.8 1.4 1.0 0.7 0.9 0.9 2.1 1.1
Share (%) 5.6 8.2 10.2 5.9 5.2 35.0 32.3 32.7 100.0
Source: Various, see references for details
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Forecast epidemiology
Table 7 presents the forecast epidemiology of open angle glaucoma across 7MM through 2016.
Table 7: Forecast epidemiology of open angle glaucoma in the 7MM, 2010
2010 France Prevalence (000s) Prevalence (%) Germany Prevalence (000s) Prevalence (%) Italy Prevalence (000s) Prevalence (%) Spain Prevalence (000s) Prevalence (%) UK Prevalence (000s) Prevalence (%) EU5 Prevalence (000s) Prevalence (%) US Prevalence (000s) Prevalence (%) Japan Prevalence (000s) Prevalence (%) 7MM total Prevalence (000s) Prevalence (%) 8,263 1.1 2,706 2.1 2,668 0.9 2,890 0.9 430 0.7 484 1.0 839 1.4 675 0.8 461 0.7
2011 467 0.7 688 0.8 850 1.4 529 1.1 435 0.7 2,969 0.9 2,713 0.9 2,735 2.2 8,416 1.1
2012 473 0.7 697 0.9 861 1.4 538 1.1 440 0.7 3,009 0.9 2,760 0.9 2,765 2.2 8,534 1.1
2013 479 0.7 705 0.9 872 1.4 549 1.2 447 0.7 3,052 1.0 2,807 0.9 2,795 2.2 8,653 1.1
2014 485 0.7 712 0.9 884 1.4 561 1.2 453 0.7 3,096 1.0 2,853 0.9 2,823 2.3 8,772 1.2
2015 491 0.7 717 0.9 894 1.4 574 1.2 460 0.7 3,137 1.0 2,904 0.9 2,846 2.3 8,887 1.2
2016 499 0.7 721 0.9 904 1.5 586 1.2 467 0.7 3,177 1.0 2,953 0.9 2,865 2.3 8,996 1.2
Source: Various, see references for details, Business Insights analysis
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Market landscape
Glaucoma is the largest and the fastest growing segment within the ophthalmic market. In 2010, glaucoma accounted for 34.5% of the market with 2010 sales of $5.6bn. The key players operating in the glaucoma market are Pfizer, Novartis, Allergan, Merck & Co., and Santen. Although, Pfizer does not have a broad product offering for the glaucoma market it leads the market with its flagship brand, Xalatan. The market leading position of Pfizer is under threat from generic competition as the patent for Xalatan expired in March 2011 in the US. Most of the leading brands in the glaucoma market have reached the mature phase of their lifecycle. Novartis and five other companies have already launched the generic version of Xalatan. The impact of generic erosion has started to show on Xalatan sales, and Xalatan generics will impact other branded products that are yet to lose patent protection. Anti-glaucoma drugs are the first choice in the management of glaucoma, rather than surgical intervention. Among the various anti-glaucoma preparations, prostaglandin analogues (PGAs) have overtaken betablockers as the preferred first-line therapy for the management of glaucoma. Although initially approved only for second-line therapy, currently these drugs stand as first-line therapies owing to their established superior efficacy profiles. Several products can also be used in a double-pronged approach, which involves a combination of a prostaglandin and related analogs and a beta-blocker. PGAs account for a majority share of the anti-glaucoma products segment with the key brands from the category namely Xalatan, Xalacom, Travatan, and Lumigan, accounting for over 50% of sales in the market in 2010. PGAs were introduced in the US for the treatment of glaucoma in 1996 with the launch of Pfizer's Xalatan, and released in the EU the following year. Xalatan has dominated the market ever since, despite the release of alternative treatment options such as Travatan and Lumigan. The superiority of the brand arises primarily from the time-tested efficacy and fewer side effects of the drug. However, Xalatan is showing sales decline following its patent expiry in March 2011. Clinically, all three products effect the same levels of intraocular pressure (IOP) baseline reduction (Xalatan by 6.7mmHg, Travatan by 7.1mmHg and Lumigan by 7.4mmHg), with negligible clinical differentiation. Sales of the drug class gained further traction in 2002, following FDA approval as the first-line treatment for open-angle glaucoma. 36
In current ophthalmic practice, beta-blockers have been replaced by PGAs as the first-line treatment for glaucoma. Consequently, beta-blockers rarely find use as monotherapy in glaucoma management today. Although PGAs have replaced beta-blockers as the standard of care, physicians continue to prescribe betablockers for glaucoma treatment. Used since the 1980s as topical interventions in ophthalmic practice, these products enjoy the benefit of more than a quarter of a century's physician experience. Hence, ophthalmologists can effectively custom-titrate these drugs for the management of glaucoma. Today, betablockers generally find use as combination therapies with PGAs and as economical alternatives to these drugs. Timolol, especially, has found wider applicability in combinations compared to other beta-blockers, as it complements the mechanism of action of most PGAs. Carbonic anhydrase inhibitors (CAIs) dorzolamide and brinzolamide represent the second most commonly used drugs in glaucoma management. The leading CAI brands include Merck & Co.'s Cosopt/Trusopt and Novartis' Azopt. Notably, CAIs are one of the chief systemically administered medications for glaucoma. However, systemic administration (both oral and parenteral) for treatment of ophthalmic indications has declined rapidly since the launch of topical CAIs. Systemic CAIs are associated with a higher incidence of adverse effects than topical formulations. Other drugs used for the treatment of glaucoma include alpha agonists, miotics, and epinephrine compounds. Aside from alpha agonists, these products are rarely prescribed. Allergan's Alphagan/Combigan is one of the leading alpha agonists. Alphagan, originally launched in 1997, was discontinued with the launch of its benzalkonium chloride-free (BAK) version Alphagan P in 2001. The advanced formulation employs Purite as a preservative. The leading miotic brands include Santen's Fotil and Alcon's Miostat, Combination products have started to gain prominence for the treatment of glaucoma. However, their position is not well established; with the exception of Merck & Co.'s CAI/beta blocker product Cosopt, no other combination product is being marketed in the US. Also available are combination products of betablockers with alpha agonists, such as Allergan's Combigan. The most significant disadvantage of combination products is that they are only prescribed when monotherapy with PGA eye drops fails.
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Key marketed products

Xalatan (latanoprost) Pfizer Xalatan, a prostaglandin F2 analogue, is used as the first-line treatment to reduce the elevated intraocular pressure in patients with open-angle glaucoma or ocular hypertension. Xalatan is believed to reduce the intraocular pressure (IOP) by increasing the outflow of aqueous humor. Xalatan is absorbed through the cornea where, through the hydrolysis of isopropyl ester prodrug, it is converted into acid form to become biologically active. Xalatan was the market leader in the Glaucoma market in 2010. However, Xalatan sales are eroding in the US following its patent expiry in March 2011. Pfizer is pursuing pediatric extension for Xalatan in Europe. If granted, the brand will remain protected until January 2012. Pfizer is developing a bioerodible implant delivery system for Xalatan and is also strengthening its marketing efforts and educating customers to continue the treatment with Xalatan if it has proved as an effective treatment. Pfizer's PGA/beta blocker brand Xalacom sales are relatively low as compared with Xalatan due to lack of approval in the US market. Xalacom is unlikely to receive approval in the US market as Pfizer has received three nonapprovable letters for Xalacom since its NDA filing with FDA in 1999. However, it has secured approval in other geographies including Australia, and certain European, South American, and Asian markets. Travatan (travoprost) Novartis Alcon launched Travatan, its first prostaglandin analogue, in 2001 and in 2006 it launched Travatan Z, a benzalkonium chloride-free formulation of Travatan. Travatan Z set a precedent in the PGA segment by eliminating BAK as preservative. Travatan Z secured strong market uptake and was the key growth driver for Alcon's PGA franchise. Travatan Z accounts for most of the sales of Travatan franchise. In Travatan Z, BAK is replaced with sofZia, an ionic buffered preservative system. The focus on the development of alternative preservative systems has intensified, because the majority of glaucoma cases also demonstrate ocular surface diseases and BAK damages the ocular surface tissue. The Travatan franchise is expected to undergo declining sales following the entry of generic Xalatan. In Japan, Travatan faces competition from Santen's Tapros, which has enjoyed strong sales momentum since its market launch in 2008. Par Pharmaceuticals has filed an ANDA for Travatan Z and has first-to-file status. Par was the only company that
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has filed ANDA for both Travatan and Travatan Z. Although the patent litigation is still ongoing, generic Travatan Z could enter the market in early 2012. Novartis also markets DuoTrav, a combination of Travatan and timolol in Europe and Japan; the product is not marketed in the US. DuoTrav was approved in 2006 in Europe and in 2010 in Japan. The product has shown strong uptake in both the geographies since launch. Alcon is adopting a line extension strategy for DuoTrav and plans to launch DuoTrav APS, which uses a different preservative than benzalkonium chloride. DuoTrav APS has been filed in Europe. Lumigan (bimatoprost) Allergan Lumigan, a prostaglandin analogue, is indicated for the treatment of IOP in patients with open-angle glaucoma or ocular hypertension, and is available in concentrations of 0.01% and 0.03%. Lumigan 0.01%, an improved reformulation of Lumigan 0.03%, was launched in mid-2010 with an aim to convert Lumigan 0.03% patients to Lumigan 0.01%, as the latter has a better tolerability profile. Lumigan 0.01% has demonstrated a strong initial uptake with a growing new prescription share in the overall Lumigan franchise. Lumigan 0.03% was initially approved for second-line use to reduce elevated IOP in chronic open-angle glaucoma and ocular hypertension in 2001 in the US and in 2002 in Europe. In 2004, Lumigan 0.03% was approved as a first-line therapy in the Europe by the European Unions Committee for Proprietary Medicinal Products and in 2006 by the FDA in the US. In Japan, where Lumigan was approved in 2009, Allergan has an exclusive licensing agreement for developing and marketing Lumigan with Senju Pharmaceutical. Although Lumigan is the most differentiated drug among the three key drugs for glaucoma (Xalatan, Travatan, Lumigan) and was initially expected to be the strongest competitor to Xalatan, unfavorable sideeffect profile, primarily hyperemia (increase of blood flow to different tissues in the body) was a major deterrent to Lumigan uptake. Allergans Ganfort, a combination of Lumigan and timolol, is being marketed in Europe since 2006. However, the brand is not approved in the US. Allergan had filed an NDA in 2003 with the FDA, however the regulator requested an additional trial. Even after conducting the necessary trial and submission of details, the FDA asked to conduct an further confirmatory trial, leaving Ganfort approval in the US an uncertain prospect. 39
Cosopt (dorzolamide/timolol)/Trusopt (dorzolamide) Merck & Co. Merck & Co.s Cosopt was the only combination product approved for the treatment of glaucoma in the US until the generics entry in the market in 2008. Cosopt is used in patients with open-angle glaucoma or ocular hypertension who are non-responsive to beta blockers. Trusopt is a carbonic anhydrase inhibitor used to reduce the production of aqueous humor. Cosopt and Trusopt lost market exclusivity in October 2008 in the US. Subsequently, competitors such as Apotex, Sandoz, Teva, Falcon, and Bausch & Lomb succeeded in securing ANDA approvals for generic versions of these brands. The Trusopt patent has also expired in most of European countries, while the patent for Cosopt will expire in March 2013 in the key European markets. As a result, the sales of Cosopt and Trusopt are set to decline through to 2016, which will significantly affect the company's presence in the global ophthalmic market. A preservative free version of Cosopt is under review in the US. Alphagan (brimonidine) Allergan Alphagan, originally launched in 1997, was discontinued with the launch of its BAK-free version Alphagan P in 2001. The advanced formulation employs Purite as a preservative. Alphagans favorable safety and efficacy profile in addition to once-daily dosing was instrumental in strong initial uptake of the brand. A new formulation of Alphagan P, the 0.1% concentration was approved by the FDA in August 2005. The new formulation of Alphagan P has a lower brimonidine concentration and also reduces allergic reactions. With the launch of 0.1% Alphagan P in 2006, Allergan was able to convert over 50% of patients from 0.15% Alphagan P to 0.1% Alphagan P. With the generic entry by Alcon post patent expiry of 0.15% Alphagan P in 2009, the brand has been witnessing sales erosion. However, the shift of patients from 0.15% Alphagan P to 0.1% Alphagan P helped Allergan to sustain Alphagan franchise.
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Tapros (tafluprost) Santen/Merck & Co. Tafluprost, a prostaglandin F2 derivative, was launched as Tapros in June 2008 in Europe and December 2008 in Japan for the treatment of glaucoma and ocular hypertension. Santen is developing tafluprost under a licensing deal with Merck & Co.. Under the terms of the agreement, Merck will develop and market the product in the US, Western Europe (excluding Germany), North America, South America and Africa while Santen retains the right to tafluprost in Germany, Eastern Europe, Northern Europe, and Asia Pacific, including Japan. The product is being marketed in some European countries and Japan. In the US, Merck filed an NDA with the FDA in early 2011. Santen also has an option to co-promote the product in the US.
Key events in the glaucoma market

Pfizer and pSivida to start Phase II trial of bioerodible eye implant In June 2011, Pfizer announced its revised deal with pSivida for bioerodible eye implant that delivers longterm, sustained release Xalatan, a marketed product from Pfizer for the treatment of glaucoma and ocular hypertension. According to the agreement, pSivida will be entitled to an initial payment of $2.3m and will conduct Phase II studies. Upon the completion of the Phase II trial, Pfizer will have an option to exercise worldwide development and commercialization rights to the candidate in return for a $20m and additional royalty payments. Presently, pSivida will retain all the intellectual property rights of the candidate and if Pfizer does not exercise the option, pSivida can develop the product with or without a new partner. The product uses Durasert technology, aims to address the key unmet need of convenience and compliance and may help to recapture Pfizers dwindling position in the glaucoma market. Merck & Co. file tafluprost in the US following positive Phase III results Tafluprost, a preservative-free (PF) prostaglandin analogue, is indicated for the treatment of open-angle glaucoma or ocular hypertension and is approved in Japan and certain European countries, including the UK, Spain and Italy. It is marketed as Taflotan in Germany and Tapros in Japan. Merck licensed the compound from Santen and has the developmental and commercialization rights of the compound in the US and marketing rights in some other regions in North America, South America, Africa, the Middle East, India, Australia, and Western Europe, excluding Germany. However Santen has an option to co-promote tafluprost in the US, post-approval. If approved by the FDA, tafluprost will become the first once-daily preservative-free 41
glaucoma treatment available in the US. In May 2011, Merck presented Phase III results at the annual meeting of the Association for Research in Vision and Ophthalmology, Florida. There is a high probability of the compound being approved in the US and it is expected to strengthen Mercks position in the glaucoma market. Efficient diagnosis may expand the glaucoma market University of California, San Diego, is developing Triggerfish, a smart contact lens for measuring the intraocular pressure in the eye. Present diagnosis techniques are cumbersome and require many tests for a complete diagnosis. Moreover, intraocular pressure fluctuates over time, and is often highest at night, while diagnosis is generally conducted during the day. Triggerfish, consists of a silicone contact lens in a strain gauge, and a microprocessor antenna. The device transmits the IOP levels wirelessly to a logger. The convenient and quick diagnostic tool is expected to expand the market through improved diagnosis rate.

Recently approved and filed drugs
Saflutan (tafluprost) Merck & Co./ Santen Merck is evaluating Saflutan for reducing elevated IOP in patients with primary open-angle glaucoma or ocular hypertension in the US. Merck filed the NDA to the FDA in March 2011. Tafluprost is being marketed in other geographies including UK, Italy, Spain, and Japan among others. If approved, tafluprost will become the first once-daily preservative-free (PF) prostaglandin analogue drug available in the US for the treatment of glaucoma. Merck enrolled 643 patients with open-angle glaucoma or ocular hypertension to conduct a 12-week multicentre, double-blind, randomized, active-controlled non-inferiority Phase III trial to evaluate the safety and efficacy of once-daily PF tafluprost as compared with twice-daily PF timolol. The primary endpoint of the study was to measure the change in mean IOP from baseline at nine time points consisting of three times during the day at weeks 2, 6 and 12. The secondary endpoint of the study was to measure the proportion of patients with 25% or more reduction in diurnal IOP from baseline to week 12. The IOP reduction in patients
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receiving PF tafluprost and PF timolol was achieved by week two and sustained through the end of the study at week 12.
Late-stage glaucoma compounds

DE-111 (tafluprost/ timolol maleate) Santen DE-111, a combination of a prostaglandin derivative and a beta-adrenergic receptor blocking agent, is being evaluated in Phase III clinical studies for treatment of glaucoma and ocular hypertension. Santen is conducting three Phase III trials to evaluate the following: Superiority of DE-111 as compared with timolol ophthalmic solution 0.5% in reducing IOP in patients with primary open-angle glaucoma or ocular hypertension in a multi-center, randomized, double-blind, parallel-group comparison study. Safety and IOP reducing capability of DE-111 ophthalmic solution in open-angle glaucoma or ocular hypertension patients in an open-label, multi-center study. Superiority of DE-111 as compared with tafluprost 0.0015% ophthalmic solution, or non-inferiority in comparison with tafluprost 0.0015% and timolol ophthalmic solution 0.5% used concomitantly, in reducing IOP in patients with primary open-angle glaucoma or ocular hypertension, in a multicenter, randomized, double-blind, parallel-group comparison study. Safety will be compared and evaluated as well. According to clinicaltrials.gov, Santen is recruiting participants for all the three studies. Brinzolamide/Brimonidine tartrate combination Novartis Novartis is conducting a multi-center, double-blind, randomized parallel group efficacy and safety Phase III study of brinzolamide 1%/brimonidine 0.2% fixed combination compared with brinzolamide 1%, and brimonidine 0.2% in patients with open-angle glaucoma or ocular hypertension. The study enrolled 525 patients with open-angle glaucoma or ocular hypertension and was started in May 2011. The primary endpoint is to measure the efficacy by mean diurnal intraocular pressure (IOP) change from baseline in 3 months. According to clinicaltrials.gov the study is currently recruiting participants and it is estimated that the study will be completed by October 2012. 43
Forecast of key products

Table 8 presents a forecast of leading glaucoma products. Xalatan/Xalacom will maintain the market leading position to 2016. Saflutan is due to reach sales exceeding $400m by 2016.
Table 8: Forecast sales of key glaucoma products ($m), 201016
Product
Sales 2010 ($m) 1,749 586 483 441 237 164 86 3 3,749
Sales 2011 ($m) 1,216 621 455 489 171 178 106 20 3,256
Sales 2012 ($m) 927 636 432 490 148 186 120 58 2,997
Sales 2013 ($m) 878 626 412 502 126 191 131 121 2,987
Sales 2014 ($m) 842 613 393 457 107 196 141 198 2,947
Sales 2015 ($m) 744 544 373 296 90 200 150 305 2,702
Sales 2016 ($m) 705 483 353 212 74 203 158 409 2,597
2010-16 CAGR( %) -14.1 -3.2 -5.1 -11.5 -17.6 3.6 10.7 126.9 -5.9
Xalatan/Xalacom Travatan franchise* Cosopt/Trusopt Lumigan franchise Alphagan franchise Combigan Ganfort Saflutan Total
*Travatan, Travatan Z, and Travatan APS

Source: Business Insights, PharmaVitae
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Chapter 3 Dry eye syndrome

Summary
Changing lifestyles in the form of increased use of contact lenses and computers has led to increase dry eye syndrome (DES) in younger age groups. Artificial tears are ocular lubricants intended to treat dryness, irritation and tear deficiency associated with DES. The artificial tear market was valued at $1.9bn in 2010 and is expected to be static to 2016. Currently, a broad spectrum of formulations is available as artificial tears and ocular lubricants. Most products, however, offer only symptomatic and short-term relief. Allergans Restasis is the only approved prescription product for the treatment of dry eye. Other drug formulations prescribed for dry eye management, are intended to maintain the tear film and provide symptomatic relief. The most common ingredients used in these artificial tear preparations include aqueous polymers such as carboxymethyl cellulose (CMC), hydroxymethyl cellulose, propylene glycol and glycerin. Allergan aims to extend Restasis life cycle, by developing new version, Restasis X, which contains a different preservative.
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Overview
Dry eye syndrome (DES) or keratoconjunctivitis sicca is a change in the tear film characteristics of the eye due to the deficient production or excessive evaporation of tears. Reduced tear production generally arises as a result of the lacrimal glands (which secrete tears) malfunctioning due to infections or inflammation. An accelerated rate of evaporation of tears is usually caused by a decline in tear quality due to lesser sebum content (secreted by meibomian glands). Factors associated with the etiology of DES include aging, hormonal changes, medications that disturb tear production, and autoimmune diseases like rheumatoid arthritis. As the severity of DES increases, scarring of the ocular surface occurs, ultimately leading to blindness. Nowadays, the term keratoconjunctivitis sicca is used synonymously with DES, although it is slightly different in terms of symptoms: as well as causing dryness and lack of tear production keratoconjunctivitis sicca also demonstrates associated inflammation. The main symptoms of dry eye are: burning of the eye secretion of excess tears following very dry eye periods discharge from the eye eye fatigue, pain and redness blurred vision and inability to cry.

Diagnosis of dry eye includes the assessment of the stability, quality, and quantity of tears. Tear film stability can be evaluated by the fluorescein tear break-up time test (TBUT), which measures the interval between a complete blink and the first appearing dry spot or discontinuity in the precorneal film. A TBUT result of less than three seconds is classified as clinical dry eyes. Quantity of tears can be analyzed with Schirmer tear test. In this test, a blotting paper strip is placed under the lower eyelid and the amount of liquid soaked in the strip indicates the quantity of the tear production. Certain dyes, such as fluorescein or rose Bengal, are also
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used to stain the surface of the eye and based on the staining patterns on the cornea, the severity of the disease can be assessed. In current ophthalmic practice, there are two strategies for the management of DES: use of artificial tears and the occlusion of nasolacrimal punctum, or tarsorrhaphy. Artificial tear therapy is effective in both cases of DES: reduced tear production or reduced tear quality. In the initial phases of treatment, most physicians advise the use of artificial tears containing aqueous polymers or glycerol such as Refresh and Genteal, which mostly help in reducing the evaporation of tears. Cyclosporine (Restasis) is the only prescription drug available to treat dry eyes. The drug is an immunosuppressant topical ophthalmic solution, which is prescribed in more severe cases. A more severe refractory form of the disease generally calls for the use of punctum plugs. These silicone plugs block the lacrimal ducts to reduce the physiological clearing of tears. In addition to the medication, the increased intake of dietary/nutritional supplements (omega-3 fatty acids especially DHA and EPA) or vitamins is also believed to decrease irritation in the eye.
Epidemiology
Dry eye prevalence is highly dependent on the sex, age and the method of diagnosis. A review study estimated the prevalence range from as low as <0.1% to as high as 33%. This wide variation can be attributed to the method of diagnosis as most of the dry eye symptoms are self-treated, thus the prevalence estimates depends on whether the survey included general population or physician assessments and diagnostic criteria used in case of physician assessments. (Stephen et al., 2008). However, across geographies was the higher prevalence of dry eye syndrome in females than males and the strong association of the disease with age. Changing lifestyle including increased use of contact lenses and spending more time using computers has led to increase in prevalence of dry eye among young population. The prevalence of dry eyes is expected to rise in younger population.
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Table 9: Prevalence of dry eye in the 7MM, 2010
Country France Germany Italy Spain UK EU5 US Japan 7MM total
Prevalence (000s) 3,382 4,921 3,542 2,458 3,259 17,562 9,098 21,557 48,216
Prevalence (%) 5.3 6.1 5.9 5.4 5.3 5.6 2.9 17.0 6.4
Share (%) 7.0 10.2 7.3 5.1 6.8 36.4 18.9 44.7 100.0
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Forecast epidemiology
Table 7 presents the forecast epidemiology of dry eye across the seven major markets through 2016.
Table 10: Forecast epidemiology of dry eye in the 7MM, 2010
2010 France Prevalence (000s) Prevalence (%) Germany Prevalence (000s) Prevalence (%) Italy Prevalence (000s) Prevalence (%) Spain Prevalence (000s) Prevalence (%) UK Prevalence (000s) Prevalence (%) EU5 Prevalence (000s) Prevalence (%) US Prevalence (000s) Prevalence (%) Japan Prevalence (000s) Prevalence (%) 7MM total Prevalence (000s) Prevalence (%) 48,216 6.4 21,557 17.0 9,098 2.9 17,562 5.6 3,259 5.2 2,458 5.3 3,542 5.8 4,921 6.0 3,382 5.2
2011 3,425 5.3 4,950 6.1 3,589 5.9 2,505 5.4 3,295 5.3 17,764 5.6 9,234 2.9 21,501 17.0 48,499 6.4
2012 3,468 5.3 4,969 6.1 3,635 5.9 2,554 5.4 3,326 5.3 17,953 5.6 9,367 3.0 21,437 17.0 48,757 6.5
2013 3,508 5.3 4,977 6.1 3,682 6.0 2,606 5.5 3,353 5.3 18,127 5.7 9,493 3.0 21,366 17.0 48,986 6.5
2014 3,543 5.4 4,978 6.1 3,728 6.0 2,659 5.6 3,377 5.3 18,287 5.7 9,615 3.0 21,288 17.0 49,190 6.5
2015 3,572 5.4 4,978 6.2 3,771 6.1 2,715 5.6 3,400 5.3 18,436 5.7 9,743 3.0 21,202 17.0 49,381 6.6
2016 3,596 5.4 4,977 6.2 3,809 6.1 2,772 5.7 3,419 5.3 18,573 5.8 9,868 3.0 21,110 17.0 49,551 6.6
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Market landscape
Artificial tears are ocular lubricants intended to treat dryness, irritation, and tear deficiency associated with DES. The artificial tear market was the third single largest segment of the ophthalmic market with sales of $1.9bn in 2010. Currently, a broad spectrum of formulations is available as artificial tears and ocular lubricants. Most products, however, offer only symptomatic and short-term relief. When launched in 2003, Allergan's Restasis was positioned to provide ophthalmologists with a different option of dealing with inflammation associated with DES. Although Restasis does not deal with DES etiology, the drug effectively suppresses the subsequent immunoallergic cascades. Other drug formulations prescribed for DES management, consisting mostly of aqueous polymers, are intended to maintain the tear film and provide symptomatic relief. The most common ingredients used in these artificial tear preparations include aqueous polymers such as carboxymethyl cellulose (CMC), hydroxymethyl cellulose, propylene glycol and glycerin. Also available are products containing petroleum jelly and hyaluronic acid. Hyaluronic acid products (used in treatments such as Santen's Hyalein), lubricant produced by the body, is one of the products that has gained traction in the market, delivering strong growth over the last few years.

Restasis (cyclosporine) Allergan Launched in October 2003, the drug captured significant physician preference in the treatment of DES. Other ocular lubricants have been reduced to economic alternatives for symptomatic treatment. Restasis is different from other artificial tear products in that it is a powerful immunosuppressant used to prevent tissue rejection following transplantations, including corneal transplants. Although the mechanism of action is unclear, Restasis is believed to exert its immunomodulatory effect to prevent inflammation of the lacrimal glands. Restasis dominates the artificial tear segment and generated 2010 sales of $621m at a Y-o-Y growth of 18.7%. With the recent approval of Restasis in Canada, the brand is expected to undergo strong growth in 2011. Restasis is now the primary driver for Allergans ophthalmic portfolio, after the entry of Alphagan and 50
Xalatan generics. Allergan, with an aim to increase Restasis life cycle, is developing a new version of of the product called Restasis X, which contains a different preservative. Restasis X is currently undergoing Phase II clinical trials. There is no immediate threat to Restasis leadership position in the near term, particularly in the US from where it generates maximum revenues, as most of the pipeline are either in Phase III or Phase II. Otsukas rebamipide is the only product which has been filed in Japan; however the product is being evaluated in Phase II studies in the US. Rebamipide is believed to act by increasing mucin production in the eyes. Hyalein (hyaluronic acid) Santen Hyalein is positioned as the first-line treatment for corneal and conjunctival epithelial disorders including DES. Hyalein is the market leader in the Japanese market and is growing faster than the overall market in Japan. Hyalein was launched in 1995 in Japan with subsequent launches in China, Korea, Vietnam, Indonesia, Philippines, Hong Kong, Singapore, Thailand, and Malaysia. Hyalein has been showing strong growth in the Japanese market due to minimal competition in this segment in Japan, and holds an impressive 80% share in the Japanese corneal and conjunctival disorders market. However the brand could not attain a similar growth pattern outside Japan.
Key events in the dry eye market

ISTA pharmaceuticals Remura failed to achieve co-primary endpoints in Phase III ISTA is developing Remura, a lower concentration of bromfenac for the treatment of dry eyes. In June 2009, ISTA announced positive Phase II results of Remura. However, in August 2011, ISTA announced that Remura failed to achieve co-primary endpoints in Phase III clinical trials. ISTA, under a common Special Protocol Assessment (SPA) approved by the FDA, is evaluating two concentrations of the drugs in two Phase III studies, EAST and WEST. The co-primary endpoints identified in the SPA required Remura to be better than placebo to a statistically significant level, however in the WEST study this was not acheived. The EAST study is expected to be completed by the end of 2011. The growing prevalence of dry eye syndrome presents ample opportunities for the companies and competition is limited. Although the roadmap for Remura will heavily depend on the results from EAST study but non-approval will be an opportunity lost to break the monopoly of Restasis in the US. 51
Celtic Therapeutic and Resolvyx partnered for developing RX-10045 In January 2011, Celtic Therapeutic Holdings announced the agreement with Resolvyx to develop RX10045. RX-10045 is a synthetic analog of RvE15 being evaluated for the treatment of dry eye syndrome and has completed Phase II clinical trails. Under the terms of the agreement, Celtic will bear the entire development cost of the drug in return of worldwide rights to RX-10045. Celtic will also pay upfront cash and milestone payments to Resolvyx, however the details of the payouts have not been disclosed. In August 2009, Resolvyx announced the results from Phase II studies of RX-10045. RX-10045 showed a substantial dose-dependent improvement from baseline. The improvement was observed in all the symptoms evaluated in the study, including dryness, stinging, burning, grittiness, and ocular discomfort. RX-10045 achieved the primary endpoint and produced a 75% reduction from baseline in CAE-induced staining of the central cornea. Otsuka filed rebamipide for dry eye syndrome in Japan, undergoing Phase II trials in the US In November 2010, Otsuka filed rebamipide for the treatment of dry eye syndrome, while Phase II trials are being conducted in the US. Rebamipide is an amino acid derivative of 2(1H) quinolinone which was initially launched for the treatment of gastric ulcers in 1980 and was later approved for gastric mucosal lesions caused by gastritis. Rebamipide enhances mucosal defense through scavenging free radicals, and activation of cyclooxygenase production. Rebamipide treats dry eye syndrome by inducing the production of mucin which forms an aqueous layer in the eye. Although, currently the competitive intensity in the DES market is low, with only a single prescription drug approved, the scenario is likely to change with a number of compounds in the pipeline. Most of the pipeline compounds are presently in Phase II and Phase III clinical trials except for Santen's Diquas which was approved in 2010 in Japan. The brand is expected to gain momentum after its approval in the US.
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Recently approved/filed drug
Diquas/Prolacria (diquafosol tetrasodium) Santen/Merck & Co. Diquas ophthalmic solution 3% was approved in Japan in April 2010 for the treatment of dry eye. Santen has licensed Diquas from Merck (Inspire) for the development of dry eye. Merck (Inspire) and Allergan were developing diquafosol as Prolacria in the US for dry eye, which failed in Phase III trials. Diquas is the first P2Y2 receptor agonist which has been formulated as an ophthalmic solution and is believed to have a novel mechanism of action to treat dry eye. Diquas acts by stimulating the secretion of mucin and tear fluid from the ocular surface. In the clinical trials conducted in Japan, Diquas improved the symptoms of dry eye through stimulating the secretion of mucin and water, which resulted in getting the tear film in a normal state. Diquas was generally well tolerated with no serious ocular or systemic adverse drug reactions reported during the clinical trials. Mucosta (rebamipide) Otsuka/ Acucela Rebamipide was initially developed as Mucosta in 1990 in Japan for the treatment of gastric ulcers. In November 2010, Otsuka filed the drug for approval in Japan and it is being co-developed with Acucela in the US. The NDA submission in Japan was based on positive Phase III results from a Japanese clinical trial that demonstrated improvements in corneal-conjunctival damage in patients with dry eye and the subjective symptoms including foreign body sensation and eye pain. According to clinicaltrials.gov in February 2011, Acucela and Otsuka completed Phase II trials for rebamipide that evaluated the safety and efficacy of 2% rebamipide compared with placebo in clearing of fluorescein staining of the central cornea in subjects with dry eye syndrome.
Late stage dry eye compounds

RX-10045 Resolvyx/ Celtic Therapeutic RX-10045 is a synthetic analog of RvE1 (resolvins) currently being evaluated in Phase III studies for the treatment of dry eye syndrome. Resolvins are derived from omega-3 essential fatty acids and are known to have strong anti-inflammatory properties. Resolvins are believed to work by activating the body's 53
mechanisms for controlling inflammation. In January 2011, Celtic Therapeutic and Resolvyx announced an agreement to co-develop RX-10045. According to the terms of the agreement, Celtic has acquired and licensed the global rights to RX-10045 in return for an upfront payment, milestone payments, and development costs. In addition, Celtic also has an option to develop RX-10045 in other topical formulations for ophthalmic indications. In August 2009, Resolvyx announced positive results from the 28-day, randomized, placebo-controlled Phase II study. The study that enrolled 232 patients with moderate dry eye syndrome, evaluated the effect of RX-10045 in improving symptoms including dryness, stinging, burning, grittiness, ocular discomfort, and the composite of each patient's most severe symptom (worst symptom score). RX-10045 produced dosedependent, significant improvement in the primary endpoints for both the signs and symptoms of dry eye than placebo. RX-10045 was found to be safe and well-tolerated. Remura (bromfenac ophthalmic) ISTA ISTA is evaluating the potential of a lower concentration of bromfenac, Remura, for the treatment of dry eye. Remura is being developed under a common Special Protocol Assessment (SPA) approved by the FDA. The product is undergoing Phase III studies in the US. ISTA conducted two Phase III EAST and WEST studies which are expected to be completed by end of 2011. The co-primary endpoints were to achieve a statistically significant improvement in one sign and one symptom of dry eye disease at day 42 versus placebo and not baseline. In August 2011, the company announced that Remura has missed the co-primary endpoints in WEST study. The results from EAST studies are expected by the end of 2011. Based on the leanings from WEST study, ISTA may amend the statistical plan in the EAST study. The company said that the higher concentration of Remura in the WEST study achieved statistical significant improvement as compared with placebo in the sign of conjunctival staining as measured by the LG test among a sub-population of female patients aged between 51-70 years with moderate dry eye disease.
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Chapter 4 Retinal diseases

Summary
The retinal disease segment which includes age-related macular degeneration (AMD), diabetic retinopathy (DR), diabetic macular edema (DME) and retinal vein occlusion (RVO) was valued at $3.5bn in 2010, and will be the fastest growing area with a CAGR of 14.1% to 2016. The advanced AMD population will grow by 11% to 3.3m in the 7MM between 2010 and 2016 due to the aging population. Lucentis (Novartis, Roche) is indicated for the treatment of wet AMD and accounted for 83% in the retinal disease market with 2010 sales of $2.9bn. Off-label use of Roche/Genentechs Avastin for wet AMD is impinging on Lucentis sales. The pipeline compounds Avastin (Phase III) and Eylea (filed) pose significant threat to market leading position of Lucentis. While Avastin scores in terms of lower pricing over Lucentis, Eylea offers a less frequent dose of bi-monthly injection than monthly injection of Lucentis. The current standard of care for diabetic retinopathy and diabetic macular edema (DME) involves laser photocoagulation, as well as adjuvant dietary and glycemic control measures. However, physicians also use off-label intravitreal treatment to suppress pronounced edema in patients for whom laser therapy cannot be performed. Novartiss Lucentis was the first product to gain approval for the treatment of visual impairment due to diabetic macular edema (DME). Lucentis was granted approval for the treatment of DME in January 2011 in the Europe. AMD has a rich pipeline; key products include Avastin, Eyelea, and lluvein.
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Age-related macular degeneration

Age-related macular degeneration (AMD) is caused by the accumulation of cellular debris called drusen between the choroid and the macula (retina) or extrusive growth of blood vessels beyond the choroid. AMD is one of the leading causes of irreversible vision impairment. Advanced age, smoking, and family history of the disease are the main risk factors. AMD can be classified as wet or dry. The formation of drusen is called dry AMD and the neovascularized form is called wet AMD. Although the dry form accounts for as much as 90% of AMD cases, transformation to the wet form can happen at any stage of the disease. 90% of AMDrelated blindness occurs in patients suffering from the wet form. Dry AMD occurs due to the breakdown of light-sensitive cells in the macula which progressively lead to blurring the central vision, referred to as geographic atrophy. Dry AMD can be classified as early,
intermediate and advanced depending upon the severity of the disease. The most common symptom of dry AMD is blurred vision. Dry AMD can either start in one eye or may affect both eyes. The development of abnormal blood vessels behind retina under macula is referred to as wet AMD. The initial symptom of wet AMD is the wavy appearance of straight lines and development of a blind spot, which results in the loss of central vision.

Dry AMD has no specific treatment measures and is generally managed by nutritional supplements such as zinc, copper and vitamins (C, E and A). Wet AMD can be classified based on the pattern of leakage demonstrated in fluorescein angiography (FA). The diagnostic method measures the extent of neovascularization as predominantly classic (25%), minimally classic (35%) or occult (40%). In classic forms of AMD, the lesion is 100% differentiable in FA while, in the minimally classic form, diagnostic differentiation of the lesion is between 1% and 50% only. Finally, in the occult form, none of the lesions are clearly defined; this is the least aggressive form of AMD. Wet AMD patients may also draw clinical benefits from daily nutritional supplements prescribed for the dry form. The more defined treatment strategies for wet AMD include laser photocoagulation, Visudyne 56
photodynamic therapy (PDT) and anti-VEGF therapy (Lucentis and Macugen). Although laser photocoagulation is often considered the most effective method for the management of AMD, anti-VEGF therapy has significantly captured physicians' attention and is used currently as a first-line treatment measure. Visudyne PDT is currently used only in the predominantly classical forms of wet AMD. Apart from these options, physicians have frequently resorted to using Avastin, even though the drug is not approved for AMD. In addition, retina specialists practice co-administration of Kenalog injection, which is a steroid with anti-neovascular properties.. Epidemiology AMD is the leading cause of blindness among European-descended people older than 65 years. The prevalence of AMD increases with age, with more than 15% of the white women over 80 years having neovascular AMD and/or geographic atrophy. More than 8m individuals in the US had drusen measuring 125m or larger and are therefore associated with almost 6% risk of developing advanced form of AMD over five years. The aging population will be the main driver of AMD patient numbers for the forecast period. The disease is more prevalent among white than black persons (Friedman et al., 2004).
Table 11: Prevalence of advanced dry AMD in the 7MM, 2010
Country France Germany Italy Spain UK EU 5 US Japan Total
Prevalence (000s) 302 405 323 208 267 1,504 1,180 241 2,925
Prevalence (%) 0.5 0.5 0.5 0.4 0.4 0.5 0.4 0.2 0.4
Share (%) 10.3 13.8 11.0 7.1 9.1 51.4 40.3 8.2 100.0
BUSINESS INSIGHTS
Table 12 presents the prevalence of drusen>125 m in the 7MM in 2010 57
Table 12: Prevalence of drusen>125 m in the 7MM, 2010
Prevalence (000s) 2,439 3,449 3,622 1,719 2,237 13,467 8,788 4,305 26,561
Prevalence (%) 3.8 4.2 6.0 3.7 3.6 4.3 2.8 3.4 3.5
Share (%) 9.2 13.0 13.6 6.5 8.4 50.7 33.1 16.2 100.0
Note: Drusen is one of the early signs of dry AMD

BUSINESS INSIGHTS
Table 13 presents the prevalence of neovascular AMD in the 7MM in 2010
Table 13: Prevalence of neovascular AMD in the 7MM, 2010
Prevalence (000s) 484 643 537 331 422 2,417 1,475 391 4,283
Prevalence (%) 0.7 0.8 0.9 0.7 0.7 0.8 0.5 0.3 0.6
Share (%) 11.3 15.0 12.5 7.7 9.9 56.4 34.4 9.1 100.0
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Forecast epidemiology of dry AMD Table 14 presents the forecast epidemiology of presence of drusen>125 m across the 7MM through 2016.
Table 14: Forecast epidemiology of advanced dry AMD in the 7MM, 2010
2010 France Prevalence (000s) Prevalence (%) Germany Prevalence (000s) Prevalence (%) Italy Prevalence (000s) Prevalence (%) Spain Prevalence (000s) Prevalence (%) UK Prevalence (000s) Prevalence (%) EU5 Prevalence (000s) Prevalence (%) US Prevalence (000s) Prevalence (%) Japan Prevalence (000s) Prevalence (%) Total Prevalence (000s) Prevalence (%) 2,925 0.4 241 0.2 1,180 0.4 1,504 0.5 267 0.4 208 0.4 323 0.5 405 0.5 302 0.5
2011 309 0.5 415 0.5 330 0.5 235 0.5 271 0.4 1,560 0.5 1,197 0.4 246 0.2 3,003 0.4
2012 316 0.5 422 0.5 336 0.5 241 0.5 275 0.4 1,590 0.5 1,214 0.4 251 0.2 3,054 0.4
2013 322 0.5 429 0.5 342 0.6 247 0.5 279 0.4 1,618 0.5 1,231 0.4 255 0.2 3,104 0.4
2014 327 0.5 438 0.5 348 0.6 253 0.5 283 0.4 1,648 0.5 1,248 0.4 259 0.2 3,155 0.4
2015 332 0.5 450 0.6 353 0.6 258 0.5 287 0.4 1,680 0.5 1,269 0.4 263 0.2 3,212 0.4
2016 336 0.5 462 0.6 359 0.6 263 0.5 292 0.5 1,712 0.5 1,290 0.4 267 0.2 3,269 0.4
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Table 15 presents the forecast epidemiology of presence of drusen>125 m across the 7MM through 2016. Table 15: Forecast epidemiology of drusen>125 m in the 7MM, 2010
2010 France Prevalence (000s) Prevalence (%) Germany Prevalence (000s) Prevalence (%) Italy Prevalence (000s) Prevalence (%) Spain Prevalence (000s) Prevalence (%) UK Prevalence (000s) Prevalence (%) EU5 Prevalence (000s) Prevalence (%) US Prevalence (000s) Prevalence (%) Japan Prevalence (000s) Prevalence (%) 7MM total Prevalence (000s) Prevalence (%) 26,561 3.5 4,305 3.4 8,788 2.8 13,467 4.3 2,237 3.6 1,719 3.7 3,622 6.0 3,449 4.2 2,439 3.8
2011 2,483 3.8 3,499 4.3 3,667 6.0 1,755 3.8 2,267 3.6 13,671 4.3 8,944 2.9 4,399 3.5 27,014 3.6
2012 2,526 3.9 3,543 4.4 3,709 6.1 1,789 3.8 2,299 3.6 13,865 4.4 9,108 2.9 4,493 3.6 27,466 3.6
2013 2,568 3.9 3,582 4.4 3,750 6.1 1,824 3.9 2,330 3.7 14,055 4.4 9,275 2.9 4,581 3.6 27,912 3.7
2014 2,607 3.9 3,631 4.5 3,793 6.1 1,859 3.9 2,360 3.7 14,251 4.5 9,440 2.9 4,663 3.7 28,354 3.8
2015 2,642 4.0 3,686 4.6 3,835 6.2 1,894 3.9 2,391 3.7 14,449 4.5 9,618 3.0 4,731 3.8 28,797 3.8
2016 2,675 4.0 3,741 4.6 3,877 6.3 1,931 4.0 2,420 3.8 14,645 4.5 9,794 3.0 4,786 3.9 29,224 3.9
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Forecast epidemiology of wet AMD Table 16 presents the forecast epidemiology of wet AMD across the 7MM through 2016
Table 16: Forecast epidemiology of wet AMD in the 7MM, 2010
2010 France Prevalence (000s) Prevalence (%) Germany Prevalence (000s) Prevalence (%) Italy Prevalence (000s) Prevalence (%) Spain Prevalence (000s) Prevalence (%) UK Prevalence (000s) Prevalence (%) EU5 Prevalence (000s) Prevalence (%) US Prevalence (000s) Prevalence (%) Japan Prevalence (000s) Prevalence (%) 7MM total Prevalence (000s) Prevalence (%) 4,283 0.6 391 0.3 1,475 0.5 2,417 0.8 422 0.7 331 0.7 537 0.9 643 0.8 484 0.7
2011
2012
2013
2014
2015
2016
496 0.8
507 0.8
516 0.8
525 0.8
532 0.8
539 0.8
656 0.8
666 0.8
676 0.8
690 0.9
709 0.9
729 0.9
548 0.9
558 0.9
567 0.9
577 0.9
587 0.9
596 1.0
340 0.7
348 0.7
357 0.8
365 0.8
372 0.8
380 0.8
429 0.7
434 0.7
440 0.7
446 0.7
452 0.7
458 0.7
2,468 0.8
2,513 0.8
2,556 0.8
2,602 0.8
2,652 0.8
2,701 0.8
1,496 0.5
1,517 0.5
1,539 0.5
1,560 0.5
1,586 0.5
1,612 0.5
396 0.3
400 0.3
403 0.3
406 0.3
410 0.3
413 0.3
4,360 0.6
4,430 0.6
4,499 0.6
4,568 0.6
4,648 0.6
4,726 0.6
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Diabetic retinopathy and diabetic macular edema

Diabetes is the root cause of the development of several eye disorders. The most prominent among them, based on severity, is diabetic retinopathy (DR), which involves the pathologic modification of retinal blood vessels. DR has four stages, each showing increasing severity of symptoms. Figure 6 lists these four stages and describes the associated symptoms and characteristics, and thus the progression of the disease.
Figure 6:
Stages of progression of diabetic retinopathy

Stages of DR 4 Proliferative retinopathy Symptoms/Characteristics Continued neovascularization leading to leakage of blood
3
Severity
Severe nonproliferative retinopathy
Neovascularization originating from Ischemia
Moderate nonproliferate retinopathy
Blockage of vessels leading to local ischemic zones
1
Mild nonproliferative retinopathy
Microaneurysms
BUSINESS INSIGHTS
Non-proliferative DR forms the earliest phase of the disease and extends from aneurysms, through vessel blockage, to the neovascularization of the affected tissue site. The proliferative form of the disease is more severe as its exudative nature causes swift progression of visual impairment. NHS data indicates that the number of non-proliferative DR cases is about 2025 times that of proliferative DR cases. Both type 1 and type 2 diabetic patients are at risk of developing DR. Diabetes and DR can often lead to macular edema, which involves swelling of the retinal layer at the macula due to perfusion of the tissue with plasma from the microvasculature. Edema can also result from dilated retinal vessels. According to NEI around 50% of the patients with proliferative retinopathy also have macular edema. 62

The tests used to detect DR and DME include: Visual acuity test measures the resolution of sight. Dilated eye exam The test uses an eye drop to dilate the eyes and retina and physician examine the damage using a magnifying lens. Tonometry The test measures the pressure inside the eye Fluorescein angiogram In this test, a dye is injected into the eyes to identify leaking blood vessels.
The current standard of care for DR and diabetic macular edema (DME) involves laser photocoagulation, as well as adjuvant dietary and glycemic control measures. Apart from laser therapy, physicians also use offlabel intravitreal treatment to suppress pronounced edema in patients for whom laser therapy cannot be performed. The drugs used as off-label treatment to DME includes Lucentis, Avastin and Trivaris. In 2009, Ozurdex was approved for the treatment of macular edema following RVO. Recently, Lucentis has also been approved in the EU, for the treatment of visual impairment due to macular edema secondary to retinal vein occlusion. Epidemiology The global prevalence of diabetes as estimated by the WHO is 2.8%. According to the International Diabetes Federation prevalence estimates, Type 2 diabetes accounts for 95% of all of these cases. According to the American Diabetes Association and literature review conducted by Scanlon and Stratton for the NHS, nearly all type 1 and 4060% of type 2 cases have associated retinopathy. DME, one of the manifestations of DR, is found in approximately 10% of all diabetic persons. The prevalence of DME is, however, dependent on the severity of DR apart from the duration of diabetes. Its incidence is significantly higher in persons suffering from proliferative DR. An international population-based study of pooled data from general and diabetic populations in the United States, Australia, Europe and Asia concluded that the overall prevalence of DR and DME was 1.5% and 0.3% respectively in 2010. Diabetic retinopathy was diagnosed from fundus photography and pooled 63
prevalence was age-sex standardized to the 2010 world diabetes populations. The study was presented in 2011 Annual Meeting of the ARVO.
Table 17: Global prevalence of diabetic retinopathy and diabetic macular edema, 2010
Disease Diabetic retinopathy Proliferative diabetic retinopathy Diabetic macular edema Vision-threatening diabetic retinopathy
Prevalence (m) 101 21 21 33
Prevalence (%) 1.5 0.3 0.3 0.5
Source: Association for Research in Vision and Ophthalmology (ARVO)
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Market landscape
The market for retinal diseases including AMD and DME is expected to increase due to the growing prevalence of these diseases. In 2010, the overall market fro retinal disease was estimated to be $3.5bn, of which AMD represented the largest share with a single drug, Lucentis generating a revenue of $2.9bn. Ocular anti neo-vascularization products help in the prevention of extrusive pathological growth of blood vessels between the choroid and the macula in wet AMD. Currently, there are only three drugs approved for the treatment of wet AMD: an anti-VEGF monoclonal antibody (Roche/Novartis' Lucentis), a light activated drug (Novartis' Visudyne), and an aptamer (Pfizer/OSI's Macugen). The US launch of Novartis' Macugen in 2005 (followed by an EU launch in 2006) played an important role in significantly shifting physicians' attention from the photo-activated destruction of neovasculature to anti-angiogenesis. However, Macugen failed to derive considerable benefits from its early-to-launch advantage, due to the FDA's approval of Lucentis in the following year (with an EU launch in 2007). In addition, the unavailability of alternate therapy options in the market and physician preference has triggered increased off-label use of Roche/Genentech's Avastin for the indication. Moreover, Avastin is much cheaper at ocular doses than Lucentis.

Lucentis (ranibizumab) Roche/Novartis Lucentis gained significant traction due to its superior efficacy and range of activity across wet AMD subtypes compared with Visudyne photodynamic therapy (PDT) and aptamers (Macugen). Originally discovered by Genentech, the ex-North American rights to the drug were later licensed to Novartis. Trials investigating the efficacy of Lucentis in wet AMD involved close to 6,500 participants spread across the globe. The BLA filed in late 2005 received approval within six months (equivalent to that during a priority review) based on the results of these trials and especially that of the pivotal MARINA trial, which demonstrated impressive gains in visual acuity. The MARINA trial compared the dose-related improvement in vision with a sham injection. Another Phase III trial (ANCHOR), the results of which were announced in January 2006 at that year's Macula conference, compared the efficacy of Lucentis with that of Visudyne PDT. The results demonstrated an 18-letter improvement in vision with 0.3mg Lucentis and a 21-letter improvement with 0.5mg Lucentis compared with Visudyne. Clinical investigations also involved addition of 65
Lucentis to Visudyne PDT (the FOCUS trial). Later evaluations revealed a substantial improvement in efficacy benefit and largely reduced subsequent administrations. Further trials such as PIER and PRONTO successfully evaluated the reduced frequency of Lucentis dosing. These trials demonstrated that Lucentis' injection frequency could be reduced to as low as five or six times per year. Postmarketing analysis revealed that AMD patients required three to four injections during the first four months of treatment followed by an average three injections during the remaining eight months. Lucentis use is not free of adverse effects. The drug has an associated risk of cerebrovascular events such as strokes in elderly patients. In January 2011, the brand was approved for the treatment of visual impairment due to diabetic macular edema. In July 2011, Lucentis was approved for additional indication in Europe to treat visual impairment due to macular edema secondary to retinal vein occlusion. Roche/Novartis' Lucentis captured sales of $2.9bn and dominated the ANV market in 2010. However, Lucentis faces stiff competition from off-label use of Avastin for the treatment of wet AMD. Moreover, the approval of Avastin will pose significant threat to the market leading position of Lucentis. Macugen (pegaptanib) Pfizer Pfizers Macugen, a PEGylated synthetic aptamer administered intravitreously, demonstrated inhibition of VEGF165 function and suppression of vision-loss progression in wet AMD. Originally developed by Eyetech, OSI procured the rights to Macugen with its acquisition of Eyetech. Later, Pfizer secured the license for development and commercialization of Macugen. OSI/Pfizer evaluated the efficacy of Macugen in the VISION trial series. The trial initially randomized participants to receive either Macugen or a sham injection every six weeks for 54 weeks. Afterwards, the groups were re-randomized to continue or discontinue their medication for a year. Fluorescein angiography (FA) examinations demonstrated slower lesion growth than the sham injection and improvements in visual acuity as early as six weeks into the trial. Despite the treatment securing approval and becoming the first anti-angiogenesis drug for the treatment of wet AMD, its sales have been severely affected following the launch of Lucentis in 2006 even though Lucentis was introduced at a higher price point than Macugen. This was primarily due to the superior efficacy of Lucentis.
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Visudyne (verteporfin) Novartis Sales of Novartis' Visudyne, which in 2000 became the first drug approved by the FDA for the treatment of wet AMD, continued to decline due to its limited therapeutic applications and high costs of therapy. Visudyne PDT treatment is comprised of two stages: the initial intravenous administration of the drug and then its photoactivation with nonthermal red light. Verteporfin, the active ingredient of Visudyne, attaches to the lipoproteins present in rapidly proliferating cells. The molecule traps light energy and excites oxygen within the cellular compartment into short-lived free radicals. These oxygen radicals cause photoactivation damage of the tissues involved. In blood vessels, this destroys occlusions and prevents further neovascularization. Although Visudyne tends to preferentially accumulate in neovasculature, including that in the choroid, the risk of peripheral damage remains. Therefore, the damage of collateral macular tissue due to photoactivation is unavoidable. Moreover, photoactivation with light may also cause damage to the eyes. In addition, Visudyne PDT requires clinics to maintain costly photosensitization machinery and skilled personnel to conduct therapy. Further adding to costs, neovascularization may not subside with a single session of PDT; the reduction of neovasculature to a quiescent scar requires two to three additional sessions. Transient skin sensitivity to bright light, acute onset and transient back pain, and rare acute visual deterioration are other adverse effects associated with Visudyne PDT. The unique mechanism of action of Visudyne, involving destruction of neovasculature, is also its biggest drawback, limiting it to the effective treatment of predominantly classic wet AMD. The placebo-controlled TAP trials, which led to the approval of Visudyne for the treatment of predominantly classical wet AMD in the US, underlined this limitation. Although the sham-controlled VIP trial demonstrated efficacy in the treatment of occult wet AMD, the difference between the drug and the sham treatment was not as significant as it was in the TAP trial. Moreover, only lesions less than four disc areas in size achieved clinically significant response with Visudyne PDT. Visudyne recorded sales of $66m in 2010, at a Y-o-Y decline of 22% and the brands commercial potential will further decline due to the acceptance of VEGF therapies over photodynamic therapy.
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The key pipeline compounds for AMD will change the dynamics of the AMD market. Both the pipeline compounds, Avastin and Eylea pose significant threat to the market leading position of Lucentis. Avastin, on one hand, benefits the patients in terms of being more cost effective than Lucentis, while Eylea is superior to Lucentis in terms of dosage frequency. The prevalence of AMD is expected to increase with the aging population, which has led to an increased focus on the R&D in this segment. With around 109 molecules under development, AMD leads the entire ophthalmic pipeline. Combination products are gaining traction for the treatment of wet AMD as a combination product is expected to result in better visual acuity results than the monotherapy. Avastin (bevacizumab) Roche/Genentech Overview Avastin was approved in 2004 for first-line therapy for metastatic colorectal cancer (mCRC) and has since gained approval for multiple other indications. Physicians have frequently resorted to off-label use of Avastin for the treatment of wet AMD. Avastin is presently undergoing clinical evaluation for a variety of ophthalmic indications including AMD, DME, and DR in separate trials. Roche is not developing Avastin for the treatment of AMD and other eye disease as Avastin is cannibalizing sales of Lucentis, Roches key product for treating AMD. Avastin is under investigation for retinal vein occlusion (RVO) in trials sponsored by government agencies in several countries. The US National Eye Institute (NEI) is funding the Phase III CATT study, comparing Avastin and Lucentis in wet AMD. Earlier, Avastin was used off-label for wet AMD management until Genentech undertook measures to curb such treatment strategies. Genentech/Roche and Novartis have raised concern over the safety of Avastin for the treatment of AMD. Clinical trials In January 2008, NEI initiated the Comparison of AMD Treatments Trials (CATT) in a multi-center randomized clinical trial to assess the relative safety and efficacy of Avastin vs Lucentis for the treatment of neovascular AMD. CATT is being conducted in 59 clinical centers. The preliminary results from the first head-to-head study of Lucentis and Avastin showed that Avastin has similar efficacy in treating neovascular AMD. The study enrolled 1,208 patients with neovascular AMD aged 50 years and above. The clinical trial 68
had four treatment regimens, Lucentis 0.50mg on a fixed schedule, Avastin 1.25mg on a fixed schedule, Lucentis 0.50mg on a variable schedule, and Avastin 1.25mg on a variable schedule. The primary endpoint of the CATT trial was improvement in visual acuity. Results of the study after a year showed the similar improvement in visual acuity by both drugs. Similar death rate, myocardial infarction and stroke were observed for both drugs. However, Avastin was found to be associated with higher incidence of systemic adverse events. The CATT study will evaluate the longer-term effects of the drugs on vision and safety through a second year of treatment. Commercial prospect The positive preliminary results of CATT trials have demonstrated equivalence in both the drugs, however, the cost of Lucentis is 40 times higher than Avastin. A single dose of Lucentis costs $2,000 while Avastin treatment costs only $50-100, a difference of $23,400 per patient annually. If approved, Avastin will change the entire market dynamics and the decline in sales revenue will offset the growth estimated from the growing prevalence of AMD. Roche/Genentech/Novartis are not in favor of using Avastin for the treatment of AMD as Avastin does not contain preservatives, so keeping it sterile into small quantities may be difficult. Lucentis does have some advantages over the Lucentis - it has a longer half-life which may lead to greater side-effects. Secondly Lucentis binds more strongly to VEGF than Avastin. Although the approval of Avastin will not impact Lucentis sales in the short run as patients already undergoing Lucentis treatment may not be shifted to Avastin immediately, Roche has started its lifecycle management strategies for Lucentis for treatment of AMD and is conducting clinical trials with a higher dose of Lucentis 2.0mg to evaluate the efficacy of higher dose in improving visual acuity or reducing dosing frequency. Eylea/VEGF Trap-Eye (aflibercept) Bayer/ Regeneron Overview Eylea is a fusion protein combining the binding sites of VEGF receptors 1 and 2, with the ability to bind to both VEGF and placental growth factor. VEGF Trap-Eye is a purified form of this fusion protein formulated for intravitreal administration. Local administration of VEGF Trap-Eye allows the drug to bypass the blood-
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ocular barrier and bind VEGF molecules active in the ophthalmic region to prevent the formation of pathologic neovascular complexes in the macula. In October 2006, Regeneron and Bayer formed an ex-US co-development and commercialization alliance for VEGF Trap-Eye. However, Regeneron retained the US rights. Clinical trials The results of a double-blind Phase II trial indicated improvements in visual acuity, retinal thickness and active choroidal neovascularization lesion size, for up to a year. Initially, patients received either monthly or quarterly doses of 2.0mg or 0.5mg of VEGF Trap-Eye for 12 weeks and then continued to receive the medication pro re nata for another 40 weeks. These participants achieved mean improvements in visual acuity versus baseline of 9.0 letters (p<0.0001 versus baseline) and 5.4 letters (p<0.085 versus baseline), respectively, at the end of one year. Additionally, VEGF Trap-Eye raised the proportion of patients with 20/40 vision or better from 23% at baseline to 45% in the 2mg group and from 16% at baseline to 47% in the 0.5mg group. Participants also achieved mean reduction in retinal thickness versus baseline of 143 (p<0.0001 versus baseline) and 125 (p<0.0001 versus baseline) at the end of the trial period. During the 40-week pro re nata period, patients in the 2mg group received an average of 1.6 additional injections and those in the 0.5mg monthly group received 2.5. In February 2011, Regeneron submitted priority review biologics license application (BLA) for Eylea and in June Bayer submitted the marketing application of Eylea in seven European countries and Japan. The submission was based on the positive results of two randomized, double-blind, multi-centre Phase III trials, VIEW 1 and VIEW 2. The VIEW 1 study randomized 1,217 patients and was conducted in the US and Canada by Regeneron under a Special Protocol Assessment (SPA) with the FDA. The VIEW 2 study randomized 1,240 patients, and was conducted in Europe, Asia Pacific, Japan, and Latin America by Bayer. The study designs for both the clinical trials were similar and included the primary endpoint evaluation at 52 weeks. Both the clinical trials evaluated Eyleas effect on maintaining and improving vision when dosed at 0.5mg monthly, 2mg monthly, or 2mg every two months (following three monthly loading doses), as compared with 70
intravitreal ranibizumab administered 0.5mg monthly during the first year of the studies. As-needed dosing (PRN) with both treatment therapies is being evaluated in the second year of the studies. Eylea was found to be non-inferior to Lucentis in maintaining vision. Commercial prospect Regeneron intends to enter in the high growth AMD market through Eylea. If approved, Eylea will compete with Lucentis and off-label Avastin for the treatment of wet AMD. Eylea differentiates itself from the other two drugs through its less frequent dosing and mechanism of action. The presently available treatments are monoclonal antibodies to VEGF, while Eylea is a fusion protein combining the binding sites of VEGF receptors 1 and 2, with the ability to bind to both VEGF and placental growth factor. Moreover, Lucentis is administered monthly while Eylea will have eight week dosing schedule with initial three monthly doses. The commercial success of Eylea, to a large extent, will depend upon the results of CATT trials and the pricing of the drug. However, even if Eylea is priced at the same level as Lucentis, the overall cost of treatment will be low due to less frequency of dosing. Eylea will initially aim to target new AMD patients as physicians may not be willing to switch the treatment therapy immediately, if patients are showing improvement on current therapies. VEGF Trap-Eye in Phase III clinical development for the treatment of CRVO Regeneron conducted COPERNICUS (controlled Phase III evaluation of repeated intravitreal administration of VEGF Trap in central retinal vein occlusion: utility and safety) trial, while Bayer conducted GALILEO (general assessment limiting infiltration of exudates in central retinal vein occlusion with VEGF Trap-Eye) study to evaluate the VEGF Trap-Eye for the treatment of CRVO. In both the studies patients were given six monthly intravitreal injections of either VEGF Trap-Eye 2.0mg or sham control injections. The primary endpoint was the improvement in visual acuity as compared with baseline. After six months, patients were dosed on a PRN basis for additional six months. In the COPERNICUS trial, 56.1% patients treated with VEGF Trap-Eye gained at least 15 letters of vision from baseline as compared with 12.3% of patients receiving sham injections (p<0.0001). In the Galileo trial 60.2% of patients on monthly 2mg dose of VEGF Trap-Eye gained at least 15 letters of vision from baseline as compared with 22.1% of patients receiving
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sham injections (p<0.0001) at week 24. While Regeneron intends to file VEGF Trap-Eye for the treatment of central retinal vein occlusion (CRVO) in the second half of 2011, Bayer plans submit a marketing application for this indication in Europe in 2012. VEGF Trap-Eye also being evaluated for DME A Phase II DA VINCI (DME and VEGF Trap-Eye: investigation of clinical impact), double-blind, randomized, controlled trial evaluated four doses of VEGF Trap-Eye as compared with focal laser for treatment of DME. Patients treated with VEGF Trap-Eye achieved statistically significantly greater mean improvements in visual acuity (8.5 to 11.4 letters) as compared with patients treated with focal laser therapy (2.5 letters gained) at week 24 (p< 0.01 for each VEGF Trap-Eye group versus focal laser). Iluvien (fluocinolone acetonide intravitreal insert) Alimera/ pSivida Overview Iluvien (fluocinolone acetonide intravitreal insert) is an innovative injectable intravitreal insert being evaluated for the treatment of DME. Iluvien is presently under review by the FDA and seven other European authorities. Iluvien is a tiny, cylindrical polyimide tube containing 190g of fluocinolone acetonide (FAc), a corticosteroid known for the treatment of ocular diseases. The FA is released through a proprietary membrane and is delivered at the back of the eye at a sustained, very low dose for up to three years. Iluvien is inserted through a proprietary 25-gauge injector system and the incision heals following delivery of Iluvien. Clinical trials The filings were based on two Phase III studies known as FAME. The study enrolled 956 patients in North America, Europe and India to compare low-dose and high-dose Iluvien with placebo in identically designed trials. The high dose of Iluvien releases 0.45g of FA per day at the start of the treatment, and was reduced to 0.15g over 1218 months. The therapeutic effect of the high-dose insert is maintained for two years. The low-dose insert release 0.23g FA daily, which was reduced to 0.15g. The therapeutic effect of the lowdose insert is maintained for three years. The primary endpoint was to measure the percentage of patients with an improvement of best corrected visual acuity (BCVA) from baseline, 15 more letters on the ETDRS eye chart at month 24 compared with 72
placebo. At month 24, around 28.6% of patients on high-dose, and 28.7% of patients receiving low-dose achieved the primary endpoint as compared with 16.2% of patients on placebo. Of the 186 patients that received treatment for 30 months, 39.8% of patients treated with low-dose Iluvien achieved a 15-letter improvement from baseline, as compared with 17.5% on placebo (p=0.002). High doses of Iluvien, was associated with high incidence of adverse events thus Alimera did not file the high-dose insert for approval. In February 2011, Alimera announced top-line results from the two 36-month trials of Iluvien in DME. Although Iluvien did not achieve a statistically significant improvement in the primary efficacy endpoint in the two individual trials, it achieved statistical significance in the pooled data. Commercial prospect If approved, Iluvien will become the first approved drug for the treatment of DME in the US. However, other drugs are used off-label for the DME indication. Alimera plans to market the product itself in the US and aims to target 1,600 retinal specialists in the US. However, in the markets outside the US, Alimera may want to comarket the product. There is no near term threat to the brand after its launch as most of the drugs for DME are in early stage of development except for Lucentis which may be filed by the end of 2011. Iluvien is also being studied in Phase II trials for the treatment of AMD and RVO. Ozurdex (dexamethasone) Allergan Ozurdex, an extended-release biodegradable ocular implant, was approved by the FDA for the treatment of macular edema following branch retinal vein occlusion (BRVO) or central retinal vein occlusion (CRVO) in July 2009. It was later approved in Europe in 2010. Allergan bought the rights to Ozurdex from Oculex Pharmaceuticals in 2003. Ozurdex uses Allergan's Novadur solid polymer delivery system and is positioned in the vitreous cavity at the back of the eye. The company claims that Ozurdex improves visual acuity within the first two months of insertion and remain there for one to three months after onset. In September 2010, Ozurdex was approved in the US for the treatment of non-infectious ocular inflammation, or uveitis by the FDA.
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The safety and efficacy of Ozurdex for the treatment of DME is being evaluated in Phase III trials. According to clinicaltrials.gov, the study is ongoing, but not recruiting participants and there have been no updates since July 2009. The study is estimated to be completed by 2014. NT-501 Neurotech NT-501, an intraocular implant, consists of human cells genetically modified to secrete ciliary neurotrophic factor (CNTF). NT-501 acts by controlled and sustained delivery of CNTF dose at the back of the eye through Neurotechs proprietary Encapsulated Cell Therapy (ECT) platform. The main advantage of ECT technology is that the drug is delivered directly to the retina bypassing the blood-retina barrier. CNTF is a nerve growth factor and inhibits degeneration of photoreceptors. In September 2008, Neurotech received fast track designation by the FDA for NT-501 in the treatment of dry AMD. In March 2009, Neurotech announced the positive results of its Phase II clinical trial. Neurotech conducted a multicenter, double-blind, placebo-controlled, dose-ranging Phase II clinical study for the treatment of visual loss in the dry form of age-related macular degeneration (dry AMD). The study enrolled 51 patients with geographic atrophy which randomly received either a high or low dose of NT-501 implant or sham surgery. The primary endpoint of the study was the change in best corrected visual acuity (BCVA) at 12 months. NT-501 significantly slowed the loss of vision in patients with geographic atrophy (GA). If approved, the drug will become the first approved drug for the treatment of GA. Dry AMD is the most common form of AMD accounting for nearly 90% of all AMD cases. The advanced form of dry AMD leads to the degeneration of photoreceptors called GA.
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Chapter 5 Other ophthalmic indications

Summary
Cataracts are the leading cause of blindness globally (although this does not hold in developed countries). There are no pharmaceutical treatments for cataracts, and surgery is the most effective method for their management Ocular anti-allergic drug preparations are used to manage allergic manifestations in the eye, or ocular allergies. Although there are several types of allergies associated with the eye, the most common and severe are those associated with the conjunctiva, such as conjunctivitis. Alcon's Patanol/Pataday (olopatadine) was among of the leading anti-allergic product with combined sales of $539m in 2010, at a Y-o-Y growth of 9.9%. Antibiotics dominate the ophthalmic anti-infectives segment owing to the higher incidence of infections caused by bacteria compared with those caused by viruses. Fluoroquinolones are the preferred antibiotics due to their broad spectrum of activity and the reduced propensity to cause microbial resistance.
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Cataract
A cataract is a gradual, painless congenital or degenerative opacification of the lens. The main symptom is a gradual and painless blurring of vision. There are no pharmaceutical treatments for cataracts, and surgery is the most effective method for their management. However, ophthalmic products find use in close association with cataract surgery. Cataracts are still the leading cause of blindness globally, with developed countries the exception
Diagnosis, treatment, and management

Cataract can be determined using visual acuity test, dilated eye exam and tonometry. Surgical removal of the opaque, cloudy lens and replacement with a lens implant is the most effective method of cataract treatment. There are three types of surgery used in lens replacement: Phacoemulsification (phaco) extracapsular cataract extraction (ECCE) intracapsular cataract extraction (ICCE).
Phaco and ECCE are the most common surgical practices today due to the higher risk of post-surgical infections associated with ICCE. Although surgery is the most effective method for cataract management, pharmaceutical intervention is irreplaceable before or after surgery. The lack of alternatives to surgical intervention for the treatment of cataracts will ensure consistent sales from the associated use of ophthalmic preparations through the forecast period. Drugs generally associated with cataract surgery include antiinfectives, local anesthetics, mydriatics (dilating drops), and cycloplegics (type of mydriatic drop that paralyze the ciliary muscles to keep the pupil dilated). Pre-operative topical anti-infective therapy is given for a day before the surgery. Prior to incising the ocular surface for lens removal, local anesthetics are used to attain topical anesthesia. The pupil is then dilated sufficiently with mydriatics or cycloplegic preparations. Despite the measures taken to avoid infection, endophthalmitis and blepharitis are common following cataract surgery, hence necessitating anti-infective and anti-inflammatory therapy post-surgery as well.
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Ocular anti-allergics
Ocular anti-allergic drug preparations are used to manage allergic manifestations in the eye, or ocular allergies. Although there are several types of allergies associated with the eye, the most common and severe are those associated with the conjunctiva, such as conjunctivitis. There are several types of conjunctivitis, including milder forms such as seasonal allergic conjunctivitis and perennial allergic conjunctivitis, and severe forms such as vernal keratoconjunctivitis, atopic keratoconjunctivitis and giant papillary conjunctivitis. Multi-action anti-allergy products are primarily the drugs of choice for the treatment of ocular allergies due to their double-pronged action. These drugs act as anti-histamines (H1) as well as mast cell stabilizers, thus effectively combining the properties of products such as Livostin and Intal. Decongestants find use in reducing the redness associated with allergic reactions. Novartis, J&J and Allergan are the leading companies in this segment. Infectious diseases of the eye mostly originate from bacterial and viral infections. While infection by protozoa and fungi can also occur, these are rare. Common bacterial infections include bacterial keratitis, blepharitis, chalazia, styes, trachoma and uveitis. Common viral infections include iritis, herpes keratitis and herpes zoster ophthalmicus. Although rare, the most important fungal infection is uveitis. Anti-inflammatory agents are used for the treatment of inflammation arising from various factors such as infections due to bacteria, virus, fungi and so on, as well as allergens and other environmental factors. As mentioned earlier, they are also used in the management of inflammation following ophthalmic surgery. Post-surgical employment of corticosteroids is also used in an attempt to prevent graft rejection in the case of transplantations.

Patanol/Pataday Alcon's Patanol/Pataday (olopatadine) registered combined sales of $539m in 2010, at a Y-o-Y growth of 9.9%. Alcon launched Patanol, a twice-daily formulation, in 1996 and Pataday, a once-daily formulation, in 2007. Pataday's launch successfully extended the lifetime of Patanol and boosted Alcon's ocular allergy franchise. The primary reasons for the success of Alcon's product are two-fold. Firstly, olopatadine's unique two-pronged action captured physician preference over other products. The drug blocks H1 receptors and 77
stabilizes mast cells simultaneously. Secondly, the launch of the first once-daily ophthalmic drops (Pataday) simplified ocular allergy management, which otherwise involved multiple dosage schedules every day. Bepreve (bpotastine) ISTA ISTA launched Bepreve in September 2009 for the treatment of ocular itching associated with allergic conjunctivitis. Bepreve, a non-sedating, highly selective, histamine (H1) receptor antagonist, acts by stabilizing the mast cells thus preventing the allergy cells from breaking and releasing inflammation-causing substances. In 2010, the brand generated sales of $15.7m.
Ophthalmic anti-infectives and anti-inflammatory preparations

A thin line separates the anti-inflammatory and anti-infective market segments in ophthalmic practice, as most forms of ocular inflammatory disease follow infections. This report's definition discounts the use of antiinflammatory preparations following ophthalmic surgery, as this represents a unique case altogether. Infectious diseases of the eye mostly originate from bacterial and viral infections, while infection by protozoa and fungi can also occur, albeit rarely. Common bacterial infections include bacterial keratitis, blepharitis, chalazia, styes, trachoma and uveitis. Common viral infections include iritis, herpes keratitis and herpes zoster ophthalmicus. Although rare, the most important fungal infection is uveitis. Anti-inflammatory agents are used for the treatment of inflammation arising from various factors such as infections due to bacteria, virus, fungi and so on, as well as allergens and other environmental factors. As mentioned earlier, they are also used in the management of inflammation following ophthalmic surgery. Postsurgical employment of corticosteroids is also used in an attempt to prevent graft rejection in the case of transplantations. Most of the key brands in the ophthalmic anti-infectives and anti-inflammatory market have lost patent protection.

Antibiotics primarily dominate the ophthalmic anti-infectives segment owing to the higher incidence of infections caused by bacteria compared with those caused by viruses. The leading antibiotics include fluoroquinolones such as Alcon's Vigamox (moxifloxacin), Santen's Cravit (levofloxacin) and Allergan's 78
Zymar (gatifloxacin). The success of these brands can be attributed to their broad spectrum of activity and the reduced propensity of these products to cause microbial resistance. Since the development of corticosteroids for ophthalmic indications, NSAIDs have steadily replaced corticosteroids for the treatment of ocular inflammation. Corticosteroids often lead to undesirable adverse effects such as elevated IOP and accelerated cataract progression, which are absent with NSAIDs. ISTAs Bromday (bromfenac), a topical non-steroidal anti-inflammatory drug is indicated for the treatment of postoperative inflammation and ocular pain following cataract extractions. Bromday is an improved formulation of Xibrom and is required to be administered once daily. Xibrom was the leading product in ISTAs portfolio, with a share of 62% in companys total revenues in 2010. However, following the patent expiry of Xibrom in 2009, it was exposed to generic threat and with the lunch of Bromday in Q4 2010, ISTA decided to discontinue the marketing of Xibrom in February 2011. Bromday has been granted three-year exclusivity period under the Hatch-Waxman Act as the approval required additional clinical investigations beyond those conducted for Xibroms approval. Bromday is expected to penetrate well in the market due to its dosing advantage as most of the other non-steroid treatments require twice, thrice or even more applications in a day. In 2010, Bromday recorded sales of around $9.4m. TobraDex was the first antibiotic/corticosteroid combination approved by the FDA and Alcon has completely leveraged this first-to-market opportunity. This unique combination also gives the product an edge over others, as ophthalmic infections are often associated with inflammation. Additionally, the FDA's requirement for a demonstration of the combined efficacy of anti-infective/anti-inflammatory formulations rather than the separate utilization of components in clinical investigations has significantly reduced the number of competing product approvals. The biggest disadvantage of TobraDex is the inability of its low-spectrum antibiotic to inhibit gram-positive bacteria and resistance presented by some strains of Pseudomonas. This disadvantage of TobraDex is the key reason behind the success of Novartis' Vigamox and other newer generation fluoroquinolones, which are broad-spectrum antibiotics.
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Moxeza (moxifloxacin) - Alcon Moxeza is a fourth-generation fluoroquinolone antibiotic approved in November 2010 for the treatment of bacterial conjunctivitis. Moxeza acts by inhibiting the bacterial enzyme DNA gyrase (topoisomerase IV). Moxeza claims to have a new formulation that improves bioavailability and provides an increased concentration of drug to the conjunctiva, thus is administered twice-daily. The approval of the drug was based on the positive results of a Phase III study that evaluated the safety and efficacy of Moxeza as compared with placebo for the treatment of bacterial conjunctivitis in patients one month of age or older. The study concluded that Moxeza is superior to placebo. Luveniq (voclosporin) Lux Biosciences Lux Biosciences is developing Luveniq, a novel calcineurin inhibitor for the treatment of noninfectious uveitis. If approved, Luveniq would be the first steroid-sparing agent for the treatment of uveitis in the US. Lux Biosciences has licensed voclosporin from Isotechnika for the development of its ophthalmic indications worldwide, while Isotechnika is developing the product for psoriasis, and kidney transplant patients. Lux Biosciences filed Luveniq in February 2010 for the review in the US and EU markets. The filings were based on results from three Phase III trials LX211-01, LX211-02 and LX211-03 known as LUMINATE trials. LX211-01 met its primary endpoint and demonstrated a significant improvement in vitreous haze while LX211-02 failed to meet its primary endpoint. LX211-03 which evaluated the drug for treatment of active uveitis in the anterior region of the eye also failed to demonstrate a reduction in inflammation that was differentiated from the placebo group efficacy profile. In August 2010, Lux Biosciences received a complete response letter from the FDA requesting an additional clinical trial for the approval of the drug. Following this, Lux Biosciences initiated a Phase III study to assess the safety and efficacy of Luveniq as therapy in subjects with active noninfectious uveitis involving the intermediate and/or posterior ocular segments. The secondary endpoint of the study is to assess the relationship of Luveniq exposure to efficacy and safety parameters. According to clinicaltrials.gov the study is expected to be completed by May 2012. 80
DE-114 (epinastine HCl) Santen Santen is evaluating DE-114 for the treatment of allergic conjunctivitis. On May 30, 2011 Santen started an interventional, double-blind, comparison study of DE-114 ophthalmic solution in patients with allergic conjunctivitis to evaluate its safety and efficacy as compared with placebo and olopatadine hydrochloride 0.1% ophthalmic solution. In addition, Santen is also conducting a long-term study of DE-114 in patients with allergic conjunctivitis. Both studies are presently recruiting participants. Santen is also developing DE-109 as an intravitreal formulation for the treatment of non-infectious uveitis. DE109 contains sirolimus, which acts as a mammalian target of rapamycin (mTOR) inhibitor. DE109 is believed to regulate basic cellular functions including cell proliferation, survival, mobility and angiogenesis. Humira (adalimumab) Abbott Laboratories Humira, a recombinant human IgG1 monoclonal antibody is presently being evaluated in Phase III trials as a subcutaneous formulation for the treatment of non-infectious intermediate, posterior, or pan uveitis. Humira blocks the normal inflammatory and immune responses by binding specifically to Tumor Necrosis Factor (TNF-alpha) and inhibiting its activity with the p55 and p75 cell surface TNF receptors and also lyses surface TNF expressing cells in vitro in the presence of complement. In July 2010, Abbott Laboratories initiated a Phase III multicenter study to compare the efficacy and safety of the Humira in patients with inactive noninfectious uveitis as compared with Placebo. According to clinicaltrials.gov the study is expected to be completed by September 2012. Myfortic/ Decortin H combination Novartis/ STZ eyetrial Novartis is evaluating the efficacy, safety, and tolerability of the combination of mycophenolate sodium (Myfortic) and low-dose Decortin H (corticosteroid) for the treatment of non-infectious intermediate uveitis. A randomized, active control, parallel assignment, and open label Phase III study compares the efficacy, safety and tolerability of the combination as compared with monotherapy with low-dose Decortin H in patients with chronic intraocular inflammation (non-infectious intermediate uveitis). Myfortic contains mycophenolate sodium that blocks biosynthesis of purine nucleotides by inhibition of the enzyme inosine monophosphate dehydrogenase. It averts the proliferation of T-cells, lymphocytes, and the
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formation of antibodies from B-cells, in addition to inhibiting the development of leukocytes to inflammatory sites. Decortin H contains prednisolone sodium succinate that induces lipocortins that antagonize phospholipase A2, an enzyme responsible for causing the breakdown of leukocyte lysosomal membranes to release arachidonic acid and reduce inflammation. The primary endpoint is to measure the time from study entry to first relapse in six months. According to clinicaltrials.gov, the study is presently recruiting participants and the study is expected to be completed by March 2013.
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Chapter 6 Key company profiles

Summary
Novartis was the leading company in the ophthalmic market with 2010 sales of $4.4bn. Novartis' leading sales-generating segment in 2010 was anti-AMD preparations or ocular ANV products, owing to the robust sales of Lucentis, which it co-promotes with Genentech/Roche. Lucentis generated total sales of $2.9bn, of which 51.7% was contributed by Novartis. Strong sales of Lumigan, Restasis, and Ganfort have propelled Allergan to become one of the leading players in the ophthalmic market. Although, combined sales of the Alphagan franchise declined in 2010 due to the generic competition in the US, the sales of Alphagan P 0.1% and Combigan showed modest growth. Merck & Co.'s traction in the global ophthalmic market revolves around Trusopt and Cosopt. The success of Cosopt owes to the greater reduction in IOP it achieves compared with the individual constituents. Sales of these brands are declining rapidly due to their loss of market exclusivity in October 2008. Pfizer was the largest anti-glaucoma preparations marketer in terms of sales until 2010 with Xalatan and Xalacom brands, however the sales of the brand have started to decline following Xalatans patent expiry in March 2011. In Q1 2011, the brands sales declined by 7% on the previous year.
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Introduction
This chapter focuses on the performance of the key leading and emerging players in the global ophthalmic market in 2010. It also provides a detailed description of each company's financial performance, key marketed products, R&D focus and strategic growth analysis. Table 18 lists the leading players in global ophthalmic market in 2010.
Table 18: Leading players of the ophthalmic market, 2010
Company Novartis Allergan Pfizer Roche Santen Pharmaceutical Merck & Co. Others Total
Sales 2010 ($m) 4,396 2,262 1,749 1,398 1,062 484 4,806 16,158
Market share 2010 (%) 27.2 14.0 10.8 8.7 6.6 3.0 29.7 100.00
Leading brands Lucentis/Travatan Restasis Xalatan/Xalacom Lucentis Hyalein Cosopt/Trusopt
Note: * Sales data are not comprehensive and covers only leading ophthalmic products
BUSINESS INSIGHTS
Novartis
Overview
Novartis is engaged in research, development and manufacturing of healthcare products including branded and generic pharmaceuticals, vaccines, and non-prescription consumer healthcare products. In April, 2011, Novartis announced the complete merger of Alcon with Novartis. In July 2008, Novartis partly consummated a deal to execute a purchase and option agreement for Alcon. Following the merger, Novartis realigned its operating structure to include five operating segments, pharmaceuticals, Alcon, Sandoz (generics), consumer health, and corporate. Alcon will include ophthalmic pharmaceutical products and CIBA vision. 84
Novartis operates in approximately 140 countries and is headquartered in Basel, Switzerland. In 2010, Novartis garnered total sales of $50.6bn, an increase of 14% over 2009. The pharmaceutical division was the largest division, contributing 60% of revenues in 2010. The acquisition of Alcon, one of the largest ophthalmic pharmaceutical companies, has strengthened Novartis presence in the ophthalmic market.
Financial performance
Novartis recorded total revenues of $50.6bn, with a Y-o-Y increase of 14% in 2010. Novartis derived most of its sales in the ophthalmic market through its ANV preparations, artificial tears and ocular anti-allergic franchises. The ANV product Lucentis was the top-selling ophthalmic brand in 2010 and garnered 2010 sales of $1.5bn at a Y-o-Y growth of 24%. Novartis (Alcons) glaucoma products showed Y-o-Y increase of 13.1% and generated 2010 sales of $1.3bn. Alcons anti-infective and anti-inflammatory products recorded 2010 sales of $980m showing Y-o-Y growth of 8.2% $980m. With 2010 sales of $539m, ocular allergy products demonstrated Y-o-Y growth of 9.9%.
Marketed product portfolio

Novartis' leading sales-generating segment in 2010 was anti-AMD preparations or ocular ANV products, owing to the robust sales of Lucentis, which it co-promotes with Genentech/Roche. Lucentis generated total sales of $2.9bn, of which 51.7% ($1.5bn) was contributed by Novartis. Lucentis has gained physician confidence as a first-line therapy while the prescription status of Visudyne was reduced to restricted treatment of only predominantly classic wet AMD. Visudyne, developed through Novartis' in-house research, has failed to capture physician confidence for treatment across AMD types due to limited efficacy. Through Alcon, the product portfolio of Novartis expanded to include products catering to all indications within the ophthalmic market. The combined sales of Travatan, Travatan Z, Azopt, Azarga and Duotrav accounted for 39.8% of Alcons pharmaceutical sales. Glaucoma sales are expected to grow with the approval of Duotrav in Japan in 2010. Alcon markets the top-selling brands from segments including antiallergics (Patanol/Pataday), anti-infective/anti-inflammatory combinations (TobraDex) and anti-infectives (Vigamox). Nevanac, the first pro-drug NSAID to be approved for topical ophthalmic application, has been showing robust double-digit growth since 2010. In clinical studies, the drug demonstrated better alleviation of 85
inflammation and better corneal penetration compared with other products. In 2010, Alcon acquired the US rights to Durezol, a corticosteroid indicated for the treatment of postoperative inflammation and pain associated with ocular surgery. The brand has demonstrated strong initial uptake since commercialization.
R&D pipeline analysis

Roche/Genentech/Novartis is investigating the efficacy of Lucentis in pathological myopia. Uveitis is another disease with no clear treatment strategy, for which the company is studying the efficacy of AIN457, an antiIL-17 monoclonal antibody. Novartis is currently investigating the molecule for indications including uveitis with no history of infections, rheumatoid arthritis, psoriasis and Crohn's disease. Current treatment strategies for uveitis involve the use of strong corticosteroids, which often cause adverse effects such as elevated (intraocular pressure) IOP. Physicians are also resorting to off-label use of Roche's Zenapax for the treatment of uveitis. The provision of a monoclonal antibody for uveitis will significantly shift physician focus to the novel therapy.
Table 19: Novartis ophthalmologic pipeline portfolio, July 2011
Product Lucentis AIN457 DuoTrav APS* Pataday* Triesence* Azarga* New combination* Nepafenac, new formulation* AL-43,546* Note: *Added from Alcons pipeline
Source: Company reports
Indication pathological myopia non-infectious uveitis Glaucoma ocular allergy retinal surgery Glaucoma Glaucoma anti-inflammatory dry eye
Status Phase III Phase III Filed Filed (Japan) Filed (EU) Phase III (Japan) Phase III Phase III Phase II
BUSINESS INSIGHTS
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Strategic and growth analysis

The ANV franchise will drive Novartis' ophthalmic business through to 2016. The advantage Lucentis holds over other anti-AMD drugs, coupled with a recent approval for use in DME and anticipated approval for RVO, will be the key drivers behind Novartis' forecast growth. In case of DME and RVO, the company will face competition from a number of compounds currently in the pipeline, including present anti-AMD therapies Macugen and Visudyne. The company also faces competition from Genentech's Avastin, which is undergoing clinical evaluation for a variety of ophthalmic indications such as AMD, DME, and DR in separate trials. The US National Eye Institute is conducting the Comparison of AMD Treatments Trials (CATT) study to assess the relative safety and efficacy of Avastin vs. Lucentis for the treatment of neovascular AMD. Avastin is also under investigation for RVO in trials sponsored by government agencies in several countries. The most important deal regarding Novartis' business was the acquisition of Alcon from Nestl. Novartis consummated its deal with Nestl to execute a purchase and option agreement for Alcon worth $39bn in July 2008. Currently, Novartis acquired a 100% stake in Alcon. Novartis chose Alcon as a suitable acquisition to offset the patent cliff looming ahead over its pharmaceutical business. Novartis' decision followed the consideration of several factors such as the aging population and hence the higher incidence of eye disorders (especially in the emerging markets, and Alcon's presence is significant in these regions), the lower pricing pressure experienced in the ophthalmic market, and the firm's desire to diversify its business. Apart from its ANV portfolio, Novartis' stronghold remains in the artificial tear and ocular anti-allergic segments. Genteal, Novartis' flagship artificial tear brand faces significant competition from Allergan's artificial tear franchise, which includes Restasis and Refresh, the leaders of the segment. Novartis' antiallergic franchise is strongest in the EU nations and Japan, where it markets Zaditen. Novartis markets the product as Zaditor in the US, where it is the only ophthalmic product to have succeeded in an OTC switch approved by the FDA. This OTC status has not, however, helped the company to revive the sales of Zaditor. One of the reasons to which the decline can be attributed is the steady growth of Bausch & Lomb's Alaway, approved in 2006, presenting similar dosing advantages such as once daily instillation. However, Alcons strong presence in ocular anti-allergic and inflammation market will help Novartis strengthen its share in these segments. 87
Allergan
Overview
Allergan, one of the leading specialty healthcare companies, is engaged in development and commercialization of pharmaceuticals, biologics, medical devices and over-the-counter (OTC) products. The company was founded in 1950 and presently markets its products in over 100 countries across the globe. The companys business is divided into two segments namely specialty pharmaceuticals and medical devices. The specialty pharmaceuticals segment includes ophthalmic products for dry eye syndrome, glaucoma, retinal diseases, and ocular surface disease. The company also markets Botox for therapeutic and aesthetic indications, skin care products for acne, OTC skin care products, and urologics products. The products in the medical devices segment include breast implants for augmentation, revision and reconstructive surgery; obesity intervention products; and facial aesthetics products. The ophthalmic franchise was Allergan's major growth driver in 2010, contributing 56.9% of the company's overall specialty pharmaceuticals sales and 46.9% of the companys total sales. The franchise has several impending patent expirations during the forecast period. However, the company began diversification of its pharmaceutical product portfolio in the recent past in areas such as dermatology, urology, and cancer to drive growth for the future. The commercial success of these products may help Allergan offset generic erosion, especially considering that the company's late stage ophthalmic pipeline primarily includes mostly lifecycle-extending advanced formulations or newer target indications.
In 2010, Allergan recorded total sales of $4.8bn at a Y-o-Y growth of 8.4%. With sales of $4.0bn, the specialty pharmaceutical segment accounted for 82.4% of total companys total sales in 2010. The eye care franchise recorded 2010 sales of $2.3bn demonstrating Y-o-Y growth of 7.7%. Restasis, the leading brand in the entire product portfolio of Allergan, garnered sales of $621m in 2010 showing a strong Y-o-Y growth of 18.7%. The growth of Restasis can be attributed to the growing prevalence of chronic dry eye indication and being the first, and presently the only prescription therapy approved for the treatment of chronic dry eye worldwide. Restasis enjoys the market leading position. 88

The marketed product portfolio of Allergan includes products to treat multiple eye indications including dry eye syndrome, glaucoma, inflammation, infection, allergy, and retinal diseases. Lumigan, Restasis and Alphagan, were among the leading ophthalmic products of Allergan in 2010. Restasis led the eye care portfolio with sales of $621m in 2010.
Table 20: Allergan leading eye care brand sales , 2010
Brand Restasis Lumigan franchise Alphagan P, Alphagan and Combigan Others Total eye care sales
Sales 2010 ($m) 621 527 402 713 2,262
Sales growth 200910 (%) 18.7 15.4 -3.1 0.9 7.7
Share in eye care portfolio 2010 (%) 27.4 23.3 17.8 31.5 100.0
Note: Lumigan franchise includes Lumigan 0.01%, 0.03% formulations and Ganfort.
BUSINESS INSIGHTS
Restasis remained the leading DES preparation in 2010, with unlikely competition in the foreseeable future. Restasis was launched in 2003 in the US under a license from Novartis for the ophthalmic use of cyclosporine. Presently, Restasis is approved in 41 countries, with the recent approval of the drug in Canada in third quarter of 2010; however it is not yet approved in the Europe. OTC artificial tears products include Refresh and Refresh Optive. The robust sales of Lumigan, Restasis and Ganfort have propelled Allergan to become one of the leading players in the ophthalmic market. Although, combined sales of the Alphagan franchise, which includes Alphagan, Alphagan P 0.15%, Alphagan P 0.1%, and Combigan, declined in 2010 due to generic competition in the US, the sales of Alphagan P 0.1% and Combigan showed modest growth. The Lumigan franchise includes Lumigan 0.03%, Lumigan 0.03% and Ganfort. Lumigan 0.01% was approved as a firstline therapy to reduce elevated IOP in patients with open-angle glaucoma or ocular hypertension in Canada
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in 2009, followed by approval in the EU in Q1 2010 and in the US in Q3 2010. Ganfort, a Lumigan and timolol combination received marketing approval in the European Union from European Commission in 2006 and has been showing a sales growth since then. Ganfort is presently being marketed in over 37 countries. The other combination product in Allergans portfolio, Combigan (Alphagan and timolol combination) is indicated for the treatment of glaucoma and ocular hypertension in patients who are non- responsive to treatment with only one drug. Presently being sold in 67 countries, Combigan was initially launched in 2006 in Europe and in 2007 in the US. The anti-inflammatory portfolio of Allergan includes Acuvail, Acular, and Pred Forte. Acuvail (ketorolac tromethamine solution), was approved by the FDA in 2009 and is indicated for the treatment of pain and inflammation following cataract surgery. Acular was a key contributor to Allergan's presence in the antiinfective/anti-inflammatory segment. Acular PF, the brand's preservative-free version, is the only such NSAID product in the US market. Acular PF is indicated for the treatment of ocular pain and photophobia following incisional refractive surgery. Pred Forte (a topical steroid) remains a leading topical steroid worldwide based on 2010 sales. Both the Acular franchise and Pred Forte have lost patent exclusivity and succumbed to generic competition. The ocular anti-infectives and anti-allergic product portfolio includes Zymaxid, which has replaced Allergans old product Zymar (discontinued since February 2011), and Elestat/Relestat/Purivist. Zymaxid is indicated for the treatment of bacterial conjunctivitis while Elestat is indicated to prevent itching associated with allergic conjunctivitis. Allegan has licensed Elestat from Boehringer Ingelheim, and has worldwide commercial rights to the drug excluding Japan. In Q3 2010, Allergan added Lastacaft (alcaftadine) to its ocular anti-allergic portfolio through the acquisition of Vistakon Pharmaceuticals. Lastacaft was commercialized in January 2011 in the US. Allergans Ozurdex (dexamethasone intravitreal implant) is the first drug therapy for the treatment of macular edema associated with branch retinal vein occlusion or central retinal vein occlusion. Ozurdex was launched in 2009 in the US and in 2010 in the EU. In the Q3 2010, Allergan expanded the drug indication by seeking FDA approval for uveitis. 90

Table 21 lists Allergan's ophthalmic pipeline compounds.
Table 21: Allergan's ophthalmologic pipeline portfolio, July 2011
Product Ozurdex (US) Restasis (Europe) Novadur (Brimonidine) IOP lowering (EP agonist) IOP lowering (sustained release) Restasis X (US) TKI
Indication Diabetic Macular Edema ocular surface disease retinal diseases glaucoma glaucoma ocular surface disease Age-related macular degeneration
Status Phase III Phase III Phase II Phase II Phase II Phase II Pre-clinical
BUSINESS INSIGHTS
Allergan's pipeline mostly contains advanced formulations, expanded indications and new doses of the current products. The company continues to concentrate on the glaucoma segment with the development of novel prostaglandin analogues (PGAs) for the disease. Upon successful clinical development, these products may become suitable follow-on products for Allergan's current PGA product Lumigan, whose patent expires in 2014. Allergan is also targeting the development of its brands through new markets, advanced formulations and expanded indications of marketed brands such as Ozurdex, Restasis and Alphagan. In November 2011, Restasis was approved in Canada for the treatment of dry eye syndrome. In September 2011, Ozurdex (dexamethasone intravitreal implant) was approved by FDA for the treatment of noninfectious ocular inflammation/uveitis. A reformulated version of Lumigan, Lumigan 0.01% was also launched in the second half of 2011 in multiple geographies. Alphagan (brimonidine) is under investigation for the treatment of retinal diseases through targeted drug delivery with the Posterior Segment Drug Delivery System (PS DDS). Allergan had earlier secured access to the drug delivery system through the acquisition of Oculex.
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Although Allergan derives over 40% of its sales from anti-glaucoma preparations, its key growth driver during the forecast period will continue to be the artificial tears portfolio. The segment demonstrated the fastest growth for the company in 2010 and faces minimal threat of generic erosion in near term. By contrast, Allergan's anti-glaucoma franchise faces the threat of generic erosion. Another segment in which significant sales threats loom large for Allergan is anti-infectives/anti-inflammatory preparations, as the patents on the firm's Acular and Zymar have expired in 2009. In 2010, Acular and Zymar recorded sales of 34m and 74m, witnessing a sharp decline of 291.1% and 45.9% respectively. Allergan has discontinued marketing of Zymar since February 2011 following the launch of its follow on product Zymaxid. In the anti-glaucoma preparations segment, Allergan faces a sales decline due to the launch of generic versions of Alphagan. The Alphagan franchise contributed 17.8% of the sales accrued by Allergans eye care franchise in 2010. Allergan's decline in the segment will increase considering the entry of Xalatan generics in 2011, although the patent for Lumigan's does not expire until 2014. The company is however able to offset some sales decline with the growth of Ganfort (bimatoprost/timolol), which has successfully helped to extend Lumigan's lifecycle. Another lifecycle extension strategy that has proved successful for Allergan is Combigan, a combination of Alphagan with timolol. Moreover, in 2010, Lumigan 0.01% was approved in the EU, Switzerland and India as a first-line therapy for glaucoma. Combigan and Ganfort demonstrated strong market uptake and will play a significant role in offsetting the sales erosion of Allergan's anti-glaucoma preparations franchise. Meanwhile, the FDA has received multiple ANDA filings for Combigan, challenging the patents covering the brand. In response, Allergan filed a lawsuit against the respective companies for patent infringement. The artificial tear franchise faces minimal sales-erosion risks during the forecast period. Restasis will continue to contribute significantly to Allergan's artificial tears business through 2014, when its patent expires. In the EU, Allergan secured orphan status for cyclosporine eye drops for the treatment of atopic keratoconjunctivitis. Approval of the product in the EU will significantly boost Allergan's DES product franchise. Allergan originally obtained worldwide (excluding Japan, Taiwan, Korea, Hong Kong and China) rights to develop cyclosporine for ophthalmic indications from Novartis. Coupled with this, the over-the92
counter (OTC) status of the Refresh franchise provides Allergan with a significant opportunity to continue sales generation through the forecast period, with the recent entry of the brand in the Canadian market. Although Restasis has limited competition in the near term, there are several promising compounds in the development for dry eye syndrome. With an aim to increase the lifecycle of Restasis, Allergan is also developing Restasis X, an extended release version of Restasis, with an alternative preservative than the one used in Restasis. The company's position in the anti-inflammatory and anti-infectives segment is also under threat from generic competition with the patent expiration of Acular in 2009. With an aim to extend the ketorolac franchise, Allergan launched Acuvail in 2009 for the treatment of pain and inflammation following cataract surgery. The topical eye drop is devoid of preservatives and contains ketorolac, similar to Acular, but at a concentration of 0.45% (unlike the latter, which is available at 0.4% and 0.5%). The approval extends the indication spectrum of the company's ketorolac franchise (Acular, Acular LS and Acular PF) beyond conjunctivitis, and inflammation due to corneal and cataract surgery. The use of carboxymethyl cellulose (CMC) as a vehicle in Acuvail, unlike purified water in Acular, also enables twice daily dosing compared with the latter's four times daily schedule. Macular edema treatment Ozurdex is expected to offer significant growth opportunities for Allergan. However the lower efficacy of the drug as compared with competitors and therapy cost may impact growth. Moreover, reimbursement of the drug is also limited, which has restricted the commercial potential of the drug. However, the product capitalized on the advantage of being the first product to secure approval for the treatment of retinal vein occlusion (RVO)-induced macular edema. The approval for additional indications including uveitis (approved 2010), and DME (Phase III) is expected boost the sales of Ozurdex. Apart from its own R&D activities for ophthalmic compounds, Allergan is also partnering with other research companies to strengthen its research activities in the ophthalmic space. In May 2011, Allergan entered into a $45m licensing agreement with Molecular Partners for MP0112, a Phase II proprietary therapeutic DARP in protein targeting VEGF, which is being evaluated for the treatment of retinal diseases. According to the terms of the agreement, Allergan will hold the exclusive global rights for MP0112 for ophthalmic indications. Both 93
the companies will co-develop the drug until Phase IIb, thereafter Allergan will be responsible for further development and commercialization of the drug. Molecular Partners will also be entitled to additional milestone payment and royalties.
Pfizer
Overview
Pfizer, a global biopharmaceutical company, is engaged in the discovery, development, manufacture and marketing of prescription medicines, vaccines, nutritional and consumer health products for humans and animals. The company primarily has two operating business segments: biopharmaceutical and diversified. The biopharmaceutical segment includes five customer-focused units including, primary care, specialty care, oncology, established products, and emerging markets. The diversified segment includes animal health, consumer healthcare, nutrition and capsugel. Following the acquisition of Wyeth in October 2009, the specialty care customer-focused unit expanded to include vaccines. Pfizer is realigning its business operations to better identify and address local market dynamics and customer needs. In 2010, Pfizers sales grew 36% over the previous year to $67.8bn, including the revenue generated through Wyeths products. Cardiovascular and metabolic diseases products were the highest contributor to Pfizers total revenues in 2010.
In 2010, the biopharmaceutical segment generated sales of $58.5bn, growing 28.8% over 2009, while the overall revenues were $67.8bn. This also includes the revenues generated from Wyeths operations. With sales of $1.7bn, Pfizer's Xalatan/Xalacom led the global glaucoma market in 2010. However, Xalatan patent expiry in March 2011 and non-approval of Xalacom in the US will threaten the established market leading position of Pfizer in 2011 and thereafter.

The company's presence in the market is due to its anti-glaucoma products franchise, comprising solely of the Xalatan and Xalacom brands. The company was the largest anti-glaucoma preparations marketer in
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terms of sales until 2010, however sales of the brand have started to decline following Xalatans patent expiry in March 2011. In Q1 2011, the brand sales declined by 7% as compared with the sales in the Q1 2010. The company is present in the ANV segment through Macugen, which hasnt been able to establish a strong foothold in the market due to the superior market uptake of Roche/Genentech/Novartis' competing product Lucentis. Macugen acts by inhibiting the growth of new blood vessels through binding with vascular endothelial growth factor-165 (VEGF-165) and is administered intravitreously. Pfizer markets and develops Macugen outside the US while Eyetech has the rights to the drug in the US. The Xalatan/Xalacom franchise generated sales of $1.7bn in 2010.

Table 22 lists Pfizer's ophthalmic pipeline compounds.
Table 22: Pfizer's ophthalmologic pipeline portfolio, May 2011
Product CP-690550 (tofacitinib) PF-04523655 PF-04217329 (taprenepag isopropyl) RN6G (PF-04382923)
Indication transplant rejection, dry eye DME, AMD (Biologic) glaucoma AMD (Biologic)
Status Phase II Phase II Phase II Phase I
DME= Diabetic macular edema, AMD= Age-related macular degeneration

BUSINESS INSIGHTS
The biggest setback for Pfizer in the ophthalmic research was the discontinuation of Macugen development for the treatment of DME in the EU. In July 2011, Pfizer announced halting of drug development following Committee for Medicinal Products for Human Use (CHMPs) negative view about the drug. Pfizer's next major breakthrough product after Xalatan and Macugen was PF-04523655, which it licensed from Quark. The 19-mer siRNA product down regulates the RTP801 gene specifically. However, the Phase II trial PF04523655 was terminated at 12 months after the interim results suggested higher doses of the drug produced a therapeutic effect. Quark and Pfizer will now conduct Phase IIb studies of PF-04523655 to evaluate the dose for Phase III studies, and Quark will conduct Phase IIb studies at its own expenses. This 95
has also led to modification in the present agreement between the companies with Pfizer increasing the development and product milestone payments and royalties for the product.

Pfizer dominated the glaucoma market in 2010. The company's PGA franchise, comprised of Xalatan and Xalacom, contributed to all of these sales. The company's position in the market is, however, under threat, due to Xalatan patent expiry in 2011. The anti-glaucoma franchise accounted for the majority of Pfizer's ophthalmic sales in 2010. In other segments of the market such as AMD, Pfizer has suffered strong erosion of its market share, despite enjoying a first-to-market opportunity. The strong uptake of anti-VEGF therapies (such as
Genentech/Roche/Novartis' Lucentis) in the management of AMD has inhibited growth of Pfizer/Eyetechs (Astellas Pharma) Macugen. Considering the slow uptake of Macugen in AMD treatment, Pfizer was investigating the efficacy of the drug in DME and filed the drug marketing authorization in the EU for the treatment of DME in June 2010. However, in July 2011 Pfizer announced the withdrawal of Macugen from the development to treat DME in the EU. Pfizer hoped to dominate in the AMD segment with the approval of the siRNA product PF-04523655. Pfizer is developing the compound with Quark Pharmaceuticals. However, in March 2011, the companies had to modify the agreement following Quarks decision to conduct additional Phase IIb trials incorporating higher doses of PF-04523655 to establish the optimal dosage for Phase III studies. According to the modified agreement Quark will bear the cost of conducting the Phase IIb studies and the milestone and royalty payments from Pfizer has been increased. PF-04523655 is 19-mer siRNA product, and acts at the bottom of the pyramid of neovascularization (gene level) and is closest to the origin of the pathological state, much lower than where Lucentis exerts its effects (receptor level). To improve its market penetration for prescription ophthalmics in the US and maintain its ophthalmic franchise growth, Pfizer has entered into multiple licensing agreements. For instance, in December 2010, Lpath and Pfizer entered into an exclusive licensing agreement to co-develop and commercialize Isonep, which is currently undergoing Phase I clinical trials. Isonep is a monoclonal antibody being evaluated for the 96
treatment wet AMD. In June 2011, Pfizer announced its agreement with pSivida for long-term, sustainedrelease bioerodible eye implants. Under the agreement, pSivida will be entitled to an initial payment of $2.3m for conducting initial studies, while Pfizer will have an option to exclusive development and commercialization after completion of Phase II trials. In June 2009, Pfizer entered into a co-promotion agreement with Bausch & Lomb. As part of the deal, the companies plan to co-promote Pfizer's Xalatan, and Bausch & Lomb's Alrex, Lotemax, Zylet and Besivance. Pfizer is also developing stem cell-based therapies primarily for wet and dry macular degeneration, and other retinal diseases. In 2009, Pfizer entered into a collaborative agreement with University College London to attain exclusive worldwide rights to develop and market a retinal pigment epithelium (RPE) stem cell-based treatment. Under the terms of the agreement, Pfizer funded the university to research and develop these therapies, in addition to supporting clinical trials, and product manufacturing techniques.
Santen Pharmaceutical
Overview
Santen is one of the leading specialty pharmaceutical companies in Japan and is engaged in research, development, manufacturing, and marketing of ophthalmic and anti-rheumatic pharmaceuticals, OTC products and medical devices. Established in 1890, Santen presently employs 2,867 employees and is headquartered in Osaka, Japan. Although the company expanded to seven markets outside Japan over 15 years ago (the US in 1993 and Germany in 1994), Santen still generates the majority of sales in the Japanese market. Santen's presence in the West is underscored by its involvement in multiple deals and alliances with pharmaceutical companies in the region. With a share of 37.3%, Santen was the largest company in the prescription ophthalmic pharmaceutical market in Japan in 2010. Santen intends to increase its market presence in international markets with focus on the emerging markets such as China, Korea and Russia. Santens products can be categorized into three segments namely prescription pharmaceuticals, OTC, and medical devices. Prescription pharmaceutical is the largest of all the segments and accounted for 93.7% to the total companys sales in 2010.
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With almost a flat Y-o-Y growth of 0.2%, Santen recorded sales of $1.3bn (110.8bn) in 2010, of which 83.5% or $1.1bn (92bn) sales were in Japan. The domestic prescription pharmaceutical sales of Santen were negatively affected by the governments cost-containment policies which resulted in a reduction in drug prices. The ophthalmic segment is one of the key segments for Santen and accounted for 81.9% of the companys total sales and 87.4% to the total prescription pharmaceutical sales of Santen in 2010. The ophthalmic segment is primarily driven by the growing sales of corneal disorders, glaucoma, and retinal disorders within the segment. Although the absolute sales for Santens ophthalmic products is relatively lower in international market as compared with domestic market, the ophthalmic segment in international market showed a higher Y-o-Y growth at 7.1% than sales in the Japanese market with 4.0% growth in 2010.

Hyalein, with domestic sales of $249m at a flat Y-o-Y growth of 0.2%, became the single largest brand in Santens ophthalmic franchise in 2010. A water-retentive product, Hyalein increases tear film stability, and its superior efficacy over other products has positioned it as the first-line treatment for corneal and conjunctival epithelial disorders (including DES). Hyalein was launched in 1995 in Japan and has gained momentum over the years due to the active disease awareness programs conducted by the company, targeting patients and physicians in Japan. As a result, Hyalein faces minimal competition in this segment of the Japanese market, with the brand holding an impressive 80% share in the Japanese corneal and conjunctival disorders market. Although Hyalein is also marketed in other geographies, the brand could not achieve similar growth momentum outside Japan. Aiming to counter further competition in this segment, Santen launched a new dry eye product, Diquas, in 2010 in Japan. The leading brands from Santen Seiyaku's anti-infective franchise, which consists of fluoroquinolones, showed mixed results in 2010. While, Cravit/Oftaquix/Quixin demonstrated considerable growth, Tarivid posted a decline in sales owing to increasing competition. Cravit/Oftaquix was one of the leading antiinfective brands in Japan and recorded sales of $151m in 2010 at a Y-o-Y growth of 5.4%.
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Tapros/Taflutan/Saflutan, indicated for the treatment of glaucoma and ocular hypertension, was launched in 2009 in Japan. In the same year the brand was launched in several countries in Europe followed by subsequent launches in other countries in Asia including Hong Kong and Korea in March 2010. In 2009, Santen entered into a licensing agreement with Merck & Co. to develop and market the drug in some European countries (UK, Spain, the Netherlands, and Italy among others), and North America. Merck has filed a NDA for Saflutan in the US in March 2011. Tapros has demonstrated a strong uptake since its launch and in less than three years of its launch the brand recorded sales of $78m in 2010 at a Y-o-Y growth of 41.5% to become the third largest brand in Santens prescription pharmaceuticals portfolio. The company aims to maximize the value from Tapros by increasing its market presence and penetration. Tapros sales are expected to rise substantially following its launch in the US and Chinese markets, the NDAs being filed in both these countries. The other drugs in Santens Glaucoma franchise including Rescula, Detantol, Timoptol XE, and Timoptol declined in sales due to competition from other branded products and reduction in drug prices. In a bid to capitalize on the growing glaucoma market, Santen in June 2010, launched Cosopt combination ophthalmic solution (Cosopt) in Japan under an agreement with MSD K.K. (previously known as Banyu Pharmaceutical, a subsidiary of Merck & Co.). MSD K.K. developed Cosopt, which was approved in April 2010 by the Japanese Ministry of Health, Labor and Welfare (MHLW). Cosopt (dorzolamide hydrochloride + timolol maleate), a combination of a topical carbonic anhydrase inhibitor and a topical betaadrenergic receptor blocking agent, is used to reduce aqueous humor secretion. Cosopt garnered sales of $34m in 2010. Santens anti-allergic and anti-inflammatory portfolio comprises of Livostin and Flumetholon. Santen holds a considerable share in these segments in Japan. Although Livostin and Flumetholon recorded Y-o-Y sales growth of 17.7% and 7.2% respectively in 2010, the company estimates that the sales of both the brands will be negatively impacted in 2011 and will decline by 19.4% and 12.7% respectively.

Most of the companys research activities are centered on ophthalmic pharmaceuticals, which dominate its R&D pipeline. Santens Tapros/Taflutan/Saflutan is launched in Japan and few European and Asian countries, while the NDA have been filed in the US and China. Diquas (diquafosol sodium) is indicated for 99
the treatment of dry eye and acts by stimulating the secretion of mucin and tear fluid from the ocular surface. Santen claims that the mechanism of action of the drug is different from existing treatments, thus is expecting higher returns from the drug. Diquas was launched in Japan in December, 2010 and is being evaluated in Phase III clinical trials in China. Santen is also evaluating a combination product, DE-111 (tafluprost/ timolol maleate) for the treatment of glaucoma. DE-111 is presently undergoing Phase III trials in Japan and Europe. Santen is developing lomerizine for glaucoma under license from Schering-Plough, which markets the drug for the treatment of migraine. The other pipeline product DE-102, being evaluated for the treatment of DME, is a novel formulation of steroids involving microsphere technology for sustained release injection. The product is under development in technical collaboration with the Michigan-based Oakwood Labs. Additionally, Santen acquired the global marketing rights for sirolimus for wet AMD and DME from the California-based MacuSight in June 2010.
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Table 23: Santen ophthalmologic pipeline portfolio, March 2011
Product Tapros/Taflutan/Saflutan * (tafluprost) DE-089* (diquafosol sodium) DE-111* (tafluprost/ timolol maleate) DE-108* (levofloxacin 1.5%) DE-090* (lomerizine HCl) DE-101* (rivoglitazone) DE-102* DE-105 DE-109 (sirolimus) DE-110
Indication glaucoma/ ocular hypertension dry eye syndrome glaucoma/ ocular hypertension bacterial conjunctivitis Glaucoma corneal and conjunctival epithelial disorder associated with dry eye DME persistent corneal epithelial defects wet AMD/DME corneal and conjunctival epithelial disorder associated with dry eye, glaucoma/ ocular hypertension
Phase Launched in Japan and few countries in Europe and Asia. NDA filed in the US and China. Launched in Japan. Phase III in Asia Phase III in Japan and Europe Approved in Japan in December 2010 Phase II in Japan Phase II in the US and Japan
Phase II in Japan Phase II in Japan and Phase I in the US Phase II in Japan Phase II in the US
DE-112
Phase II in the US
* = being co-developed with other companies. DME = Diabetic macular edema, AMD = Age-related macular degeneration
BUSINESS INSIGHTS

Ophthalmic products constituted 81.9% to the total 2010 sales of Santen. Although the company has a very strong presence in the ophthalmic market in Japan, Santens presence in the global ophthalmic market is characterized by multiple deals and alliances with pharmaceutical companies of the region. In the US, the company has signed a distribution agreement with J&J's ophthalmic division Vistakon. Vistakon holds exclusive rights to market Santen's Iquix, Quixin, Betimol, and Alamast in the US. 101
Santen has signed multiple in-licensing and out-licensing deals with Japanese and non-Japanese companies. The major products for which the company has in-licensed marketing rights include Cravit, Detantol, Tapros, and Cosopt. Cravit, originally licensed from Daiichi Sankyo, has been licensed to J&J's Vistakon as Quixin and Iquix in the US. Santen and Merck entered into a licensing agreement to develop and commercialize Tapros in Western Europe, (excluding Germany), North America, South America, and Africa. Santen aims to strengthen its presence in high growth markets including China, Northern Europe, Eastern Europe, and Russia. In 2009, Santen started direct marketing in China with its own team of local medical representatives (MRs) in key cities in China. Moreover, Santen has also introduced a doctor marketing strategy in China, which offers customized solutions to the needs of doctor with appropriate recommendations for prescriptions to provide doctors with scientific information that reflects their needs. Growth in Europe was primarily due to the launch of new products, penetration of existing products and introduction of existing products in new markets. Due to the increasing competition from other branded products, generic alternatives, and drug price reduction imposed by National Health Insurance, (NHI) Santens lays significant emphasis on the marketing and promotional activities for its products. In March 2010, Santen entered into a co-promotion agreement with Banyu Pharmaceutical to promote Cosopt in Japan. Santen also plans to launch new products catering to the unmet needs in the ophthalmic space. Santen implemented network-based drug discovery model to reduce the drug development cost and speed up the developmental process. This model promotes the concept of conducting joint research from the drug discovery stage to reduce costs and improve profits. For instance Santen used the network-based drug discovery method to develop Tapros, and simultaneously conducted the clinical development of the drug in Japan, the US, Europe, and Asia. Santen aims to strengthen its R&D activities in high growth areas within the ophthalmic space including glaucoma, corneal and conjunctival epithelial disorders and dry eye syndrome. The company also plans to derive maximum value from its recently launched products such as Diquas and Cosopt. Santen, with an aim to sustain growth in the long term, is also actively pursuing in-licensing deals for promising compounds in high growth categories. In April 2010, Santen entered into an in-licensing agreement with the US based 102
Clinical Data, to attain the developmental rights to ATL313, an adenosine A2a agonist product for the treatment of glaucoma and the retinal disorders segments. Santen has started to strengthen its manufacturing activities to enhance its global product supply capability. Prior to start of its manufacturing operations in Suzhou, China in 2008, Finland was the only manufacturing center for Santen outside of Japan and catered to the demand in Europe and the US. The company aimed at reducing the cost with its manufacturing unit in China. In 2010, Santens manufacturing cost was reduced by 9.9% and the company aims to further reduce its manufacturing expenses in 2011.
Merck & Co.

Overview
Merck & Co. is one of the leading pharmaceutical companies worldwide, with a diverse product offering across a broad range of therapeutic areas, a strong pipeline and extensive global reach. In 2009, Merck and Schering-Plough merged. The company has only one reportable segment: pharmaceuticals, which includes human health pharmaceutical and vaccine products. Merck & Co. has a worldwide presence and markets its products either directly or through joint ventures. The sales accrued by Merck in the ophthalmic market in 2010 were primarily from its anti-glaucoma product franchise. The declining sales of the ophthalmic franchise of Merck failed to make significant contributions towards the growth of the overall pharmaceutical business of the company in 2010. The sales decline is primarily due to the patent expiry of its key brands Cosopt and Trusopt in late 2008. However, the acquisition of Inspire Pharmaceuticals will strengthen Mercks position in the global ophthalmic market. Moreover, the agreement with Santen to develop and commercialize Tapros will help Merck to regain its lost share in ophthalmic market.
Mercks total 2010 sales were $46bn and the key ophthalmic brands, Cosopt and Trusopt, collectively recorded sales of around $484m in 2010. The brands showed a sales decline of 4% due to patent expiry in the US in 2008. While Trusopt has also lost its patent exclusivity in several European markets, the patent for 103
Cosopt will expire in March 2013 in key European markets. The recent launch of Cosopt in Japan and Tapros (launched in few European countries and NDA filed in the US) under the agreement with Santen is expected to present growth opportunities for Merck in the near term. However, Merck is expected to witness a substantial revenue loss in the European markets following the patent expiry of Cosopt and Trusopt.

Merck's traction in the global ophthalmic market revolves around its carbonic anhydrase inhibitor (CAI) brand Trusopt, and a combination product, Cosopt. The success of Cosopt owes to the greater reduction in IOP it achieves compared with the individual constituents. The sales growth of these brands is declining rapidly due to their loss of market exclusivity in October 2008. Mercks key products include Azasite, Restasis, Elestat and recently launched Diquas. The convenient dosing of twice daily for two days, followed by once daily dosing for five days of Azasite, an antibiotic (azithromycin) ophthalmic solution, differentiates it from competitors. Merck is also evaluating the drug for blepharitis (inflammation of the eyelids and eyelash follicles that results in itching and scaly skin), an area where there is no competition. The drug is undergoing Phase II clinical trials. Restasis (cyclosporine), indicated for the treatment of chronic dry eye, does not face any competition presently. The drug is set to lose patent exclusivity in May 2014. Although Allergan manufacturers and markets the products, Merck receives royalties on the drug, which will continue until 2020. This is due to the return of rights to Prolacria, a discontinued investigational compound for dry-eye in exchange for royalties on Restasis. Merck co-promotes Elestat (epinastine) with Allergan. Elestat, an anti-allergic drug, is under threat of launch of generic drug even though the product is patent protected until November 2020. The co-promotion agreement will end with the launch of generic epinastine. PharmaForce, Apotex, Cypress Pharmaceutical, Paddock Labs, and Sandoz have submitted ANDAs of the drug to the FDA. Diquas (diquafosol tetrasodium), indicated for the treatment of dry eye syndrome was developed by Santen Pharmaceutical, and was approved in Japan in April 2010. Merck was developing diquafosol tetrasodium as
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Prolacria in the US which failed Phase III trial and was discontinued. However, Merck continues to receive royalties on Japanese sales.

The key pipeline compound in Mercks pipeline is Saflutan (tafluprost, being marketed as Tapros in Japan), under license agreement with Santen. Merck has filed a NDA for the drug in March 2011. Merck is also developing a preservative free version of Cosopt which is under review in the US. Inspires acquisition also gave access to its Phase I glaucoma candidates INS115644 and INS117548.

The declining sales of the anti-glaucoma franchise and absence of late-stage pipeline products raises doubt over Merck & Co.s future position in the global ophthalmic market. Merck's flagship brands Cosopt and Trusopt lost market exclusivity in October 2008. Subsequently, competitors such as Apotex, Sandoz, Teva, Falcon and Bausch & Lomb succeeded in securing ANDA approvals for generic versions of these brands. As a result, sales of Cosopt and Trusopt are set to decline through to 2016, which will significantly affect the company's presence in the ophthalmic market. Mercks attempts to expand its presence in the ophthalmic market are evident from its latest acquisition and in-licensing and out-licensing licensing deals. In June 2009, the company signed an agreement with Santen for the rights to PGA product tafluprost, marketed by the latter as Taflotan in Germany and Tapros in Japan. The commercialization of tafluprost will be the next major event in Merck's ophthalmic business. In line with the deal, Merck will receive rights to market the product in Western Europe (excluding Germany), North and South America, and Africa. Santen retains the rights in Eastern and Northern Europe, and Asia Pacific (including Japan). Merck has filed the NDA in the US in March 2011. Santen also retains the option to copromote the product in the US upon approval. Furthermore, Merck has offered to support Santen in product promotional activities in Germany and Poland. In April 2011, Merck announced the acquisition of Inspire, a specialty pharmaceutical company with a significant presence in ophthalmic space. The acquisition of inspire will benefit Merck in three ways; firstly, the existing products from Inspires portfolio will help Merck retain its share in the ophthalmic market, 105
secondly the pipeline compounds of Inspire will strengthen Mercks weak ophthalmic pipeline and the acquisition will also help Merck to prepare the ground for the launch of Saflutan. Merck will use Inspires marketing representatives to market the product.
Emerging ophthalmic companies

ISTA Pharmaceuticals
Overview ISTA is a multi-specialty pharmaceutical company primarily engaged in research, development, and marketing of ophthalmic pharmaceutical products. The companys presence is limited to the US and Puerto Rican markets. ISTA is headquartered in California and employs 326 employees. The company recorded sales of $156.5m in 2010. Although the company presently has only four products in its portfolio, it has a few late stage compounds in the pipeline, which are expected to drive the growth of the company. Marketed product portfolio ISTAs product portfolio includes Bromday, Bepreve, Istalol, and Vitrase. Bromday (bromfenac) is a topical non-steroidal anti-inflammatory drug indicated for the treatment of postoperative inflammation and ocular pain following cataract extractions. The drug is a once-daily version of Xibrom (a twice-daily formulation), which was the leading product in ISTAs portfolio, with a share of 62% in companys total revenues in 2010. ISTA licensed the molecule from Senju Pharma for the North American markets in 2002. Approved initially in 2005 for the treatment of ocular inflammation following cataract surgery, Xibrom secured approval for an expanded indication for the management of pain following the same surgical procedure in 2006. However, following the patent expiry of Xibrom in 2009, it was exposed to generic threat and with the lunch of Bromday in Q4 2010, ISTA decided to discontinue the marketing of Xibrom in February 2011. Bromday has been granted three-year exclusivity period under the Hatch-Waxman Act as the approval required additional clinical investigations beyond those conducted for Xibroms approval. Bromday is expected to penetrate well in the market due to its dosing advantage as most of the other non-steroid treatments require twice, thrice or even more applications in a day. In 2010, Bromday recorded sales of around $9.4m.
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Bepreve (bepotastine besilate) is indicated for the treatment of ocular itching associated with allergic conjunctivitis in patients aged two years and older. Bepreve was approved in September 2009 in the US by the FDA. Bepreve, a non-sedating, highly selective, histamine (H1) receptor antagonist, acts by stabilizing the mast cells thus preventing allergy cells from breaking and releasing inflammation-causing substances. While bepotastine was a new molecular entity in the US, it was approved for the treatment of allergic rhinitis and urticaria/pruritis in Japan and is marketed by Mitsubishi Tanabe under the brand name Talion. In 2010, the brand generated sales of $15.7m. Istalol (timolol maleate) is a beta-blocking agent indicted for the treatment of glaucoma. Istalol was initially developed by Senju in Japan. In May 2002, ISTA acquired the rights to Istalol in the US under a licensing agreement with Senju. ISTA has been marketing the drug since 2004 in the US. Istalol, a once-daily formulation, contains potassium sorbate, which enhances timolol lipophilicity thus increasing its penetration in the anterior chamber. With Y-o-Y growth of 17%, Istalol recorded sales of $22m in 2010. R&D pipeline analysis ISTA is developing a lower concentration of Bromday for postoperative inflammation and ocular pain following cataract extractions. The drug is presently in Phase III clinical trials. The other drug in development is Remura, a lower concentration of bromfenac for the treatment of dry eye. ISTA is conducting two Phase III trials namely EAST and WEST for Remura. In the preliminary result of the WEST study, Remura was found to be effective in treating the signs and symptoms of dry eye syndrome; however the results were not significantly better than placebo. The final result from the WEST study will determine the future development plans for Remura. The other key compound in ISTAs clinical pipeline is T-Pred, a fixed combination product of tobramycin 0.3% and prednisolone acetate 1.0%. T-Pred is being evaluated for the treatment of steroid responsive inflammation and allergic conjunctivitis. If approved, T-Pred will compete in a high growth market; however the results from a previous study were not very satisfactory, with the FDA issuing a not approvable letter in 2007. However, the company is confident of the drug and intends to initiate Phase III studies in 2012.
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In addition, ISTA has a number of products in early stage of development including iganidipine (used to enhance ocular nerve blood flow), a new formulation of latanoprost (a prostaglandin for the treatment of glaucoma), ecabet sodium (for the treatment of dry eyes), and bromfenac (as an adjunct therapy for the treatment of AMD). Strategic and growth analysis In 2010, ISTA sales grew 41.5% Y-o-Y, which can be attributed to the growing prescription base of Xibrom. However, as the company has launched Bromday with improved dosing, ISTA aims to convert all its patients from Xibrom to Bromday. Bepreve also demonstrated strong uptake in second year of its launch. ISTA has a strong late stage of pipeline, which is expected to expand the prescription base of ISTA in the near future. The company either in-licenses or internally develops products to cater to the growing demands of the ophthalmic market. ISTA has also increased its marketing and sales activities and has strengthened its sales team.
Regeneron
Overview Regeneron is an integrated biopharmaceutical company involved in research, development, and marketing of pharmaceutical products. Regeneron was founded in 1988 and is headquartered at New York. Presently, the company has only one marketed product Arcalyst (rilonacept), indicated for the treatment of CryopyrinAssociated Periodic Syndromes (CAPS), including Familial Cold Auto-inflammatory Syndrome (FCAS) and Muckle-Wells Syndrome (MWS) in adults and children aged 12 years and above. However, the company has 11 compounds under development for multiple indications. Regenerons research focus is spread across various therapy areas including ophthalmology, oncology, cardiovascular diseases, and infectious diseases. R&D pipeline analysis The companys lead compound in ophthalmic treatment is Eylea/VEGF Trap-Eye (aflibercept), being developed for retinal disease including wet AMD, DME and RVO. Regeneron's VEGF Trap is a fusion protein combining the binding sites of VEGF receptors 1 and 2, with the ability to bind to both VEGF and placental growth factor. VEGF Trap-Eye is a purified form of this fusion protein formulated for intravitreal
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administration. Local administration of VEGF Trap-Eye allows the drug to bypass the blood-ocular barrier and bind VEGF molecules active in the ophthalmic region to prevent the formation of pathologic neovascular complexes in the macula. In October 2006, Regeneron and Bayer formed an ex-US development-cum commercialization alliance for VEGF Trap-Eye. Regeneron retained the US rights. Regeneron submitted a BLA for the drug in February 2011 in the US while Bayer submitted the application in June 2011 in Europe and Japan for the treatment of wet AMD. The submission was based on the positive results from two Phase III trials, VIEW 1 and VIEW 2. In the trials, all dosages of Eylea, including 2 milligrams (mg) dosed every two months (following three initial monthly doses), met the primary endpoint of statistical non-inferiority as compared with ranibizumab 0.5 mg dosed every month, in the proportion of patients who maintained (or improved) vision over 52 weeks. The drug was found to be well tolerated. In addition to this, Regeneron is also investigating other novel compounds for the treatment of eye diseases. The company also aims to utilize its proprietary VelociGene technology to identify new molecular targets which could be used to develop therapies for treatment of eye diseases. Strategic and growth strategies In the ophthalmic segment, Regenerons growth depends on the commercial success of Eylea. Eylea has received a strong recommendation from the FDA panelist with 10/10 voting in favor of Eylea. The approval date for Eylea was August 20, 2011; however the FDA has recently announced that it will take an additional three months to evaluate the drug. Although the market is not very competitive with only one approved product, Lucentis for the treatment of wet AMD, Eylea will face competition from off-label use of Avastin. Eyleas competitive strength lies in its improved dosing profile and convenience for the patients. While Lucentis and Avastin are required to be administered once in a month Eylea will be dosed once in two months reducing the burden from patients as well as the caregivers. Eyleas uptake to a large extent will depend upon its pricing as well as the results of CATT trials. Regeneron also plans to file Eylea in the second half of 2011 in the US for to the treatment of central retinal vein occlusion (CRVO), while Bayer aims to file the drug in Europe in 2012 for this indication.
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Alimera Sciences
Overview Alimera is a biopharmaceutical company with a special focus on the R&D of retinal ophthalmic pharmaceuticals. The company was founded in 2003 and was primarily focused in the development of OTC products at the time of inception. However, in 2006, it decided to discontinue the development and marketing of OTC products to focus on R&D in high growth markets such as AMD and DME. The company sold its OTC products to Bausch & Lomb in 2007. Alimera is developing Iluvien is collaboration with pSivida. R&D pipeline analysis Alimeras lead candidate in the pipeline is Iluvien which is presently filed with the FDA in addition to regulatory authorities in seven European countries including the UK, Austria, France, Germany, Italy, Portugal, and Spain for the treatment of DME. In September 2010, Alimera completed two Phase III trials for Iluvien in sites across the US, Canada, Europe and India to evaluate the efficacy and safety of the drug in the treatment of DME. Iluvien is available as intravitreal injection and is inserted through a 25-gauge needle in the back of the eye to deliver a corticosteroid, fluocinolone acetonide (FAc). Iluvien is also being evaluated in three Phase II clinical trials for the treatment of the dry and wet AMD, and RVO. Additionally, Alimera has also licensed a class of nicotinamide adenine dinucleotide phosphate (NADPH) oxidase inhibitors from Emory University. The company intends to evaluate NADPH oxidase inhibitors for the treatment of dry AMD and later for wet AMD and diabetic retinopathy. Strategic and growth analysis Alimeras future is highly dependent on the commercial success of its lead candidate Iluvien, which is presently under review in the US and seven European counties. Currently, the companys key focus is to get approval for Iluvien, maximize its commercial success, and to develop the drug for other indications. As the company has limited sales and marketing strength, it intends to enter into collaborative agreements to comarket Iluvien in markets outside North America. The company has aims to target around 1,600 retinal specialists and 900 retina centers in North America. In 2005, the company entered into a collaborative research agreement to use pSivida's Medidur technology in Iluvein. Although, Iluvien will be the first drug to
110
be approved for DME, it will face stiff competition from laser photocoagulation and off-label use of antiVEGF and corticosteroid therapies, and other therapies under development. Ozurdex (dexamethasone intravitreal implant), Lucentis, and Avastin are the key marketed products (currently not approved for DME) that are likely to compete with Iluvien in the near future. In July 2009, Alimera entered into an agreement with Emory University to attain rights to a class of NADPH oxidase inhibitors. The company believes that oxidative stress can help in managing the development and progression of eye disease, and NADPH oxidase inhibitors have the potential to reduce oxidative stress. Alimera intends to first develop NADPH oxidase inhibitors for the treatment of dry AMD and later for wet AMD and diabetic retinopathy.
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Appendix
Table 24 present the fiscal year end of the companies profiled Table 24: Fiscal year end of the companies profiled
Allergan: Novartis: Merck & Co. Pfizer Santen Pharmaceutical ISTA Pharmaceuticals Regeneron Alimera Sciences
JanuaryDecember JanuaryDecember JanuaryDecember JanuaryDecember April March JanuaryDecember JanuaryDecember JanuaryDecember
BUSINESS INSIGHTS
Scope
The Ophthalmic Market Outlook to 2016 provides comprehensive coverage of the global ophtyhalmic market, incorporating disease overview and detailed epidemiological analyses of the major indications. This report makes a comprehensive assessment of the marketed product portfolios, R&D pipelines, market share data, sales forecast, and the competitive landscape for the major players. Further, this report highlights the key market and R&D trends that may influence treatment sales, with a thorough analysis of the competitive dynamics of leading brands within each indication to enable you to identify growth brands, key drug classes and leading players through to 2016.
Methodology
Market size methodology
The leading products and companies in the global ophthalmic market were identified using companyreported sales sourced from PharmaVitae and company annual reports. Where applicable, reference was 112
also made to multiple secondary resources, in-house databases, scientific journals, and analyst reports to derive additional insights into currently marketed drugs.
Epidemiology
The epidemiology of relevant indications is derived from the cohort studies referenced in the report. The epidemiology forecast is extrapolated based on the forecast population changes sourced from the US Census Bureau keeping the prevalence same as 2010. The forecast does not take into account any genetic, cultural, environmental, social, or racial changes to population demographics that could have an impact on disease epidemiology in the various markets.
Market forecast
To forecast future market sizes, regression analysis was used to establish a forward-looking baseline trend. This baseline was then adjusted to take into account future events that are not reflected by the historical trend. Examples of these events include: The launch of new products, with peak sales forecasts based on expected patient numbers and expected price. Patent expirations, generic competition, any ongoing patent litigation, or restricted label warnings (black box warnings). Product extensions based on superior administration/dosage profiles, expanded indications, or postmarketing studies. For biologics, the likely entry of biosimilars/follow-on biologics in the developed (mostly the US and EU) and developing countries, and the competitive dynamics that these may introduce post-approval. Special consideration is also given to the impact of first-in-class, novel drugs that result in a paradigm shift in the treatment algorithm in therapy areas and diseases with significant unmet medical need.
Glossary/Abbreviations
AMD: age-related macular degeneration 113
BAK: BCVA: CAI: CAPS: CATT: CHMP: CRVO: DES: DME: DR: ECT: FA: FAc: FCAS: GR: IOP: mTOR: MWS: NADPH:
benzalkonium chloride best corrected visual acuity carbonic anhydrase inhibitor Cryopyrin-Associated Periodic Syndromes Comparison of AMD Treatments Trials Committee for Medicinal Products for Human Use central retinal vein occlusion dry eye syndrome diabetic macular edema diabetic retinopathy Encapsulated Cell Therapy fluorescein angiography fluocinolone acetonide Familial Cold Auto-inflammatory Syndrome glucocorticoid receptor intraocular pressure mammalian target of rapamycin Muckle-Wells Syndrome nicotinamide adenine dinucleotide phosphate
114
NEI: NRx: OTC: PDT: PF: PGAs: PGF2 alpha: R&D: RVO: SOD: SPA: TBUT: TNF: VEGF: V-PDT: WHO:
National Eye Institute new prescription over-the-counter photodynamic therapy preservative-free prostaglandin analogues prostaglandin F2 alpha research and development retinal vein occlusion superoxide dismutase Special Protocol Assessment tear break-up time test Tumor Necrosis Factor vascular endothelial growth factor verteporfin photodynamic therapy World Health Organization's
115
Bibliography/References
Prevalence of glaucoma
Antn, Alfonso; Andrada, Maria T, Mujica Vicente, Calle Miguel A, Portela Javier, Mayo, Agustin (2004) Prevalence of Primary Open-Angle Glaucoma in a Spanish Population: The Segovia Study. Journal of Glaucoma: October 2004 Vol. 13: No 5 Cedrone C, Culasso F, Cesareo M, Zapelloni A, Cedrone P, Cerulli L. (1997) Prevalence of glaucoma in Ponza, Italy: a comparison with other studies. Ophthalmic Epidemiology 1997 Jun;4(2):59-72. Friedman DS, Wolfs RC, O'Colmain BJ, Klein BE, Taylor HR, West S, Leske MC, Mitchell P, Congdon N, Kempen J; Eye Diseases Prevalence Research Group (2004) Prevalence of open-angle glaucoma among adults in the United States. Arch Ophthalmol. 2004 Apr; 122(4):532-8. JM Burr, G Mowatt, R Hernandez, MAR Siddiqui, J Cook, T Lourenco, C Ramsay, L Vale, C Fraser, A Azuara-Blanco, J Deeks, J Cairns, R Wormald, S McPherson, K Rabindranath and A Grant (2007) The clinical effectiveness and cost-effectiveness of screening for open angle glaucoma: a systematic review and economic evaluation. Health Technology Assessment 2007; Vol. 11: No. 41 Wang YX, Xu L, Yang H, Jonas JB. (2010) Prevalence of glaucoma in North China: the Beijing Eye Study. Am J Ophthalmol. 2010 Dec;150(6):917-24. Epub 2010 Oct 20.
Prevalence of AMD
Augood CA, Vingerling JR, de Jong PT, Chakravarthy U, Seland J, Soubrane G, Tomazzoli L, Topouzis F, Bentham G, Rahu M, Vioque J, Young IS, Fletcher AE (2006) Prevalence of age-related maculopathy in older Europeans: the European Eye Study (EUREYE). Arch Ophthalmology 2006 Apr;124(4):529-35. Friedman DS, O'Colmain BJ, Muoz B, Tomany SC, McCarty C, de Jong PT, Nemesure B, Mitchell P, Kempen J; Eye Diseases Prevalence Research Group (2004) Prevalence of age-related macular degeneration in the United States. Arch Ophthalmology 2004 Apr;122(4):564-72.
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Yuji Oshima, Tatsuro Ishibashi, Toshinori Murata, Yoshihisa Tahara, Yutaka Kiyohara, Toshiaki Kubota (2001) Prevalence of age related maculopathy in a representative Japanese population: the Hisayama study. Br J Ophthalmology 2001;85:11531157
Prevalence of dry eye

Eloy Viso, Maria Theresa Rodriguez-Ares, Francisco Gude (2009) Prevalence of and associated factors for dry eye in a Spanish adult population (the Salnes Eye Study). Ophthalmic Epidemiology (2009) Volume: 16, Issue: 1, Pages: 15-21 Hikichi T, Yoshida A, Fukui Y, Hamano T, Ri M, Araki K, Horimoto K, Takamura E, Kitagawa K, Oyama M, et al. (1995) Prevalence of dry eye in Japanese eye centers. Graefes Arch Clin Exp Ophthalmol. 1995 Sep;233(9):555-8. Miki Uchinoa, Murat Dogrua, Yuichi Uchinoa, Kazumi Fukagawaa, Shigeto Shimmuraa, Toru Takebayashic, Debra A. (2008) Schaumberge and Kazuo Tsubotaa, Japan Ministry of Health Study on Prevalence of Dry Eye Disease Among Japanese High School Students. American Journal of Ophthalmology Volume 146, Issue 6, December 2008 Stephen C. Pflugfelder (2008) Prevalence, Burden, and Pharmacoeconomics of Dry Eye Disease. The American Journal of managed care Vol.14, No.3 Uchino M, Schaumberg DA, Dogru M, Uchino Y, Fukagawa K, Shimmura S, Satoh T, Takebayashi T, Tsubota K. (2008). Prevalence of dry eye disease among Japanese visual display terminal users. Ophthalmology. 2008 Nov;115(11):1982-8. Epub 2008 Aug 16.
Prevalence of diabetic retinopathy

Wang FH, Liang YB, Zhang F, Wang JJ, Wei WB, Tao QS, Sun LP, Friedman DS, Wang NL, Wong TY. (2009) Prevalence of diabetic retinopathy in rural China: the Handan Eye Study. Ophthalmology. 2009 Mar;116(3):461-7. Epub 2009 Jan 24. Others
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Bausch + Lomb's Indian alliance preludes expansion in other emerging markets, July 2011, SCRIP Intelligence.
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Ophthalmic Pharmaceutical Market Outlook To 2016-201109

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Ophthalmic Pharmaceutical Market Outlook To 2016-201109

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The Ophthalmic Pharmaceutical Market Outlook to 2016

Competitive landscape, pipeline analysis, and growth opportunities

Reference Code: BI00042-019 Publication Date: September 2011

About the author

Chapter 1 Introduction to the ophthalmic market

Research and development

Forecast of key products

Chapter 3 Dry eye syndrome

Summary Overview Diagnosis, treatment and management

Research and development

Chapter 4 Retinal diseases

Diabetic retinopathy and diabetic macular edema

Chapter 5 Other ophthalmic indications

Ophthalmic anti-infectives and anti-inflammatory preparations

Chapter 6 Key company profiles

Merck & Co.

103 104 105 105

Emerging ophthalmic companies

Prevalence of diabetic retinopathy

Dry eye syndrome

Other ophthalmic indications

Key company profiles

Chapter 1 Introduction to the ophthalmic market

Overview of the global ophthalmic market

Ophthalmic market by country/region

Ophthalmic market by region, 2010

US, 40% Asia, 6%

Japan, 14% EU5, 18% Total market = $16bn

Ophthalmic market by drug class

The global ophthalmic market by drug class ($m), 2010

Artificial tears 1,939

Retinal diseases 3,500

Total market = $16bn

Revenue forecasts for the ophthalmic market

Sales 2010 ($m) 5,582 3,500 1,939 5,137 16,158

Sales 2011 ($m) 5,665 3,995 1,916 5,056 16,632

Sales 2012 ($m) 5,806 4,560 1,912 5,060 17,338

Sales 2013 ($m) 5,951 5,204 1,907 5,063 18,125

Sales 2014 ($m) 6,099 5,940 1,903 5,067 19,009

Sales 2015 ($m) 6,251 6,779 1,899 5,070 19,999

Sales 2016 ($m) 6,406 7,738 1,895 5,074 21,113

CAGR 2010 16 (%) 2.5 14.1 -0.2 0.1 4.6

Glaucoma Retinal diseases Artificial tears Anti-infective and others Total

Source: Company reports, Business Insights

Leading causes of blindness worldwide (%), 2006

Childhood blindness, 4% Cataract, 47% Diabetic retinopathy, 5% Corneal opacities, 5%

AMD, 9% Glaucoma, 12% AMD= Age-related macular degeneration

Ophthalmic sector: Five forces analysis

Ophthalmic sector: Five forces analysis

Threat of new entrants

Source: Business Insights

Increased focus on combination therapies

Emerging markets to substantially contribute in the industry growth

Total 109 74 44 31 30 115 403

Source: National Eye Institute

Diagnosis, treatment and management

Table 4: Target intra-ocular pressure and degree of glaucoma

Target IOP (mmHg) 18 16 12 22

Recommended minimum IOP reduction (%) 25 30 35 20

Source: Delphi Panel Recommendations, Hawaii Eye Meeting, 2002

Table 5 lists glaucoma management strategies in practice.

Table 5: Glaucoma management strategies