Sales of first big COVID-19 drug, remdesivir, may disappoint

Many doctors remain wary of using remdesivir widely, raising questions about sales forecasts for a drug that could be eclipsed by newer treatments. (AFP)
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Updated 17 October 2020

Sales of first big COVID-19 drug, remdesivir, may disappoint

  • Coronavirus treatment has not been used as much as expected and faces complex insurance reimbursement issues

LONDON: Investors betting on big profits from COVID-19 treatments may get an unwelcome surprise when Gilead Sciences Inc. reports quarterly results this month. Its remdesivir,
the first important coronavirus treatment, has not been used as much as first expected and faces complex insurance reimbursement issues.

Its best hope may be that the US and other northern hemisphere governments concerned about a winter spike in cases are beginning to stockpile the antiviral drug, which is also being tested in combination with experimental COVID-19 antibody therapies.
Remdesivir has become the standard of care for patients hospitalized with severe COVID-19. But many doctors remain wary of using it more widely, raising questions about lofty analyst sales forecasts for a drug that could eventually be eclipsed by newer treatments.
The World Health Organization on Thursday said its international trial of COVID-19 therapies found that remdesivir did not have a substantial effect on patients’ length of hospital stay or chances of survival. The study has not been reviewed by outside experts. Gilead, whose shares have fallen 22 percent since the US Food and Drug Administration authorized remdesivir for emergency use in May, said that the WHO findings are “inconsistent with more robust evidence.”
The company struggled to meet early demand and gave away around 250,000 courses earlier in the pandemic, when remdesivir was the only treatment proven to shorten hospital stays for severely ill patients.
Since then, low-cost steroids have demonstrated an ability to cut death risk in severely ill COVID-19 patients, and doctors question the medical value of using remdesivir for moderately ill patients.
Wall Street forecast $2.5 billion in worldwide sales of remdesivir this year, according to Refinitiv.

FASTFACT

Remdesivir costs $3,120 for a five-day course, or $2,340 for government purchasers.

However, the US Department of Health and Human Services (HHS), which oversaw the drug’s second-quarter distribution, said hospitals only bought 32 percent of 500,000 available courses — worth about $500 million at $3,120 per course.
The EU in July purchased 30,000 courses worth another $74 million. The EU recently contracted for 500,000 remdesivir courses over the next six months, but the deal does not require purchases. Gilead sells and licenses
remdesivir to most of the world but is expected to get the vast majority of revenue from the US and Europe.
Johanna Mercier, Gilead’s chief commercial officer, acknowledged that “hospitalization rates were much lower than originally predicted.”
“A lot of people were worried about the supply and wanted to keep remdesivir for their worst-case patients,” she said.
She declined in an interview to discuss Gilead’s sales expectations, but said that some of the excess US supply was soaked up by HHS for stockpiling, and some was diverted to Europe.
The drug accounts for a fraction of Gilead’s product sales, which totaled $21.7 billion in 2019. But the company in July raised its 2020 outlook, implying remdesivir sales of up to $3 billion, according to analysts.
Public health authorities have said that COVID-19 patients are not being denied drugs because of cost, but US hospital incentives are complex.
Most commercial insurers as well as Medicare, the federal health plan for seniors, pay hospitals a flat per-patient rate for care, based on diagnosis.
That creates an incentive to “avoid keeping people in the hospital,” and makes a drug that shortens stays cost effective, said Richard Trembowicz, health care reimbursement specialist at ECG Management Consultants.
Medicare in March approved a 20 percent increase in its payment for hospital stays related to COVID-19 but does not reimburse directly for remdesivir, which costs $3,120 for a five-day course, or $2,340 for government purchasers.
US hospitals say the cost is not influencing clinical decisions. “The price is not outrageous enough,” said Katherine Perez, infectious disease pharmacist at Houston Methodist Hospital. “We are hoping it is getting patients out of the hospital sooner.” But, she added, “I don’t think the data supports using it in more mild infections.”
Still, the FDA in August expanded its remdesivir authorization to include patients with less-severe illness.
“I would use it in an elderly person or someone on a drug that suppresses the immune system,” said Dr. Rajesh Gandhi, an infectious disease physician at Massachusetts General Hospital in Boston. “For a 30-year-old doing well it would be less likely.”
Gilead’s Mercier said reserving remdesivir for patients who need oxygen “is not necessarily the best use” of the drug, since antivirals may work best early in an infection, before a virus has reproduced enough to cause damage.
The drug, which failed as a treatment for Ebola, is designed to prevent viruses from replicating and overwhelming their host’s immune system.
Meanwhile, Gilead is moving ahead with remdesivir development, including testing an inhaled formulation to see if it could help non-hospitalized patients.


China’s niche LNG buyers plan billion-dollar investments, double imports amid reforms

Updated 26 sec ago

China’s niche LNG buyers plan billion-dollar investments, double imports amid reforms

SINGAPORE: A group of niche Chinese gas firms is set to make waves in the global market with plans to invest tens of billions of dollars and double imports in the next decade as Beijing opens up its vast energy pipeline network to more competition.

The companies, mostly city gas distributors backed by local authorities, are ramping up purchases of liquefied natural gas (LNG) as newly formed national pipeline operator PipeChina begins leasing third parties access to its distribution lines, terminals and storage facilities from this month.

The acceleration in demand in what is already the world’s fastest-growing market for the super-chilled fuel is a boon for producers such Royal Dutch Shell, Total and traders like Glencore faced with oversupply and depressed prices.

Just last month, UK’s Centrica signed a 15-year binding deal to supply Shanghai city gas firm Shenergy Group 0.5 million tons per year of LNG starting in 2024.

“They’re very, very interested in imports — we’re talking to a lot of them already,” said Kristine Leo, China country manager for Australia’s Woodside Energy, which signed a preliminary supply deal with private gas distributor ENN Group last year.

China could buy a record 65-67 million tons of LNG this year and is expected to leapfrog Japan to become the world’s top buyer in 2022. Imports could surge 80 percent from 2019 to 2030, according to Lu Xiao, senior analyst at consultancy IHS Markit.

State-owned Guangdong Energy Group, Zhejiang Energy Group, Zhenhua Oil and private firms like ENN were quick to take advantage of the market reforms and low spot prices for LNG, said Chen Zhu, managing director of Beijing-based consultancy SIA Energy.

Their imports will reach some 11 million tons this year, up 40 percent versus 2019, more than 17 percent of China’s total purchases, said Chen.

For years such companies have worked to expand a domestic consumer base among so-called “last mile” gas users like tens of millions of households, shopping malls and factories, but they had to rely on state majors for supplies.

With greater access to distribution networks, they are now incentivized to build their own import terminals that could account for 40 percent of the country’s LNG receiving capacity by 2030, versus 15 percent now, Chen said.

Frank Li, assistant to president of China Gas Holdings, a private piped gas distributor, said his company has been in talks with PipeChina for infr structure access as it prepares to import LNG next year.

In Southern China’s industrial hub Guangdong, companies like Guangzhou Gas, Shenzhen Gas and Guangdong Energy hold small stakes in LNG facilities operated by China National Offshore Oil Company. They imported their first cargoes from these terminals last year.

Guangzhou Gas is set to import 13 LNG shipments this year, up from five last year, after “tough negotiations” with CNOOC won it access to terminals, said Vice President Liu Jingbo.

“The reform is bringing us diversified supplies, helping us cut cost,” Liu said.

Some companies also plan to beef up trading expertise by opening offices overseas, such as in Singapore, executives said.

“Naturally, companies will be thinking of growing into a meaningful player globally,” said a trading executive with Guangdong Energy, adding that his firm looks to Tokyo Gas , Japan’s top gas distributor and trader, as a model.

The rise of niche players will erode some market share held by state giants CNOOC, PetroChina and Sinopec, prompting them to scale back gas infrastructure investment and focus on global trading, while extending into retail gas distribution at home, officials said.