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Cadence Pharmaceuticals is a biopharmaceutical company that focuses exclusively on products for use in the hospital setting. The company currently has one product which it in-licensed from Bristol-Myers Squibb Company (BMY), OFIRMEV™, Cadence has marketing rights for the U.S. and Canada. OFIRMEV is an IV form of acetaminophen used for the reduction of fever and pain. Like many small pharmaceutical companies Cadence will need to tackle the high costs of drug development and as its drug has been marketed already by Bristol Myers Squibb, the company will need to maximize profits before its patents expire.
As of December 31, 2010, the company had not generated any revenues, but began in January 2011 to generate sales from OFIRMEV. Outside of the U.S. and Canada the drug is marketed by Bristol Myers Squibb and is estimated to have had sales of $232 million in 2009.
For more detailed information on the FDA approval process, see also Clinical trials.
Developing a new drug is a time-consuming and costly endeavor. Hundreds of thousands of candidate compounds must be screened to identify a handful of potential drugs, and even fewer of these candidate drugs are found to be effective at treating a disease. The drug must then pass strict safety standards in several series of clinical trials. The entire process of developing a new drug and bringing it to the market takes up to 10 to 15 years and on average costs $1.3 billion.
For a detailed discussion of brand name vs. generic medication, see also Generic drugs.
Patent exclusivity is essential within the pharmaceutical industry, where the market exclusivity granted by patents enables companies to enjoy a period of high profitability necessary to justify the high costs of development for a novel therapeutic. Moreover, in the pharmaceutical industry, a single patent covering the active ingredient of the drug can often times represent the entire unique value of that product.
The United States, European Union, Japan, and most developed nations in the world offer an accelerated generic drug approval process whereby competitors can develop generic versions of brand name drugs with expired patents. The accelerated approvals, known as ANDAs in the US, only require that the sponsor company show that their drug is equivalent to the name-brand drug, enabling that company to bypass the expensive and time consuming clinical trials required of a novel drug. The relatively cheap cost to develop generics in comparison to name-brand drugs enables generic companies to substantially undercut prices, to the tune of $10 billion total, annually across the industry.
The various aspects of patent protection and the extremely high costs of researching and developing drugs marks the pharmaceutical industry with high risk and high competitiveness. It is important to keep in mind when considering a comparison of industry players that competition does not arise between each company as a whole, but rather between specific drug areas and their relative advantages in therapeutic treatment. Other companies that focus on the hospital market with therapies for pain are listed below.