Generic Drug Cos Eye New Growth Pill

Shift fo­cus to niche prod­ucts with huge en­try bar­ri­ers as first-to-file sta­tus for off-patent drugs looks less at­trac­tive, now

The Economic Times - - Companies -

RAJI REDDY KE­SIREDDY

In­dian generic drug pro­duc­ers are de­vis­ing fresh strate­gies to con­tinue ben­e­fit­ing from the world’s largest phar­ma­ceu­ti­cal mar­ket, the United States, be­cause exclusive mar­ket­ing rights for off­patent drugs are not so exclusive any more. The US Food and Drug Ad­min­is­tra­tion (USFDA) has been clear­ing ap­pli­ca­tions to make generic drugs that are go­ing off patent at a faster pace, which is re­sult­ing in in­creased com­pe­ti­tion. More­over, the FDA has been grant­ing joint ‘first to file’ (FTF) sta­tus for sev­eral gener­ics, di­lut­ing the value of the exclusive mar­ket­ing right that comes with such a sta­tus. FTF refers to drugs whose generic, or low-cost, ver­sions, can be launched by a drug-maker who en­joys a 180-day exclusive mar­ket­ing pe­riod dur­ing which no other generic ver­sions can be sold. FTFs are the main growth driv­ers for most leading In­dian com­pa­nies that make generic ver­sions of ex­pen­sive drugs that have gone off patent. In­dus­try ex­perts and an­a­lysts point out that many do­mes­tic phar­ma­ceu­ti­cal com­pa­nies that once en­joyed wind­fall gains fre­quently through 180-day mar­ket ex­clu­siv­ity are re­al­is­ing that they can­not re­main the sole play­ers to reap ben­e­fits of mar­ket ex­clu­siv­ity af­ter the FDA amended guide­lines to al­low joint firsts to copy­cat drug­mak­ers. Out of In­dia’s $15 bil­lion global phar­ma­ceu­ti­cal ex­ports, do­mes­tic drug­mak­ers de­pend on the US mar­ket for at least $4 bil­lion in sales. Ab­hi­jit Mukher­jee, COO of In­dia’s sec­ond-largest drug­maker Dr Reddy’s Lab­o­ra­to­ries said the era of wind­fall gains from FTF is over. “Be­cause of the in­creas­ing com­pe­ti­tion among the generic drug com­pa­nies, there is no guar­an­tee that one com­pany can solely en­joy the 180-day mar­ket ex­clu­siv­ity.” Be­cause of the chang­ing dy­nam­ics of the US generic mar­ket, Dr Reddy’s has de­vised new busi­ness strate­gies, in­clud­ing shift­ing fo­cus to com­plex and dif­fi­cult to make gener­ics, which ad­dress com­pe­ti­tion and en­sure bet­ter growth and higher mar­gins. IDFC Se­cu­ri­ties’ pharma an­a­lyst Nitin Agar­wal said the value of the 180-day mar­ket ex­clu­siv­ity, which is con­sid­ered the holy grail of the US gener­ics mar­ket, now stands “con­sid­er­ably di­min­ished”, thanks to grow­ing com­pe­ti­tion among play­ers. Re­flect­ing the chang­ing sit­u­a­tion in re­cent months, more than a dozen gener­ics mak­ers have been shar­ing mar­ket­ing ex­clu­siv­ity for about 70% of the ap­pli­ca­tions for off-patent drugs. A re­cent ex­am­ple is Vim­pat, an anti-epilep­tic drug with in­no­va­tor rights be­long­ing to UCB. As many as 15 In­dian compa- nies, in­clud­ing Ran­baxy, Aurobindo, Glen­mark, Sun Pharma, Cadila, Alem­bic and Het­ero are com­pet­ing to share the ex­clu­siv­ity, apart from multi­na­tion­als like My­lan, San­doz and Wat­son. But this does not mean sole ex­clu­siv­ity is ab­sent — among the ben­e­fi­cia­ries are Dr Reddy’s and Lupin. The lat­ter re­ported wind­fall gains from oph­thalmic so­lu­tion Zy­maxid ($60 mil­lion) and an­tiHIV drug Trizivir ($110 mil­lion) while Dr Reddy’s en­joyed mar­ket ex­clu­siv­ity from anti-psy­chotic medicine Ziprasi­done. An­a­lysts said large In­dian drug­mak­ers are shift­ing their fo­cus to­wards niche prod­ucts with huge en­try bar­ri­ers, like com­plex gener­ics. Ac­cord­ingly, the ex­pen­di­ture of In­dian medicine man­u­fac­tur­ers to­wards re­search and de­vel­op­ment has risen sig­nif­i­cantly. A se­nior ex­ec­u­tive of a Hy­der­abad-based generic firm said on con­di­tion of anonymity that the strat­egy of fo­cussing on FTFs for mar­ket ex­clu­siv­ity and spend­ing large amounts on patent in­fringe­ment bat­tles is slowly los­ing tak­ers. The new game is to ju­di­ciously shift at­ten­tion to in­jecta­bles and drugs with limited com­pe­ti­tion to main­tain growth and earn high mar­gins, he said. Ex­pe­dited clear­ance of generic ap­pli­ca­tions by FDA of­fers both re­wards and draw­backs, said IDFC Se­cu­ri­ties’ Nitin Agar­wal. “While this will lead to ac­cel­er­ated mon­eti­sa­tion of for larger play­ers, it will also re­duce op­por­tu­ni­ties for prof­its aris­ing out of de­lay in ap­proval of com­pet­ing generic prod­ucts.”

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