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Pharma Horizon: Cloud, Rainbow And Smear

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Some recent papers contemplated that the patent cliff for blockbuster drugs has already reached the zenith and early signs of recovery should be visible from 2013 onwards. However, from analysis of the currently available data, contrary to the above belief, I reckon, the downtrend in global pharma is far from over, not just yet.

One of the telltale signs of this slump is near-term patent expiry of today’s blockbuster drugs, the impact of which will continue to keep the global pharma sky overcast with clouds for some more time, especially in absence of replaceable equivalents. Interestingly, on the flip side, a beautiful rainbow, as it were, also takes shape in the horizon, ushering-in a hope to a large number of patients for improved access to newer drugs, just as it does to the generic players for accelerating business growth.

That’s the good part of it, though for the generic drug industry. However, the bad part of the emerging scenario gives rise to a lurking fear of gloom and doom, emanating from self-created evitable smears and taints, blended in vessels of despicable mindsets.

Clouds:

While having a glimpse at that following table, the underlying impact of the dark clouds looming large on the global pharma horizon cannot just be wished away:

Total Patent Expiry:

Year Value US$ Billion
2015 66
2014 34
2013 28
2012 55
Total 183 

(Compiled from FiercePharma data)

Thus, the negative impact from sales lost to patent expiry of blockbuster drugs of today, though declined from US$ 55 billion in 2012 to US$ 28 billion in 2013, the same would start climbing-up again to US$ 66 billion in 2015.

If we take a look at the product-wise details, the picture pans out as under:

Top 10 ‘Patent Expiry’ in 2014:

No. Brand Company Disease Sales 2012   US$ Million Expiry
1. Copaxone Teva MultipleSclerosis 3996 May 2014
2. Nexium AstraZeneca Acid peptic 3994 May 2014
3. Micardis/HCT BoehringerIngelheim Hypertension 2217 Jan 2014
4. Sandostatin LAR Novartis Cancer 1512 June 2014
5. Exforge/HCT Novartis Hypertension 1352 Oct 2014
6. Nasonex Merck Resp. Allergy 1268 Jan 2014
7. Trilipix Abbvie Anti-lipid 1098 Jan 2014
8. Evista Eli Lilly Osteoporosis 1010 Mar 2014
9. Renagel Sanofi Chronic Kidney Disease  861 Sep. 2014
10. Restasis Allergan Chronic Dry Eye  792 May 2014

(Compiled from FiercePharma data)

The above figures, therefore, do reinforce the hypothesis that the following factors would continue to make the best brains of global pharma burning the midnight oil in search of sustainable strategic blueprints, at least, for some more time:

-       Mostly, high growth emerging markets of the world are generic drugs driven

-       Increasing cost containment pressure of Governments and/or other payor

-       Challenges from Intellectual Property (IP) and Market Access related  issues

-       Declining R&D productivity

-       Shift in overall focus for new drugs on expensive biologics

-       Markets turning more Volatile, Uncertain, Complex and Ambiguous (VUCA)

Current strategy to deliver shareholder-value not sustainable:

Since last several years, one has witnessed, despite slowing down of sales growth, big pharma players, by and large, have not failed in delivering impressive shareholder returns. This has been possible mainly due to ruthless cost cutting across the board, restructuring of operational framework and taking measures like, increase in dividends and share repurchases.

These strategic measures, though laudable to keep the head above water, are just not sustainable over a period of time sans strong cashflow.

Thus, for a long haul, robust and consistent business growth with commensurate impact on the bottom-line generating smooth cashflow, is imperative for all these companies.

In this difficult ball game of developing sustainable cutting-edge strategies at an equally challenging time, the consolidation process within the industry would gain further momentum, where only the fittest corporations, led by great corporate brains, would manage to survive and thrive.

However, who all would successfully be able to squarely face the moments of truth, triumphantly seizing the opportunities frozen in time, in the fast changing paradigm of a seemingly VUCA world, is not more than a matter of speculation now.

The Rainbow:

As stated above, while this canopy formed with dark clouds keeps looming large at the global pharma horizon, a beautiful rainbow is simultaneously seen taking shape for the domestic Indian drug manufacturers to cash-on with well-orchestrated strategic measures. One of the critical success requirements for this sprint, is touching the tape in the finishing line to become first to introduce generic versions of the patent expired drugs, especially in the US market.

Indian pharma players have already demonstrated in the past that they do have the wherewithal of making such rare opportunities meaningful by offering affordable new drugs of high quality standards to a large number of patients, while simultaneously accelerating growth of their respective business operations.

Proven acumen even in biologics:

India has recently proven its acumen in the area of biologics too, by developing a biosimilar version of the complex biologic drug – Trastuzumab (Herceptin) of Roche, used for the treatment of breast cancer, and that too in a record time.

As is known to many, earlier in 2013 Roche decided not to defend its patents on Herceptin in India, which reportedly recorded local sales of about US$ 21 million in 2012. Many people opined at that time, it would not be easy for any company to develop biosimilar version of Trastuzumab, mainly due to the complexity involved in its clinical development. Hence, some diehards kept arguing, Roche would not be commercially impacted much for taking the above decision, at least in the near to mid term.

Surprising almost everybody, Biocon and its MNC partner Mylan not only developed an affordable biosimilar version of Trastuzumab successfully, but also got its marketing approval from the Drug Controller General of India (DCGI), thereby immensely benefitting a large number of breast cancer patients in India and hopefully even beyond.

Keeping ‘Eye on the ball’?

Details of ANDA status from the USFDA source probably indicate that several Indian players have started gearing up to move in that direction at a brisk pace, keeping their eyes well fixed on the ball.

The following table further indicates that in 2012 India ranked second, after the United States (US) in terms of number of ANDA approvals and in 2013 till October India ranks number one, overtaking the United States (US):

ANDA’s Granted in 2012 and upto October 2013):

Country ANDA 2012 ANDA (October 2013) Total Since 2007
United States 183 119 1191
India 196 138 993
Switzerland 20 12 134
Israel 28 13 133
Canada 27 13 116
Germany 20 6 107
UK 11 15 95
China 7 10 29

Smears:

Unfortunately, just out side the frame of the above kaleidoscope, one can see large spots of self created slimy smears, which can make the ‘Rainbow’ irrelevant, maintaining the horizon as cloudy even for the Indian generic players.

Continuous reports from US-FDA and UK-MHRA on fraudulent regulatory acts, lying and falsification of drug quality data by some otherwise quite capable Indian players, have just not invited disgrace for the country in this area, but also reportedly prompted regulators from other nations trying to assess whether such bans might suggest issues for drugs manufactured for their respective countries, as well.

Such despicable mindsets of the concerned key players, if remain unleashed, could make Indian Pharma gravitating down, stampeding all hopes of harvesting the incoming opportunities. 

We have one such ready example before us and that too is not an old one. The ‘Import Alert’ of the USFDA against Mohali plant of Ranbaxy, has already caused inordinate delay in the introduction of a cheaper generic version of Diovan, the blockbuster antihypertensive drug of Novartis AG, after it went off patent. It is worth noting that Ranbaxy had the exclusive right to sell a generic version of Diovan from September 21, 2012.

Another report of November 2013 states, “The Drug Controller General of India has ordered Sun Pharmaceutical, the country’s largest drug maker by market capitalization to suspend clinical research activities at its Mumbai based bio-analytical laboratory, a move that could slow down the company’s regulatory filings in India and possibly overseas as well.”

The outcome of such malpractices may go beyond the drug regulatory areas, affecting even the valuations of concerned Indian pharma companies. According to a recent report Strides Arcolab will not get US$ 250 million of the US$ 1.75 billion anticipated from the sale of its injectable drugs unit to Mylan Inc unless regulatory concerns at Agila Specialities in Bangalore are resolved.

Thus the smears though for now are confined to a few large manufacturing units of Indian Pharma, including some located overseas, may eventually play the spoil sport, trashing all hopes seen through the rainbow in the bins of shame.

Conclusion:

In the balance of probability, I believe, the clouds of uncertainty would continue to loom large over the global pharma, at least, till 2015.

However, in the midst of it, heralds a ‘never before opportunity’ for Indian pharma to cash on the early fruits of forthcoming patent expiries of today’s blockbuster drugs, not just for them, but for patients at large.

Already demonstrated capabilities of the homegrown players, trigger expectations of making it happen. The encouraging trend of grant of ANDAs in the US further reinforces this belief.

Despite all these, a lurking fear does creep in. This evitable fear finds its root in repeated fraudulent behavior of some Indian drug manufacturers, seriously compromising with cGMP standards of global drug regulators, including lying and falsification of data generated, thus playing a spoil sport by ‘snatching defeat from the jaws of victory’, as it were.

That said, the question to ponder now is: In the ‘Pharma Horizon’ what would ultimately prevail in the short to medium term, especially in the Indian context – Clouds, The Rainbow or Smears?

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

More Glivec Like Deals in China and Mounting Global Challenges: Innovators poised Joining Biosimilar Bandwagon

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Pressure from the emerging markets on pricing of patented products is mounting fast. This time the country involved is China.

Recently, the Health Minister of China who stepped down last month after a seven-year stint in the top health job reportedly commented that western drugmakers will require to give hefty subsidies and forgo significant amount of profit on expensive cancer drugs, if they want access to huge market of China. He further voiced as follows:

“If the cost (of patented drugs) is too high, maybe only a few percent of patients can benefit. If we can arrange an appropriate, acceptable, affordable price, then you can have a huge market.”

‘Glivec deal’ in China: 

In the same report, it was indicated that in China Novartis ultimately agreed to donate three doses of its leukemia drug Glivec for every one sold to the government.

It is expected that many more such deals will take place in China.

The situation to get more challenging in the emerging markets: 

Many experts believe that due to high cost of patented drugs, especially biologics, negotiating hefty discounts with the Governments may be the best alternative for the innovator companies to avoid any possibilities of Compulsory Licensing (CL), like what happened to Bayer’s cancer drug Nexavar in India.

An opportunity in biosimilar drugs: 

Biologic drugs came to the international market slightly more than three decades ago, in 1980s. Growing at a scorching pace, the value turnover of these products exceeded US$ 138 billion in 2010 (IMS Health).

Launch of biologics like, Recombinant Insulin, Human Growth Hormone (HGH), Alteplase, Erythropoietin (EPOs), Granulocyte Colony Stimulating Factors (G-CSFs) and Monoclonal Antibodies (MAbs) kept fueling the market growth further.

Patent expiry of a number of biologic drugs over a period of next five years, especially in areas like, various types of cancer, diabetes and rheumatoid arthritis, besides many others, will help opening a huge window of opportunity for the global biosimilar players, including from India, to reap a rich harvest.

Global innovators joining the bandwagon: 

After a dream-run with high priced patented drugs for a reasonably long time, now stung by the current reality in various developed and emerging markets and factoring-in the width/depth/robustness of their own research pipeline, many global players have started taking a hard look at the emerging opportunities offered by biosimilar drugs.

Moreover, high price of original biologic drugs, cost containment pressure by various Governments, encouragement of generic prescriptions, large number of such drugs going off patent and growing demand of their low cost alternatives across the world, are making biosimilar market more and more lucrative from the global business perspective to all interested players, including from India.

According to Bloomberg Industries (2013), during the next six years biologic drugs with a total annual sales turnover of US$ 47 billion in 2012, will go off patent.

Sniffing opportunities for business growth, as stated above, many hard-nosed large research-based global pharmaceutical companies, currently fighting a challenging battle also in the ground of a tougher ‘patent cliff’, have started venturing into the biosimilar market, that too in a mega scale.

Some of them have already initiated developing biosimilar versions of blockbuster biologics, as reported below:

Originator Product Indication Biosimilar development by:
Roche/Genentech Rituxan Rheumatoid arthritis Boehringer Ingelheim
Roche/Genentech Herceptin, Rituxan Breast Cancer, Rheumatoid arthritis Pfizer
Roche/Genentech Rituxan Non-Hodgkin’s lymphoma Novartis
Johnson & Johnson Remicade Rheumatoid arthritis Hospira

Source: Bloomberg BusinessWeek

Thus, I reckon, continuous quest for development of cost-effective alternatives to high-priced biologic medicines would keep on propelling the growth of biosimilar drugs, across the world.

Glivec maker Novartis fought a court battle to launch the first ‘Biosimilar drug’ in America: 

In mid-2006, US FDA approved its first ‘biosimilar drug’-Omnitrope of Sandoz, the generic arm of the Glivec maker Novartis, following a Court directive. Omnitrope is a copycat version of Pfizer’s human growth hormone Genotropin. Interestingly, Novartis had also taken the US FDA to court for keeping its regulatory approval pending for a while in the absence of a well-defined regulatory pathway for ‘biosimilar drugs’ in the USA at that time.

More interestingly, having received the US-FDA approval, the CEO of Sandoz (Novartis) had then commented as follows:

“The FDA’s approval is a breakthrough in our goal of making high-quality and cost-effective follow-on biotechnology medicines like, Omnitrope available for healthcare providers and patients worldwide”.

Biosimilar market started shaping-up:

Internationally most known companies in the biosimilar drugs space are Teva, Stada, Hospira and Sandoz. Other large research based global innovator pharmaceutical companies, which so far have expressed interest in the field of biosimilar drugs, are Pfizer, Astra Zeneca, Merck and Eli Lilly.

Following are examples of some biosimilar drug related initiatives of the global players as the market started developing:

  • Merck announced its entry into the biosimilar drugs business on February 12, 2009 with its acquisition of Insmed’s portfolio for US$ 130 million. The company also paid US$ 720 million to Hanwha for rights to its copy of Enbrel of Amgen.
  • Samsung of South Korea has set up a biosimilars joint venture with Quintiles to create a contract manufacturer for biotech drugs.
  • Celltrion and LG Life Sciences have expressed global ambitions in biosimilar drugs.
  • Some leading global innovator biotech companies also like, Biogen Idec and Amgen have reportedly been mulling entry into biosimilar market.

According to Reuter (June 22, 2011), Merck, Sandoz, Teva and Pfizer are expected to emerge stronger in the global biosimilar market, in the years ahead. 

Why is still so low penetration of lower cost biosimilar drugs?

Although at present over 150 different biologic medicines are available globally, just around 11 countries have access to low cost biosimilar drugs, India being one of them. Supporters of biosimilar medicines are indeed swelling as time passes by.

It has been widely reported that the cost of treatment with patented biologic drugs can vary from US$ 100,000 to US$ 300,000 a year. A 2010 review on biosimilar drugs published by the Duke University highlights that biosimilar equivalent of the respective biologics would not only reduce the cost of treatment, but would also improve access to such drugs significantly for the patients across the globe. (Source: Chow, S. and Liu, J. 2010, Statistical assessment of biosimilar products, Journal of Biopharmaceutical Statistics 20.1:10-30)

Now with the entry of global pharma majors, the biosimilar market is expected to get further heated up and develop at a much faster pace with artificial barriers created by vested interests, if any, being removed.

Recent removal of regulatory hurdles for the marketing approval of such drugs in the US  will indeed be the key growth driver.

Other growth drivers:

According to a study (2011) conducted by Global Industry Analysts Inc., besides recent establishment of the above regulatory guidelines for biosimilars in the US, the key growth drivers for global biosimilar market, will be as follows:

▪   Patent expiries of blockbuster biologic drugs

▪   Cost containment measures of various governments

▪   Aging population

▪   Supporting legislation in increasing number of countries

The business potential in India:

The size of biotech industry in India is estimated to be around US$ 4 billion by 2015 with a scorching pace of growth driven by both local and global demands (E&Y Report 2011).

The biosimilar drugs market in India is expected to reach US$ 2 billion in 2014 (source: Evalueserve, April 2010).

Recombinant vaccines, erythropoietin, recombinant insulin, monoclonal antibody, interferon alpha, granulocyte cell stimulating factor like products are now being manufactured by a number of domestic biotech companies like, Biocon, Panacea Biotech, Wockhardt, Emcure, Bharat Biotech, Serum Institute of India and Dr. Reddy’s Laboratories (DRL), besides others.

DRL is the largest biosimilar player in India with an impressive product portfolio. Reditux of DRL is the world’s first Biosimilar monoclonal antibody, which is a copy version of Mabthera/ Rituxan of Roche and costs almost 50 percent less than the original brands.

Some of the Biosimilar products of the Indian Companies are as follows:

Indian Company

Biosimilar Product
Dr Reddy’s Lab Grafeel, Reditux, Cresp
Intas Neukine, Neupeg, Intalfa, Epofit
Shantha Biotech/Merieux Alliance Shanferon,Shankinase,Shanpoietin
Reliance Life Sciences ReliPoietin, ReliGrast, ReliFeron, MIRel
Wockhardt Wepox, Wosulin
Biocon Eripro, Biomab, Nufil, Myokinase, Insugen

(Source: Stellarix Consultancy Services)

The cost of development of Biosimilars in India is around US$ 10-20 million, which is expected to go up, as “Biosimilar Guidelines” are now in place for marketing approval of such products in India.

The ultimate objective of all these Indian companies will be to get regulatory approval of their respective biosimilar products in the US and the EU, either on their own or through collaborative initiatives.

Indian players making rapid strides:

As stated above, biosimilar version of Rituxan (Rituximab) of Roche used in the treatment of Non-Hodgkin’s lymphoma has already been developed by DRL in India. It also has developed Filgastrim of Amgen, which enhances production of white blood cell by the body and markets the product as Grafeel in India.

Similarly Ranbaxy has collaborated with Zenotech Laboratories to manufacture G-CSF.

On the other hand Glenmark reportedly is planning to come out with its first biotech product soon from its biological research establishment located in Switzerland.

Indian pharmaceutical major Cipla reportedly has invested around US$ 60 million in 2010 to acquire stakes of MabPharm in India and BioMab in China and is planning to launch a biosimilar drug in the field of oncology by 2013.

Another large pharmaceutical company of India, Lupin signed a deal with a private specialty life science company NeuClone Pty Ltd of Sydney, Australia for their cell-line technology. Lupin reportedly will use this technology for developing biosimilar drugs in the field of oncology, the first one of which, will reportedly be launched in India by 2013.

The global Market:

In 2011 the turnover of Biologic drugs increased to over US$ 175 billion in the total market of US$ 847 billion. The sale of Biosimilar drugs outside USA exceeded US$ 1 billion.

Six biologic drugs featured in the top 10 best selling global brands in 2012 with Humira of AbbVie emerging as the highest-selling biologics during the year.  Roche remained the top company by sales for biologics with anticancer and monoclonal antibodies.

According to IMS Health report, by 2015, sales of biosimilars are expected to reach between US$ 1.9 – 2.6 billion. The report also states that this market has the potential to be the single fastest-growing biologics sector in the next five years.

Cost of biosimilar development in the developed markets:

The process of developing a biosimilar drug is complex and requires significantly more investment, technical capabilities and clinical trial expertise than any small molecule generic drug. As per industry sources, average product developmental cost ranges between US$ 100 and 250 million in the developed markets, which is several times higher than the same associated with development of small molecule generics, ranging around US$ 1to 4 million.

All these factors create a significant market entry barrier for many smaller players with similar intent but less than adequate wherewithal.

Even higher market entry barrier with ‘second generation’ biosimilar drugs:

Emergence of second generation branded biosimilar products such as PEGylated products and PegIntron (peginterferon alpha), Neulasta (pegfilgrastim) and insulin analogs have the potential to reduce the market size for first generation biosimilar drugs creating significant entry barrier.

Negotiating the entry barriers:

As stated above, the barriers to market entry for biosimilar drugs are, in general, are much higher than any small molecule generic drugs. In various markets within EU, many companies face the challenge of higher development costs for biosimilar drugs due to stringent regulatory requirements and greater lead-time for product development.

Navigating through such tough regulatory environment will demand different type of skill sets, especially for the generic companies not only in areas of clinical trials and pharmacovigilance, but also in manufacturing and marketing. Consequently, the investment needed to take biosimilar drugs from clinical trials to launch in the developed markets will indeed be quite significant.

The future potential:

According to an IMS Health study, the emerging markets will drive biosimilar market growth with significantly more number of patients. The report estimates that over a period of time US will emerge as the number one global biosimilars market.

By 2020, emerging markets and the US are expected to register a turnover of US$11 billion and US$ 25 billion representing a share of 4 percent to 10 percent of the total global biologics market, respectively.

The report estimates that overall penetration of biosimilars within the off-patent biological market will reach up to 50 percent by 2020, assuming a price discount in the range of 20 to 30 percent.

Is 12 years exclusivity in the US a significant entry barrier?

In the US, the innovator companies get 12 years exclusivity for their original biologic drugs from the date of respective marketing approvals by the USFDA.

The BPCI Act clearly specifies that applications for ‘biosimilar drugs’ to the USFDA will not be made effective by the regulator before 12 years from the date of approval of the innovators’ products. In addition, if the original product is for pediatric indications, the 12-years exclusivity may get an extension for another six months.

The key point to note here is, if the USFDA starts its review process for the ‘biosimilar drugs’ only after the ’12 year period’, the innovator companies will effectively get, at least, one additional year of exclusivity over and above the ’12 year period’, keeping applicants for ‘biosimilar drugs’ waiting for that longer.

Conclusion:

As stated above, with around 40 percent cost arbitrage and without compromising on the required stringent international regulatory standards, the domestic ‘biosimilar’ players should be able to establish India as one of the most preferred manufacturing destinations to meet the global requirements for such drugs, just as small molecule generic medicines.

With experience in conforming to stringent US FDA manufacturing standards, having largest number of US FDA approved plants outside USA, India has already acquired a clear advantage in manufacturing high technology chemical based pharmaceutical products in the country. Now with significant improvement in conformance to Good Clinical Practices (GCP) and honed skill sets in the field of biologics, Indian biosimilar players are clearly poised to catapult themselves to even a higher growth trajectory, either on their own or with appropriate collaborative arrangements with the international partners.

Thus, the initiatives of joining the biosimilar bandwagon by the hard-nosed research based global players, I reckon, will ultimately get translated into a win-win advantage for India in the rapidly evolving pharmaceutical space of the world.

Besides, like what they had to do in China, working with the Government to put in place a robust and win-win mechanism of ‘Price Negotiation for Patented Drugs’ in India could augur well for the global players of pharmaceutical and biologic drugs. This mechanism may also help putting forth even a stronger argument against any Government initiative to grant CL on the pricing ground for expensive patented drugs in India.

With all these developments, patients will be the ultimate winners having much greater access to both innovative medicines and biosimilar drugs than what they have today, fetching a huge relief to all right thinking population in the country.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

The Ghost Keeps Haunting: NCD Dogs Cancer in ‘Compulsory License’ Debate of India

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In November 2012, as a part of the ‘Campaign for Affordable Trastuzumab’ for the treatment of breast cancer, a citizens’ collective, reportedly sent an ‘Open Letter’ signed by around 200 cancer survivors, women’s groups, human rights and health rights campaigns and treatment activists from across the world to the Indian Prime Minister, urging him to ensure that the breast-cancer drug Trastuzumab is made affordable for treating cancer patients in the country.

Trastuzumab was named because of the following reasons:

  • Breast-cancer affects around 28-35 per cent of all cancers among women in major cities of India.
  • No other drug against HER+2 cancer can reduce patients’ mortality as Trastuzumab and reduce the spread of malignancy to other parts of the body.
  • Majority of women with HER+2 breast cancer do not have access to a complete course of the drug, which reportedly costs anywhere between Rs 6 to 8 lakhs (US$ 11,000 to US$ 14,500).

Reaping reach harvest: 

According to a media report, three homegrown Indian companies are currently developing biosimilar drugs to this protein molecule to reap a reach harvest arising out of the emerging opportunities.

However, this is expected to be an arduous, expensive and challenging endeavor, as the concerned companies will require pursuing a complicated biotechnological route to create follow-on biologics for Trastuzumab.

The ‘Trigger Factor’: 

It is widely believed that the above ‘Open Letter’ to the Prime Minister had prompted the Ministry of Health to form an ‘Experts Committee’ to evaluate the situation and make recommendations accordingly.

Thereafter, within a short period of time, in January, 2013, in a move that is intended to benefit thousands of cancer patients, Ministry of Health forwarded the report of the above ‘Experts Committee’ to the Department of Industrial Policy and Promotion (DIPP) for its consideration to issue Compulsory Licenses (CL) for three commonly used anti-cancer drugs namely, Trastuzumab (used for breast cancer), Ixabepilone (used for chemotherapy) and Dasatinib (used to treat leukemia). Public Health Foundation of India (PHFI), among other experts, also reportedly had participated as a member of this ‘Experts Committee’,

For a month’s treatment drugs like Ixabepilone and Dasatinib reportedly cost on an average of US$ 3,000 – 4,500 or Rs 1.64 – 2.45 lakh for each patient in India.

 A ‘Technology Transfer’ discouraged: 

Such a rapid development in the CL landscape of India is indeed intriguing, especially after a voluntary announcement by Roche in 2012 that it will produce Trastuzumab and Rituximab in India through transfer of technology to an Indian contract manufacturer.

Consequently for a month’s treatment, the price of Trastuzumab will come down from around US$ 2,000 to US$ 1, 366, i.e. by 31 percent and Rituximab from around US$ 1,456 to US$ 682 i.e. by 53 percent. This was reportedly announced by none other than the Minister of State of Chemicals and Fertilizers of India Mr. Srikant Jena.

Despite this voluntary decision of technology transfer and price reduction of two life saving drugs in India by Roche, reported Government consideration for grant of CL for Trastuzumab, without getting engaged in any form of a win-win dialogue with the Company, could ultimately prove to be counter productive and may discourage further technology transfer of expensive patented drugs to India.

Increasing incidence of cancer in India: 

Cancer is just not a dreaded disease, but also making a devastating impact, financial and otherwise, on the lives and families of thousands of sufferers in India.

According to ‘The Lancet’, published on 28 March 2012, in India 556 400 people died of cancer only in 2010.

The paper also comments that only half of the estimated 9.8 million total deaths per year is captured by the CRS in India, fewer than 4 percent are medically certified, while more than 75 percent of deaths occur at home.

The Lancet study clearly highlights that most cancer patients in India die without medical attention and drugs. Cancer is, therefore, increasingly becoming a public sensitive disease area with high socioeconomic impact in the country. High treatment cost of this near terminal disease is beyond reach of majority of population in the country.

In a written reply to a question in the ‘Upper House’ of the Indian Parliament, the Minister of State for Health and Family Welfare on March 4, 2012 said that according to “Three Year Report on Population Based Cancer Registries 2006 – 08″ of the Indian Council of Medical Research (ICMR), the estimated numbers of cancer patients for 2015 and 2020 are 1.16 million and 1.27 million respectively. There is a gradual rise in the prevalence of cancer in India, though the government has initiated several measures in this area.

High incidence of breast cancer: 

As per a recent report, an estimated 1, 00,000 – 1, 25,000 new patients suffer from breast cancer every year in India and this number is expected to double by 2025.

Government is mulling CL for NCD: 

Currently the DIPP appears to be planning to extend the provision of Compulsory License  (CL) beyond cancer drugs to other Non-Communicable Diseases (NCD) in the country, like diabetes. 

Domestic Pharma Association supports the move: 

A major domestic pharmaceutical industry association, as per media reports, supports this move by clearly articulating, “Over the years, more deaths are taking place on account of Non-Communicable Diseases (NCDs) than communicable ones. It is, therefore, natural that this provision (CL) will be used for NCDs as well.”

UN declaration on NCD provides flexibilities in TRIPS Agreement: 

Experts believe that this new move on CL for drugs related to NCDs is a consequence of India’s signing the United Nation (UN) declaration on the prevention of NCDs in the country by, among others, using flexibilities in the TRIPS Agreement to increase availability of affordable drugs for such diseases.

The Government has already launched a “National Program for Prevention & Control of Cancer, Diabetes, Cardio Vascular Diseases and Stroke (NPCDCS)” as a pilot project covering 150 million people in 100 inaccessible and most backward districts during the financial year 2011-2012 at a cost of US$ 275 million.

Socio-economic impact of NCDs in India: 

Indian Journal of Community Medicine (IJCM) in an article titled, “Social and Economic Implications of Non-Communicable Diseases (NCDs) in India” has highlighted, among others as follows:

  • NCDs account for 62 percent of the total disease burden in India with a significant ascending trend both in terms of overall mortality and morbidity.
  • This burden is likely to increase in the years to come.
  • Due to chronic nature of the disease and technological advancements in care, costs of treatment are high leading to access barriers, or ‘catastrophic expenditures’ for those who undergo treatment.
  • There are evidences of greater financial implications for the poorer households suffering from NCDs.
  • Most estimates suggest that the NCDs in India account for a significant economic burden ranging from 5 to 10 percent of GDP.
  • An urgent multi-sectoral Government action is strongly warranted both on grounds of economic arguments and social justice.
  • Action needs focus on addressing the social determinants of NCDs for prevention and strengthening of health systems to meet the challenge.
  • A framework for monitoring, reporting, and accountability is essential to ensure that the returns on investments in NCDs meet the targets and expectations set in the national plans.

Innovator companies contemplating legal recourse: 

Reacting to all these developments, the global pharmaceutical companies have, once again, expressed strong commitment to protect and continue to defend their Intellectual Property Rights (IPR) within the legal framework of India.

They have also reiterated their belief that a robust IPR regime will encourage innovation in the country making available more and more innovative drugs for the patients in India.

An interesting WHO report on a ‘robust IPR regime’: 

In this regard a World Health Organization (WHO) research report titled “Patents, Price Controls and Access to New Drugs: How Policy Affects Global Market Entry” makes some interesting observations on a ‘robust IPR regime’.

The report highlights the following four important points:

1. Increasing the strength of a patent system to include long-term protection on pharmaceutical products appears to spur market entry mostly in the high-income countries.

For the low- and middle-income countries that are currently being encouraged to move to stronger protection through trade policies, the evidence that extending protection enhances access to new pharmaceuticals is mixed.

2. There is some evidence that high level of protection might encourage more frequent entry of innovative products in the short term. However, in the longer term the same domestic capacity could well be an alternative source of entry of such drugs.

3. Intellectual Property (IP) holders frequently assert that the poor quality of enforcement in developing countries undermines the value of their patent rights. However, it is quite evident now that patent laws in these countries are at least broadly meaningful commensurate to their respective domestic requirements.

4. The standard argument on price regulation that it will dissuade market entry for innovative drugs appears to have more relevance among the high-income countries and not so for the poorer countries.

The authors further indicate:

“There we find that while price regulation makes it less likely that new drugs will be available quickly, it does not appear to prevent new products from being launched eventually.”

Conclusion: 

Following all these recent developments and weighing pros and cons, one could well imagine that pressure on the Government from various stakeholders for CL on drugs for Cancer and NCDs will keep mounting, unless an alternative measure like, ‘Price Negotiation for Patented Drugs’ is put in place by the Department of Pharmaceuticals, sooner than later, in 2013.

The recent judgment of the ‘Intellectual Property Appellate Board (IPAB)’ on CL to Natco may further add fuel to this raging debate.

It is now quite clear from the Finance Minister’s speech on the ‘Union Budget Proposal’ for 2013-14 that eagerly awaited ‘Universal Health Coverage’ or ‘Free Distribution of Essential Medicines to all’ schemes will not be implemented, at least for now.

Thus in all probability, the ghost of CL will keep haunting the innovators in India unabated, unless an effective, scalable and sustainable model for improving access to patented drugs for majority of population in the country is put in place. This will call for demonstrative, innovative and constructive Public-Private-Partnership (PPP) initiatives, sooner. In this effort  all concerned should at first be aligned with the cause, in principle, and try to be a constructive partner to get it translated into reality together, rather than just playing the role of vociferous critics in perpetuity .

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Takes ‘Two to Tango’: Encashing Opportunities with Biologic drugs in India

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Despite current ‘Patent Cliff’ ongoing research on biologics is now at the forefront of the Global Pharmaceutical Industry.  The bottom-line impact of a successful new biologic molecule to treat intractable ailments like, cancer, blood disorders, Parkinson’s, Myasthenia Gravis, Multiple Sclerosis, Alzheimer’s diseases, will be huge.

Currently, faster growth of this segment as compared to conventional small molecules is primarily driven by novel technologies and highly targeted approaches, the final outcome of which is being more widely accepted by both physicians and patients.

Lesser generic competition makes it more attractive:

After patent expiry, innovators’ small molecule brands become extremely vulnerable to cut throat generic competition with as much as 90% price erosion.This is mainly because  these small molecules are relatively easy to replicate by many generic manufacturers and the process of getting their regulatory approval is also not as stringent as biosimilar drugs in most of the markets of the world.

On the other hand biologic drugs involve difficult, complex and expensive processes for development. Such resource intensive scientific expertise together with stringent regulatory requirements for obtaining marketing approval, especially in the developed markets of the world like, EU and USA, help creating a significant market entry barrier for many players. That is why even after patent expiry, biologics enjoy significant brand protection from generic competition for quite some time, in many cases.

It is for this reason brands like the following ones are expected to go relatively strong even for some more time, without any significant competition from biosimilar drugs in many of the major markets of the world:

Brand Company Launch date
Rituxan Roche/Biogen idec 1997
Herceptin Roche 1998
Remicade Centocor/J&J 1998
Enbrel Amgen/Pfizer 1998

Global Market:

In 2011 the turnover of Biologic drugs increased to over US$ 175 billion in the total market of US$ 847 billion. The sale of Biosimilar drugs outside USA exceeded US$ 1 billion.

Six biologic drugs featured in the top 10 best selling global brands in 2012 with Humira of AbbVie emerging as the highest-selling biologics during the year.  Roche remained the top company by sales for biologics with anticancer and monoclonal antibodies.

According to IMS Health, by 2015, sales of biosimilars are expected to reach between US$ 1.9 – 2.6 billion, an increase from US$ 378 million for the year to the first half of 2011.

Attractiveness:

The answer to the key question of why do so many companies want to enter into the biotech space of the business, in summary, could lie in the following:

  • Truly innovative small molecule discovery is becoming more and more challenging and expensive with the low hanging fruits already being plucked.
  • More predictable therapeutic activity of biologics with better safety profile.
  • Higher percentage of biologics have turned into blockbuster drugs in the recent past.
  • Market entry barrier for biosimilar drugs, after patent expiry of the original molecule, is much tougher than small molecule generics.
  • A diverse portfolio of both small and large molecules will reduce future business risks.

A 2012 report by PwC titled ‘From Vision to Decision: Pharma 2020’ states that “the next few years may look bleak for pharma, but we’re convinced that the following decade will bring a golden era of renewed productivity and prosperity.”

The document also points out that the global pharmaceutical industry is now focusing its R&D initiatives on biologics for the treatment of cancer and rare diseases. Nearly 30 percent of the 7,891 molecules currently in clinical testing cover cancer and autoimmune conditions.

Another emerging opportunity:

As stated above, unlike commonly used ‘small molecule’ drugs, ‘large molecule’ biologics are developed from living cells using very complex processes.

It is virtually impossible to replicate these protein substances, unlike the ‘small molecule’ drugs. One can at best develop a biologically similar molecule with the application of high degree of biotechnological expertise. These drugs are known as ‘Biosimilar Drugs’ and usually cost much less than the original ones.

Biosimilar drugs market is currently fast evolving across the world with varying degree of pace and stages of developments. The U.S currently holds the leadership status in the production of biologics, with around 45 percent of the total share. India’s share, now being at 7 percent is continuously increasing.

Biosimilar Monoclonal Antibodies (mAbs) in the Pipeline:

Company

Location

Biosimilar mAbs

Development Status
BioXpress

Switzerland

16

Preclinical
Gene Techno Science

Japan

6

Preclinical
Zydus Cadilla

India

5

Preclinical
PlantForm

Canada

3

Preclinical
BioCad

Russia

3

Preclinical
Celltrion

South Korea

2

Phase 3
LG Life Sciences

South Korea

2

Preclinical
Gedeon Richter

Hungary

2

Preclinical
Cerbios-Pharma

Switzerland

1

Preclinical
Hanwha Chemical

South Korea

1

Preclinical
PharmaPraxis

Brazil

1

Preclinical
Probiomed

Mexico

1

Phase 3
Samsung BioLogics

South Korea

1

Preclinical
Novartis

Switzerland

1

Phase 2
Teva

Israel

1

Phase 2
Zenotech

India

1

Phase 3
Spectrum

US

1

Preclinical
Biocon/Mylan

India/US

1

Preclinical

(Source: PharmaShare; as of September 10, 2011 from Citeline’s Pipeline database)

Future business potential with cost arbitrage of India:

In 2013, products like, Avonex of Biogen Idec, Humalog of Eli Lilly, Rebif of Merck KgaA, Nupugen of Amgen will go off-patent, paving the way of entry for lower priced biosimilar drugs. The sum total of revenue from all such drugs comes to over U.S$ 15 billion.

The report from the ‘Business Wire’ highlights that, ‘the manufacture and development of a biosimilar molecule requires an investment of about US$ 10 to 20 million in India, as compared to US$ 50 to 100 million in developed countries’, vindicates the emergence of another lucrative business opportunity for India for such drugs with significant cost arbitrage.

Government support in India:

In India, the government seems to have recognized that research on biotechnology has a vast commercial potential for products in human health, including biosimilars, diagnostics and immunobiologicals, among many others.

To give a fillip to the Biotech Industry in India the National Biotechnology Board was set up by the Government under the Ministry of Science and Technology way back in 1982. The Department of Biotechnology (DBT) came into existence in 1986. The DBT currently spends around US$ 300 million annually to develop biotech resources in the country and has been reportedly making reasonably good progress.

The DBT together with the Drug Controller General of India (DCGI) has now prepared ‘Regulatory Guidelines for Biosimilar Drugs’ in conformance to international quality and patient safety standards.

Currently, a number of both financial and non-financial incentives have been announced by the Central and the State Governments to encourage growth of the biotech industry in India, which include tax incentives, exemption from VAT and other fees, grants for biotech start-ups, financial assistance with patents, subsidies on investment from land to utilities and infrastructural support with the development of ten biotech parks through ‘Biotechnology Parks Society of India’.

A commendable DBT initiative:

Towards this direction, the Department of Biotechnology (DBT) of the Government of India has taken a commendable step to encourage the small and medium scale business outfits by setting-up ‘The Small Business Innovation Research Initiative (SBIRI)’. This scheme has been launched to boost ‘Public-Private-Partnership (PPP)’ projects in the country.

SBIRI supports ‘the high-risk pre-proof-of-concept research’ and ‘late stage development’ in small and medium size companies to get them involved in the development of biologics.

Some examples:

Examples of some among many of the PPP initiatives in the healthcare space under SBIRI are as follows:

No.

Company Name with Collaborator

Title of the Project Supported
1. IcubedG Ideas Private Limited, New Delhi Risk based Process Design for large scale Manufacturing of male injectable contraceptive
(Phase I)
2. Incozen Therapeutics Pvt. Ltd., Hyderabad Discovery and Development of Novel, Selective and Potent Dihydroorotate Dehydrogenase Inhibitors in Inflammatory Bowel diseases.
(Phase I)
3. Mediclone Biotech Private Limited, Chennai Commercial Production of Monoclonal Antibodies as an import substitute with special reference to Red Blood Cell Phenotyping (Phase II)
4. Orchid Chemicals & Pharmaceuticals Ltd., Chennai in collaboration with AU-KBC Research Center, Chennai Development and validation of a cell-tissue co-culture model for aiding liver specific studies and drug discovery applications. (Phase I)
5. Reliance Life Sciences Pvt. Ltd., Navi Mumbai An open label, multicenter, prospective clinical study to evaluate the safety and efficacy of tissue engineered R-STE-001 in patients with symptomatic cartilage defect of femoral condyle (Phase II)
6. USV Limited, Mumbai Development of a Vaccine capable for eliciting immunological memory for the prevention of Typhoid (Phase II)
7. Virchow Biotech Private Limited, Hyderabad Development of commercialization of a recombinant uricase for the prevention and treatment of tumor lysis syndrome associated with leukemia, lymphoma & solid tumor malignancies (Phase II)
8. Virchow Biotech Private Limited, Hyderabad Indigenous development of a recombinant Fuzeon for the treatment of AIDS (Phase II)
9. Zenotech Laboratories Limited., Hyderabad Development of humanized monoclonal antibodies against human epidermal growth factor receptor (Phase I)
10. Advanced Neuro-Science Allies Pvt. Ltd, Bangalore in collaboration with Vittal Mallya Scientific Research Foundation, Bangalore Pre-clinical studies of Human mesenchymal stem cells (MSCs) isolated and characterized from different sources in autoimmune disease, namely rheumatoid arthritis (RA) and type 1 diabetes (TIDM)(Phase I)
11. Avesthagen Ltd., Bangalore Hepatocyte-like cells generated from human embryonic stem cells (hESC) for hepatotoxicity screening of xenobiotics in the drug discovery process(Phase I)
12. Avesthagen Limited, Bangalore Scale-up and evaluation of high-value biosimilar product (Etanercept) aimed at providing cost-effective healthcare solutions to the emerging markets(Phase II)
13. Bharat Serum and Vaccines Limited, Mumbai Expression of recombinant proteins for development of synthetic pulmonary surfactant for Respiratory Distress Syndrome(Phase I)
14. Cadila Pharmaceuticals Ltd., Ahmedabad Development of Mycobacterium was an adjuvant for anti – rabies vaccine(Phase I)

Besides, Indian pharmaceutical majors like Dr. Reddy’s Laboratories (DRL), Reliance Life Science, Shantha Biotech, Ranbaxy, Biocon, Wockhardt and Glenmark have made good investments in biotech drugs manufacturing facilities keeping an eye on the emerging opportunities with Biosimilar drugs in the developed markets of the world.

Funding remains a critical issue:

That said, many industry experts do feel that R&D funding for the Biotech sector in the country is grossly inadequate. Currently, there are not many ‘Venture Capital’ funds for this sector and ‘Angel Investments’ almost being non-existent, Indian biotech companies are, by and large, dependent on Government funding.

Making India a global hub for biosimilar manufacturing:

However, with around 40 percent cost arbitrage, adequate government support and without compromising on the required stringent international regulatory standards, the domestic ‘biologic’ players should be able to establish India as one of the most preferred manufacturing destinations to meet the global requirements for particularly ‘biosimilar drugs’.

Experience in conforming to stringent US FDA manufacturing standards, having largest number of US FDA approved plants outside USA, India has already acquired a clear advantage in manufacturing high technology chemical based pharmaceutical products in India. Significant improvement in conformance to Good Clinical Practices (GCP) standards will offer additional advantages.

Conclusion:

With increasing support from the government and fueled by creative, scientific and technological inputs from various experts and entrepreneurs in the country, India has the potential to emerge as one of Asia’s best powerhouses in the field of biosimilars drugs by the end of this decade. It will take ‘two to tango’.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

 

 

 

Robust implementation of Biosimilar Guidelines could help India earn leadership status in ‘Biosimilar World’

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Across the world, biologic drugs, in general, have a successful record in treating many life threatening and other complicated ailments. Expiration of product patents of the first major group of originators’ biologic molecules has led to the development of products that are designed to be ‘similar’ to the originators’ products, as it is virtually impossible to replicate any protein substances, unlike the ‘small molecule’ drugs.

These are known as ‘Follow-on Biologics’ or more commonly ‘Biosimilar Drugs’, which rely in part, on prior information obtained from the innovators’ products and demonstration of similarity with the originator’s molecule based on detailed and comprehensive product characterization, for their marketing approval.

The bedrock: 

India seems to have a good potential to become one of the key players in the development and manufacture of biosimilar drugs, not only to serve the needs of the local population, but also for exports to large developed and other developing markets. However, for this dream to materialize science-driven ‘Biosimilar Guidelines’ are absolutely necessary and should form the bedrock in the development process of all such drugs.

Paving the way: 

These guidelines will provide a regulatory framework or pathway to ensure that biosimilar Drugs approved in India are of good quality and demonstrably similar in efficacy, safety and immunogenicity to the original reference products.

Paving the way for such regulatory framework in the country with comprehensive sets of guidelines is of utmost importance, especially in the light of prevailing sub-optimal pharmacovigilance system in India.

Setting ground rules: 

Considerable developments have occurred across the globe in the scientific and regulatory understanding of biosimilar drugs. Nearly all developed nations and many developing countries have now defined or in the process of defining appropriate regulatory framework for the same.

However, due to lack of such guidelines in India, until recently, there have been instances of so called ‘biosimilar drugs’ being approved for marketing, reportedly with sub-optimal testing and dossiers, thereby putting into question the product quality, comparability and patient safety.

With the above backdrop, the Ministries of Health & Family Welfare and the Science and Technology have now set the ground rules and released India’s first “Guidelines on Similar Biologics: Regulatory Requirements for Marketing Authorization in India”. These Guidelines are already in place effective September 15, 2012.

A step in the right direction: 

Long awaited new ‘Biosimilar Guidelines’ of India, demonstrating an overall similarity in the philosophy and approach with the those in the U.S and Europe, though a belated move by the Government, but certainly a step in the right direction.

The global potential:

In most of the developed countries, besides regulatory issues, biosimilar drugs are considered to be a threat to fast growing high value innovative global biotech industry.

At the same time, there is an urgent need to effectively address the global concern for cheaper and more affordable biologic medicines for patients across the world. To achieve this objective, relatively smaller biotech companies, given the required wherewithal  at their disposal, could emerge as winners in this new ball game as compared to traditional generic pharmaceutical players.

Biosimilar drugs will, therefore, have immense global potential to improve access to life saving biologic medicines for the ailing population across the continents.

First ‘Biosimilar drug’ in the US: 

In mid-2006, US FDA approved its first ‘Biosimilar drug’- Omnitrope of Sandoz (Novartis) following a court directive. Omnitrope is a copycat version of Pfizer’s human growth hormone, Genotropin. Interestingly, Sandoz had also taken the US FDA to court for keeping its regulatory approval pending for a while in the absence of a well-defined regulatory pathway for ‘Biosimilar drugs’ in the USA at that time.

Having received the US-FDA approval, the CEO of Sandoz had then commented, “The FDA’s approval is a breakthrough in our goal of making high-quality and cost-effective follow-on biotechnology medicines like Omnitrope available for healthcare providers and patients worldwide”.

Despite this event, very few people at that time expected the US FDA to put regulatory guidelines in place for approval of ‘Biosimilar drugs’ in the largest pharmaceutical market of the world.

Global initiatives:

Internationally most known companies in the biosimilar drugs space are Teva, Stada, Hospira and Sandoz. Other large research based global innovator pharmaceutical companies, which so far have expressed interest in the field of biosimilar drugs are Pfizer, Astra Zeneca, Merck and Eli Lilly.

Following are the examples of some relatively recent biosimilar drug related initiatives of the global players:

  • Merck announced its entry into the biosimilar drugs business on February 12, 2009 with its acquisition of Insmed’s portfolio for US$ 130 million in cash. The company also paid US$ 720 million to Hanwha for rights to its copy of Enbrel of Amgen
  • Samsung of South Korea has set up a biosimilars joint venture with Quintiles to create a contract manufacturer for biotech drugs.
  • Celltrion and LG Life Sciences have expressed global ambitions in biosimilar drugs.

According to Reuter (June 22, 2011), Merck, Sandoz, Teva and Pfizer are expected to emerge stronger in the global biosimilar market, as we move on. 

In India: 

  • Dr Reddy’s Laboratories (DRL) has already been marketing a biosimilar version of Rituxan of Roche since 2007.
  • Reliance Life Science is also a potential player in the biosimilar market, though it has reportedly faced a setback in Europe with the regulators asking for more data for its version of EPO prompting them to withdraw their application for now.

Many other developments are also taking place in tandem in the space of biosimilar drugs, the world over. To fetch maximum benefits out of this emerging opportunity, as mentioned above, India has already started taking steps to tighten its regulatory process for marketing approval of such drugs. This is absolutely necessary to allay general apprehensions on drug safety with inadequate clinical data for similar protein substances.

The global market:

According to Datamonitor the global market for biosimilars drugs is expected to grow from US$ 243 million in 2010 to around US $3.7 billion by 2015.

Another report points out that only in the top two largest pharmaceutical markets of the world, the USA and EU, sales of biosimilar drugs will record a turnover of US$ 16 billion in the next couple of years when about 60 biotech products will go off-patent. 

Major Indian players:

Such a lucrative business opportunity in the western world is obviously attracting many Indian players, like, Biocon, Dr. Reddy’s Labs, Ranbaxy, Wockhardt, Shantha Biotech, Reliance Life Science etc., who have already acquired expertise in the development of biosimilar drugs like, erythropoietin, insulin, monoclonal antibodies, interferon-alpha, which are not only being marketed in India, but are also exported to other non/less-regulated markets of the world.

Ranbaxy in collaboration with Zenotech Laboratories is engaged in global development of Granulocyte Colony-Stimulating Factor (GCSF) formulations. Wockhardt is expected to enter into the global biosimilar drugs market shortly. Dr. Reddy’s Laboratories and Biocon are also preparing themselves for global development and marketing of insulin products, GCSF and streptokinase formulations. 

The domestic market:

According to IMS Health March 2012, the biosimilar drugs market in India is around US$ 700 million with the main categories being as follows:

Therapy Area US $ Million
Insulin 250
Hepatitis-B Vaccine 200
Heparin 70
Human Chorionic Gonadotropin 50

Moreover, as per available reports, till March 2012 about 91 clinical trials have been lined-up in India for 20 recombinant therapeutics, as approved by the Genetic Engineering Approval Committee.

Brand proliferation offering wider choices: 

Currently there has been huge brand proliferation for biosimilar products in India with around 250 brands in 20 therapeutic areas. Some examples are as follows:

Therapy Area No. of Brands
Insulin 40
Erythropoietin 55
Human Chorionic Gonadotropin 48
Streptokinase 33
Interferon 10
Heparin 10

Increasing demand:

The demand of such drugs even in India is increasing at a rapid pace. The focus of the government on various immunization programs is also getting sharper simultaneously. For example, during 2011-12, the government spent around US$ 115 million for routine immunization covering reportedly about 25 million pregnant women and children and nearly US$ 140 million towards pulse polio vaccination initiatives. This trend, though may not still be enough for the size and scale of a country like India, but praiseworthy nonetheless.

The focus on Oncology: 

Within bio-pharmaceuticals many companies are targeting Oncology disease area, which is estimated to be the largest emerging segment with a value turnover of over US$ 55 billion in 2010 growing over 17%.

As per recent reports about 8 million deaths take place all over the world every year only due to cancer. May be for this reason, the research pipeline for NMEs is dominated by oncology with global pharmaceutical majors’ sharp R&D focus and research spend being on this particular disease area.

About 50 NMEs for the treatment of cancer are expected to be launched in the global markets by 2015.

Indian market for oncology products: 

Current size of the Indian oncology market is reportedly around US$ 75 million.

Biocon has launched its monoclonal antibody based drug BIOMAb-EGFR for treating solid tumors with intent to introduce this product in the western markets as soon as they can get necessary regulatory approvals. Similarly, Ranbaxy with its strategic collaboration with Zenotech Laboratories is planning to market oncology products in various markets of the world like, Brazil, Mexico, CIS and Russia.

Government support: 

It has been reported that the Department of Biotechnology (DBT) of the Government of India has proposed funding of US$ 68 million for biosimilar drugs through Public Private Partnership (PPP) initiatives, where soft loans will be made available to the Indian biotech companies for the same.

Currently DBT spends reportedly around US$ 200 million annually towards biotechnology related projects. 

Areas of concern:

According to a research report from ‘The Decision Resources’, one of the key success factors for any such new biosimilar drugs, especially from India, will be how quickly the specialists accept them.

The report also noted a high level of concerns, if such drugs are not supported by robust sets of clinical data on the claimed treatment indications. To allay this concern robust implementation of the recent biosimilar guidelines in India will play a very critical role.

Conclusion: 

As the R&D based global innovator companies are expanding into the biosimilar space, many Indian domestic pharmaceutical companies are also poised to invest on biosimilars drugs development to fully encash the emerging global opportunities in this area. It is quite prudent for the Indian players to focus on the oncology therapy area, as it has now emerged as the fastest growing segment in the global pharmaceutical industry.

With around 40 percent cost arbitrage and without compromising on the required stringent national and international regulatory standards, the domestic biosimilar players should be able to establish India as one of the most preferred manufacturing destinations to meet the global requirements for biosimilar drugs.

Experience in conformance to stringent US FDA manufacturing standards having largest number of US FDA approved plants outside U.S, India has already acquired a clear advantage in manufacturing high technology chemical based pharmaceutical products in India.

Having progressed thus far, with adequate additional investments for similar biologics and ensuring robust implementation of new ‘Biosimilar Guidelines’, India has the potential to earn the leadership status even in the global biosimilar segment, just as it did in the generic pharmaceutical space of the world.

By: Tapan J Ray    

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Getting unfolded a global opportunity for India with Biosimilar Drugs

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Over a period of time, the trend of a disease treatment process is becoming more targeted and personalized to improve effectiveness of both diagnosis and treatment. Biotechnology being the key driver to this trend, India should not fall out of line from this direction.

There are two clear opportunities for India in this fast evolving arena. One is to get more engaged in the discovery research of new large molecular entity and the other is to make a successful foray in the fast emerging and relatively high value biosimilar drugs (generic versions of biotechnology medicines) markets of the world.

In my view, India has greater probability of success in the field of biosimilar drugs, which could catapult India as a major force to reckon with in the fast growing biotechnology space of the global pharmaceutical industry.

An interesting global collaboration:

On October 19, 2010, the home grown Biotech Company Biocon with its headquarter in the Information Technology (IT) heartland of India – Bangalore created a stir in the Industry by inking an interesting international business deal with the largest global pharmaceutical company – Pfizer.

With this deal of US $350 million Biocon initiated its foray into the global biosimilar market by enabling Pfizer to globally commercialize Biocon’s biosimilar human recombinant insulin and three insulin analogues.

Before this deal, Sanofi-Pasteur, the’ vaccine business unit’ of the global major Sanofi of France had acquired Shantha Biotechnics, located in Hyderabad for a consideration of US$ 602 million, in July 2009.

Global players signal a new aspiration:

Just a year before the above acquisition in India, on December 11, 2008, Reuters reported that just two days after Merck announced a major push into biosimilar medicines, Eli Lilly signaled similar aspirations. This report, at that time, raised many eyebrows in the global pharmaceutical industry, as it was in the midst of a raging scientific debate on the appropriate regulatory pathways for biosimilar drugs globally.

Be that as it may, many felt that this announcement ushered in the beginning of a new era in the pharmaceutical sector of the world, not just for the pharmaceutical players, but also for the patients with the availability of affordable lower priced biologic medicines.

The scenario is heating up with regulatory hurdles relatively easing off:

Within the developed world, European Union (EU) had taken a lead towards this direction by putting a robust system in place, way back in 2003. In the US, along with the recent healthcare reform process of the Obama administration, the regulatory pathway for biosimilar drugs is now being charted out by the US FDA. However, as of November 2011, they do not seem to have finalized the details of the process.

It is worth mentioning that during the same reform process a 12 year data exclusivity period has been granted for biosimilar drugs, against the 5-year period of the same granted to the innovators of small molecule chemical drugs.

In the recent past, the EU has approved Sandoz’s (Novartis) Filgrastim (Neupogen brand of Amgen), which is prescribed for the treatment of Neutropenia. With Filgrastim, Sandoz will now have 3 biosimilar products in its portfolio.

The trigger factor:

Globally, the scenario for biosimilar drugs started heating up when Merck announced that the company expects to have at least 5 biosimilars in the late stage development by 2012. The announcement of both Merck and Eli Lilly surprised many, as the largest pharmaceutical market of the world – the USA, at that time, was yet to approve the regulatory pathway for biosimilar medicines.

What then are the trigger factors for the research based global pharmaceutical companies like Pfizer, Sanofi, Merck and Eli Lilly to step into the arena of biosimilar medicines? Is it gradual drying up research pipeline together with skyrocketing costs of global R&D initiatives, cost containment pressures from the payers or relatively strong market entry barrier for smaller players? I reckon, all of these.

Low penetration of lower cost biosimilar drugs:

Although at present over 150 different biologic medicines are available globally, just around 11 countries have access to low cost biosimilar drugs, India being one of them. Supporters of biosimilar medicines are indeed swelling as time passes by.

It has been widely reported that the cost of treatment with innovative and patented biologic drugs can vary from US$ 100,000 to US$ 300,000 a year. A 2010 review on biosimilar drugs published by the Duke University highlights that biosimilar equivalent of such biologics could not only reduce the cost of treatment,  but would also improve access to such drugs significantly for the patients across the globe. (Source: Chow, S. and Liu, J. 2010, Statistical assessment of biosimilar products, Journal of Biopharmaceutical Statistics 20.1:10-30)

At present, the key global players are Sandoz (Novartis), Teva, BioPartners, BioGenerix (Ratiopharm) and Bioceuticals (Stada). With the entry of pharmaceutical majors like, Pfizer, Sanofi, Merck and Eli Lilly, the global biosimilar market is expected to heat up and develop at a much faster pace than ever before. Removal of regulatory hurdles (ban) for the marketing approval of such drugs in the US , as mentioned above, will be the key growth driver.

Biosimilar Monoclonal Antibodies (mAbs) in the Pipeline:

Company

Location

Biosimilar mAbs

Development Status
BioXpress

Switzerland

16

Preclinical
Gene Techno Science

Japan

6

Preclinical
Zydus Cadilla

India

5

Preclinical
PlantForm

Canada

3

Preclinical
BioCad

Russia

3

Preclinical
Celltrion

South Korea

2

Phase 3
LG Life Sciences

South Korea

2

Preclinical
Gedeon Richter

Hungary

2

Preclinical
Cerbios-Pharma

Switzerland

1

Preclinical
Hanwha Chemical

South Korea

1

Preclinical
PharmaPraxis

Brazil

1

Preclinical
Probiomed

Mexico

1

Phase 3
Samsung BioLogics

South Korea

1

Preclinical
Novartis

Switzerland

1

Phase 2
Teva

Israel

1

Phase 2
Zenotech

India

1

Phase 3
Spectrum

US

1

Preclinical
Biocon/Mylan

India/US

1

Preclinical

(Source: PharmaShare; as of September 10, 2011 from Citeline’s Pipeline database)

Global Market Potential:

According to a study (2011) conducted by Global Industry Analysts Inc., worldwide market for biosimilar drugs is estimated to reach US$ 4.8 billion by the year 2015, the key growth drivers being as follows:

  • Patent expiries of blockbuster biologic drugs
  • Cost containment measures of various governments
  • Aging population
  • Supporting legislation in increasing number of countries
  • Recent establishment of regulatory guidelines for biosimilars in the US

On the other hand, according to Alan Shepard, principal of Thought Leadership, Global Generics at IMS Health: ‘Forecasting biosimilar sales is complex because of various factors including the imprecise classification of a biosimilar and pricing policies of the originator resulting in the use of the brand in place of the biosimilar. Some estimates show the market growing from US$ 66 million in 2008 to US$ 2.3 billion in 2015. Others see sales exceeding US$ 5.6 billion in 2013. Whatever the forecast, there remains a US$ 50 billion potential for biosimilars’.

Currently, off-patent biologic blockbusters including Erythropoietin offer an excellent commercial opportunity in this category. By 2013, about 10 more patented biologics with a total turnover of around U.S. $ 15 billion will go off-patent, throwing open even greater opportunity for the growth of biosimilar drugs globally.

The scenario and business potential in India:

The size of biotech industry in India is estimated to be around US$ 4 billion by 2015 with a scorching pace of growth driven by both local and global demands (E&Y Report 2011). The biosimilar drugs market in India is expected to reach US$ 2 billion in 2014 (source: Evalueserve, April 2010).

Recombinant vaccines, erythropoietin, recombinant insulin, monoclonal antibody, interferon alpha, granulocyte cell stimulating factor like products are now being manufactured by a number of domestic biotech companies like Biocon, Panacea Biotech, Wockhardt, Emcure, Bharat Biotech, Serum Institute of India, Dr. Reddy’s Laboratories (DRL) etc.

The ultimate objective of all these Indian companies will be to get regulatory approval of their respective biosimilar products in the US and the EU either on their own or through collaborative initiatives.

Indian players are making rapid strides:

Biosimilar version of Rituxan (Rituximab) of Roche used in the treatment of Non-Hodgkin’s lymphoma has already been developed by DRL in India. Last year Rituxan clocked a turnover of over US$ 2 billion. DRL also has developed Filgastrim of Amgen, which enhances production of white blood-cell by the body and markets the product as Grafeel in India. Similarly Ranbaxy has collaborated with Zenotech Laboratories to manufacture G-CSF.

On the other hand Glenmark reportedly is planning to come out with its first biotech product by 2011 from its biological research establishment located in Switzerland.

Indian pharmaceutical major Cipla reportedly has invested Rs 300 crore in 2010 to acquire stakes of MabPharm in India and BioMab  in China and is planning to launch a biosimilar drug in the field of oncology  by end 2012.

In June this year another large pharmaceutical company of India, Lupin  signed a deal with a private specialty life science company NeuClone Pty Ltd of Sydney, Australia for their cell-line technology. Lupin reportedly will use this technology for developing biosimilar drugs  in the field of oncology, the first one of which is expected to be launched in India again by 2012.

Oncology is becoming the research hot-spot:

As indicated above, many domestic Indian pharmaceutical companies are targeting Oncology disease area for developing biosimilar drugs, which is estimated to be the largest segment globally with a value turnover of over US$ 55 billion by the end of this year growing over 17%.

As per recent reports, about 8 million deaths take place all over the world per year due to cancer. May be for this reason the research pipeline of NMEs is dominated by oncology. With the R&D focus of the deep-pocket global pharmaceutical majors’ on this particular therapy area, the trend will continue to go north.

About 50 NMEs for the treatment of cancer are expected to be launched globally by 2015.

Current market size of Oncology drugs in India is estimated to be around Rs.1,300 Crore (US$ 260 million) and is expected to double by 2014.

Greater potential for global collaborative initiatives:

It is envisaged that the recent Pfizer – Biocon deal will trigger many other collaborative initiatives between the global and the local pharmaceutical companies.

Among Indian biotech companies, Reliance Life Sciences has already marketed Recombinant Erythropoietin, Recombinant Granulocyte Colony Stimulating Factor, Recombinant Interferon Alpha and Recombinant tissue plasminogen activator and  has been reported to have the richest pipeline of biosimilar drugs in India.

Companies like Wockhardt, Lupin, DRL and Intas Biopharmaceuticals are also in the process of developing an interesting portfolio of biosimilar drugs to fully encash the fast growing global opportunities.

‘Patent Cliff’ is hastening the process:

Many large research-based global pharmaceutical companies, after having encountered the ‘patent cliff’, are now looking at the small molecule generic and large molecule biosimilar businesses, in a mega scale, especially in the emerging markets of the world like India.

The country has witnessed major acquisitions like, Ranbaxy, Shantha Biotechnics and Piramal Healthcare by Daiichi Sankyo of Japan, Sanofi of France and Abbott of USA, respectively. We have also seen collaborative initiatives of large global companies like, GSK, AstraZeneca, and Pfizer with Indian companies like DRL, Aurobindo, Claris, Torrent, Zydus Cadila, Strides Arcolab, Sun Pharma and now Biocon to reach out to the fast growing global generic and biosimilar drugs markets.

This trend further gained momentum when immediately after Biocon deal, Pfizer strengthened its footprints in the global generics market with yet another acquisition of 40% stake in Laboratorio Teuto Brasileiro of Brazil with US$ 240 million to develop and globally commercialize their generic portfolio.

Emergence of ‘second generation’ biosimilar drugs and higher market entry barrier:

Emergence of second generation branded biosimilar products such as PEGylated products Pegasys and PegIntron (peginterferon alpha) and Neulasta (pegfilgrastim), and insulin analogs have the potential to reduce the market size for first generation biosimilar drugs creating significant entry barrier.

The barriers to market entry for biosimilar drugs are, by and large, much higher than any small molecule generic drugs. In various markets within EU, many companies face the challenge of higher development costs for biosimilar drugs due to stringent regulatory requirements and greater lead time for product development.

Navigating through such tough regulatory environment will demand a different type of skill sets from the generic companies not only in areas of clinical trials and pharmacovigilance, but also in manufacturing and marketing. Consequently, the investment needed to take biosimilar drugs from clinical trials to launch in the developed markets will indeed be quite significant.

Government support in India:

To give a fillip to the Biotech Industry in India the National Biotechnology Board was set up by the Government under the Ministry of Science and Technology way back in 1982. The Department of Biotechnology (DBT) came into existence in 1986. The DBT now spends around US$ 200 million annually to develop biotech resources in the country and have been making reasonably good progress.

The DBT together with the Drug Controller General of India (DCGI) has now prepared regulatory guidelines for biosimilar Drugs, which are expected to conform to international quality and patients’ safety standards.

Currently, a number both financial and non-financial incentives have been announced by the Central and the State Governments to encourage growth of the biotech industry in India, which include tax incentives, exemption from VAT and other fees, grants for biotech start-ups, financial assistance with patents, subsidies on investment from land to utilities and infrastructural support with the development of ten biotech parks through ‘Biotechnology Parks Society of India’.

However, many industry experts feel that R&D funding for the Biotech sector in the country is grossly inadequate. Currently, there being only a few ‘Venture Capital’ funds for this sector and ‘Angel Investments’ almost being non-existent, Indian biotech companies are, by and large, dependent on Government funding.

Conclusion:

Recent international deal of Pfizer and Biocon to globally commercialize Biocon’s four biosimilar insulin and analogues developed in India, does signal a new global status for the Indian biosimilar drugs to the international pharma majors, who were vocal critics of such drugs developed in India, until recently.

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Biologic Drugs: The hunt for the ‘Magic Bullets’ is on

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The global pharmaceutical industry is now navigating its way through very cautiously while negotiating an unprecedented ‘patent cliff’, simultaneously with gradually drying-up R&D pipelines. This unique situation has triggered off several global mega Mergers and Acquisitions (M&A) not only involving better protected biologic drugs business, but also in the large generic space mostly in the emerging markets of the world, which used to be ignored by many before the turn of the new century.

Patent Expiry in next 12 months:

According to an article published in the ‘FiercePharma’ dated October 24, 2011 titled, ‘10 largest U.S patent losses’, over the next 12 months the following best-selling drugs, ranked not by US sales volume but by their weight in each company’s US revenue stream, will face patent expiry:

Company Brand
1 Forest Laboratories Lexapro
2 Takeda Pharmaceuticals Actos
3 Bristol-Myers Squibb Plavix
4 AstraZeneca Seroquel
5 Eli Lilly Zyprexa
6 Pfizer Lipitor*
7 Merck Singulair
8 Novartis Diovan
9 Teva Pharmaceuticals Provigil
10 Abbott Laboratories TriCor

* Patent expired on November 30, 2011

Opening a new vista of opportunity:

In the midst of such a critical situation within the global pharmaceutical industry, application of biotechnology in the drug discovery process opened up a new vista of a broad range of new class of therapies. These include monoclonal antibodies, therapeutic protein hormones, cytokines tissue growth factors, cell or gene therapies and vaccines, just to name a few.

A recent report of the Organization for Economic Cooperation and Development (OECD) predicts that 80% of the total biotech products, which are expected to be commercialized by 2030, will be medicines and medical diagnostics.

Old business model signals a diminishing return:

Over a period of decades, the business model of small-molecule based blockbuster drugs has successfully catapulted the global pharmaceutical business to a high-margin, dynamic and vibrant industry. However, a time has now come when the golden path from the ‘mind to market’ of the drug discovery process is becoming increasingly arduous and prohibitively expensive.

Deploying expensive resources to discover a New Chemical Entity (NCE) with gradually diminishing returns in the milieu of ‘me too’ types of new drugs, does no longer promise a strong commercial incentive.

A shift in focus from ‘small molecules’ to ‘large molecules’:

Since last several years, the success of biologic drugs compared to conventional small-molecule chemical drugs, has been changing the area of focus of pharmaceutical R&D altogether, making the biotech companies interesting targets for M&A.

As per published data, although the market capitalization of the top ten large pharmaceutical companies dropped more than US$ 700 billion since 2001, the same for the biotech companies, on the other hand,  has gone up by more than 50% during this period. This trend signifies proliferation of biotech drugs in the years ahead for meeting unmet needs of the patients.

To keep pace with the biotech led growth of the global pharmaceutical industry, many companies have started imbibing biotech-like R&D structure within their respective organizations. For examples, the pharmaceutical majors GsK and Pfizer have already articulated the strategic intent to restructure their respective large monolithic R&D set-ups to smaller independent drug discovery units.

Such restructuring is expected to foster ‘can do’ spirit of the biotech entrepreneurs within the recreated smaller units of large R&D setups to accelerate overall R&D productivity for enrichment of the new product pipelines. However, future will be the best judge to evaluate the success of this experiment.

As if to vindicate this emerging scenario, on November 30, 2011 Bloomberg reported, “U.K.’s largest drug maker has broken up research into competitive teams and put scientists back at the center of the process. But freedom carries a price: researchers who don’t adapt must go. Scientists now ‘live or die with their project.’ This month, Glaxo (GsK) completed the first appraisal of its new model. The company is now deciding which teams deserve more funding and which ones don’t. The conclusions will probably be made public in February when Glaxo (GsK) reports full-year earnings.”

Biologic drugs offer greater promise to meet more unmet needs:

Unlike conventional chemical drugs, most genetically modified biologic drugs work with a very high degree of precision and accuracy on the cells of the diseased organ. Many clinical studies have amply demonstrated that such drugs not only ensure faster recovery, but also help saving incremental treatment cost because of their excellent safety profile.

As we see today, more and more of those global pharmaceutical companies, who used to spend around 15% to 20% of their annual sales for R&D projects are channelizing a large part of the same to effectively compete in the fast evolving market of biologic drugs mainly through M&A. This strategy well justifies their strategic intent to make good the loss of income from the blockbuster drugs going off-patent quite in tandem with their fast dwindling R&D pipeline, as it were.

The bottom-line impact of a successful well targeted new biologic molecule to treat intractable ailments like, various types of cancer and blood disorders, auto-immune and Central Nervous System (CNS) related diseases, neurological disorders such as Parkinson’s, Myasthenia gravis, Multiple Sclerosis and Alzheimer’s disease, are expected to be huge.

Faster growth of biologic drugs:

Despite patent cliff, large molecule biologic drugs like Enbrel, Remicade, Avastin, Rituxan and Humira continue to contribute more than the small molecule drugs of chemical origin to overall growth of the large global pharmaceutical majors. Many of these drugs were sourced by them either through acquisitions or collaborative arrangements.

Cash strapped biotech companies with molecules ready for human clinical trials or with target molecules falling in the well sought after growth areas like, monoclonal antibodies, vaccines, cell or gene therapies, therapeutic protein hormones, cytokines and tissue growth factor are becoming attractive acquisition targets of the small molecules dominated large pharmaceutical companies having deep pockets.

Global Market Scenario:

According to IMS Health, biologics contribute around 17% of global pharmaceutical sales and generated a revenue of US$ 120 billion during MAT March 2009

In 2010 Biologic drugs increased their turnover to US$ 140 billion in the total market of US$ 850 billion. The sale of Biosimilar drugs outside USA exceeded US$ 1 billion.

Six biologic drugs featured in the top 12 and eight in the top 20 best selling global brands. Remicade emerged as the highest-selling biologics in 2010, ahead of Enbrel. Roche remained the top company by sales for biologics with anticancer and monoclonal antibodies. (source: Knol 2010)

Major acquisitions from 2005-2011 for Biologic drugs:

The opportunity of meeting the unmet needs of the patients with effective biologic drugs, especially in high-growth therapy areas, has given the M&A activities in the pharma-biotech space an unprecedented thrust in the recent times.

Following are the major acquisitions in the field of biologic drugs from 2005 to 2011:

Company

Target company

The deal: $billion

Products
Roche Genentech 47 Rituxan, Avastin, Herceptin, MoAbs, Oncology
Sanofi Aventis Genzyme 20 Orphan biologicsCerezyme, Fabrazyme, Renagel, Synvisc
AstraZeneca MedImmune 15.6 Monoclonal Antibodies
Merck Serono 13.5 Biologics
Takeda Millennium 8.8 Velcade, Oncology
Lilly ImClone 6.0 Erbitux, Oncology
Novartis Chiron 5.8 Vaccines
Teva Cephalon 6.2 Nuvigil, Provigil, Treanda CNS, Oncology
Abraxis American BioScience 4.2 Oncology
Astellas OSI Pharma 4.0 Tarceva, oncology
Eisai MGI Pharma 3.9 Aloxi, Salagen, Hexalen, Oncology
Celgene Pharmion 2.9 Oncology
Celgene Abraxis 2.9 Oncology
Gilead Myogen 2.5 Biotechnology
BMS Medarex 2.4 Monoclonal antibodies
J&J Crucell 2.3 Vaccines
Amgen Abgenix 2.2 Monoclonal antibodies
Boehringer Ingelheim MacroGenics 2.1 Monoclonal antibodies
Gilead CV Terapeutics 1.4 Cardiovascular
Genzyme Osiris 1.4 Prochymal, Stem cells
GSK ID Biomed 1.3 Biologics
AstraZeneca Cambridge Antibody Technology 1.3 Monoclonal Antibodies
Merck Sirna 1.1 RNAi
Amgen BioVex 1 OncoVex

(Source: Mergers and Acquisitions Review2005-2011 Pharma Biotech by Knol)

Why do so many companies want to enter into the biotech space?

The answer to the key question of why do so many companies want to enter into the biotech space of the business, in summary, could lie in the following:

  1. Truly innovative small molecule discovery is becoming more and more challenging and expensive with the low hanging fruits already being plucked.
  2. More predictable therapeutic activity of biologics with better safety profile.
  3. A higher percentage of biologic drugs have turned into blockbuster drugs in the recent past.
  4. Market entry barrier for biosimilar drugs, after patent expiry of the original molecule, is much tougher than small molecule generics.
  5. A diverse portfolio of both small and large molecules will reduce future business risks.

A recent study:

In one of their recent collaborative studies published in an article titled, “Is R&D Earning its Investment?” Deloitte and Thomson Reuters (2009) have reported that the top 12 global pharma majors have 21% to 66% biologic drugs in their late stage product pipeline with the average being at 39%.

Another interesting trend:

Besides mega acquisitions, relatively smaller pharmaceutical players have started acquiring venture-backed biotech companies to enrich their product pipelines with early-stage drugs at a much lesser cost. For example, with the acquisition of Calistoga for US $ 600 million and venture-backed Arresto Biosciences and CGI Pharmaceuticals, Gilead known for its HIV drugs, expanded into blood cancer, solid tumor and inflammatory disease segments. In 2009 the same Gilead acquired CV Therapeutics for US $1.4billion to build a portfolio for cardiovascular drugs. In November 2011, Gilead acquired ‘Pharmasset’ for US$ 11 billion to include in its product pipeline a future Hepatitis C drugs offering 95% cure rates.

Smaller biotech companies usually do not get engaged in very large deals unlike the top pharma players, but make quick, decisive and successful smaller deals more effectively.

Much less generic competition for biologic space:

After patent expiry of NCEs, innovators’ brands become extremely vulnerable to cut throat generic competition with as much as 90% price erosion. This happens as the small molecules are relatively easier to replicate by the generic manufacturers. Moreover, the process of getting regulatory approval of NCEs is also not as stringent as biosimilar drugs in most of the markets of the world.

On the other hand biosimilar drugs involving difficult, complex and expensive processes for development with stringent regulatory requirements for getting their marketing approval in the developed markets of the world like the EU and the USA, offer significant brand protection from generic competition for quite some time, even after the patent expiry.

Mainly due to this reason, brands like the following are expected to go strong for some more time without any significant competition from the biosimilar drugs:

Brand Company Launch date
Rituxan Roche/Biogen idec 1997
Herceptin Roche 1998
Remicade Centocor/J&J 1998
Enbrel Amgen/Pfizer 1998

Smaller biotech companies to be the prime targets:

In my view, the voracious appetite of large pharmaceutical companies for inorganic growth through mega M&A, will ultimately subside due to various compelling reasons.  Instead, smaller biotech companies, especially with products in Phase I or II of clinical trials, without wherewithal to take them to subsequent stages of development, will be the prime targets for acquisition by the pharma majors at an attractive valuation.

Cost of treatment:

Despite so many positives, high priced biologic drugs do raise a critical concern about the incremental load on already ballooning healthcare costs to the patients.

The Wall Street Journal (WSJ) in its September 29, 2010 issue highlighted that biologic drugs can cost as much as $1.5 million annually to the user. Similarly Forbes.com on April 12, 2009 reported, “Biologic drugs can cost up to 22 times more than traditional medications – some as much as $400,000 a year”.

This is indeed a very serious issue that needs to be resolved sooner. Speedy entry of biosimilar drugs will partly address this critical issue.

Conclusion:

Although the large pharma majors have already started experimenting to work with the pure biotech companies in terms of M&A and strategic alliances, it will be interesting to watch the long term ‘DNA Compatibility’ of the business models, organization/ work/employee culture and market outlook of these two different types of organizations while improving the global business performance of the overall entity, significantly.

Only future will tell us whether or not just restructuring of the R&D set up of companies like, Pfizer, Merck, Roche and perhaps Sanofi at a later date, helps synergizing the overall R&D productivity of the merged entities.

Be that as it may, despite serious cost concern, experts still believe that biologic drugs have all the potential to deliver the ‘magic bullets’ in the fight against many intractable diseases of mankind in not too distant future.

Hence the hunt is on.

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Biosimilar Drugs: The Roadblocks and the Road Ahead

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Unlike commonly used ‘small molecule’ chemical based drugs, ‘large molecule’ biologic drugs are developed from living cells and using very complex processes. These groups of drugs could range from simpler insulin to therapy for treating complex ailments like, cancer and almost invariably attract a high price tag, which could run even in thousands of dollars.

It is virtually impossible to replicate these protein substances, unlike the ‘small molecule’ drugs. One can at best develop a biologically similar molecule with the application of high degree of biotechnological expertise. These drugs are usually much less expensive than the original ones and called ‘Biosimilar Drugs’. It is expected that ‘biosimilar drugs’ will have lesser market competition than the conventional ‘small molecule’ generic drugs, mainly because of complexity and costs involved in their developmental process.

Future growth potential:

In most of the developed countries, besides regulatory issues, ‘Biosimilar drugs’ are considered to be a threat to the fast growing global biotech industry. At the same time, it is widely believed that in the rapidly evolving global concern for cheaper and more affordable medicines for patients across the world, relatively smaller biotech companies, given the required wherewithal  at their disposal, could emerge as winners in this new ball game as compared to traditional generic pharmaceutical players.

Novartis (Sandoz) – first to launch a ‘Biosimilar drug’ in the US:

In mid-2006, US FDA approved its first ‘Biosimilar drug’- Omnitrope of Sandoz (Novartis) following a court directive. Omnitrope is a copycat version of Pfizer’s human growth hormone, Genotropin. Interestingly, Sandoz had also taken the US FDA to court for keeping its regulatory approval pending for some time in the absence of a well-defined regulatory pathway for ‘Biosimilar drugs’ in the USA. The CEO of Sandoz had then commented, “The FDA’s approval is a breakthrough in our goal of making high-quality and cost-effective follow-on biotechnology medicines like Omnitrope available for healthcare providers and patients worldwide”. Despite this event, none at that time expected the US FDA to put regulatory guidelines in place for approval of ‘Biosimilar drugs’ in the country.

Merck’s entry was through an acquisition:

Merck announced its entry into the ‘Biosimilar drugs’ business on February 12, 2009 with its acquisition of Insmed’s portfolio for US$ 130 million in cash. Rich pipeline of follow-on biologics of Insmed is expected to help Merck to hasten its entry into global ‘Biosimilar drugs’ markets.

Other recent global initiatives:

  • Merck paid US$ 720 million to Hanwha for rights to its copy of Enbrel of Amgen
  • Samsung of South Korea has set up a biosimilars joint venture with Quintiles to create a contract manufacturer for biotech drugs.
  • Celltrion and LG Life Sciences have expressed global ambitions in biosimilar drugs.
  • Dr Reddy’s Laboratories (DRL) has already been marketing a biosimilar version of Rituxan of Roche since 2007.
  • According to Reuter (June 22, 2011), Merck, Novartis (Sandoz), Teva and Pfizer are expected to be strong players in the biosimilar market.
  • Reliance Life Science though has faced a setback in Europe with the regulators asking for more data for its copy of EPO prompting them to withdraw their application for now, is also a potential player in the biosimilar market.

Many other developments are also now taking place in the space of ‘Biosimilar drugs’, the world over. To fetch maximum benefits out of this emerging opportunity, India has started taking steps to tighten its regulatory process for marketing approval of such drugs. This is absolutely necessary to allay general apprehensions on drug safety with inadequate clinical data for similar protein substances.

Current status in the US:

President Barak Obama administration of the US has been expressing for quite some time a strong intent to pave the way for ‘Biosimilar drugs’ in the US. To facilitate this process, a new draft legislation titled, “Promoting Innovation and Access to Life Saving Medicine Act” was introduced by the legislators of the country. This legislation came into force with the announcement by US-FDA the outline of how biopharmaceutical players can submit their application for marketing approval of ‘Biosimilar drugs’ in the country. Many industry players have since then been gearing up, across the world, to have a share of the potentially large ‘biosimilar drugs’ market in the US.

Challenging clinical data requirements in the US:

According to ‘Biologics Price Competition and Innovation Act of 2009 (BPCI Act)’, which was enacted in the US on March 23, 2010, any biological substance to be “biosimilar” will require to be “highly similar to the reference product, notwithstanding minor differences in clinically inactive components”. BPCI also specifies that there should be “no clinically meaningful differences between the biological product and the reference product in terms of the safety, purity, and potency of the product”. It is interesting to note that the Act emphasizes on ‘clinical similarity’ rather than ‘biological or structural similarity’ between the original and ‘biosimilar drugs’.

The New England Journal of Medicine dated August 4, 2011 reported that US-FDA is in the process of establishing very challenging clinical requirements from the makers of ‘biosimilar drugs’ for obtaining marketing approval in the country. Such stringent regulatory requirements are expected to push up the cost of development of ‘biosimilar drugs’ significantly, seriously limiting the number of players in the market.

12 years Exclusivity in the US:

In the US, the innovator companies get 12 years exclusivity for their original biologic drugs from the date of respective marketing approvals by the FDA.

The BPCI Act clearly specifies that applications for ‘biosimilar drugs’ to the FDA will not be made effective by the regulator before 12 years from the date of approval of the innovators’ products. In addition, if the original product is for pediatric indications, the 12-years exclusivity may get an extension for another six months.

However, the key point to note here is, if the FDA starts its review process for the ‘biosimilar drugs’ only after the 12 year period, the innovator companies in that case, will effectively get, at least, one more year of exclusivity over and above  the 12 years period, when the applicants for ‘biosimilar drugs’ will keep waiting for marketing approval from the FDA.

The market:

According to Datamonitor the global market for ‘biosimilars drugs’ is expected to grow from US$ 243 million in 2010 to around US $3.7 billion by 2015.

Another report points out that only in the top two largest pharmaceutical markets of the world, the USA and EU, sales of ‘biosimilar drugs’ will record a turnover of US$ 16 billion in the next couple of years when about 60 biotech products will go off-patent.

The Indian biotech players:

Such a lucrative business opportunity in the west is obviously attracting many Indian players, like, Biocon, Dr. Reddy’s Labs, Ranbaxy, Wockhardt, Shantha Biotech, Reliance Life Science etc., who have already acquired expertise in the development of ‘Biosimilar drugs’ like, erythropoietin, insulin, monoclonal antibodies, interferon-Alfa, which are not only being marketed in India but are also exported to other non/less-regulated markets of the world.

Ranbaxy in collaboration with Zenotech Laboratories is engaged in global development of Granulocyte Colony-Stimulating Factor (GCSF) formulations. Wockhardt is expected to enter into the Global ‘Biosimilar drugs’ market shortly. Dr. Reddy’s Laboratories and Biocon are also preparing themselves for global development and marketing of insulin products, GCSF and streptokinase formulations.

Funding by the Government of India:

It has been reported that the Department of Biotechnology (DBT) of the Government of India has proposed funding of US$ 68 million for ‘biosimilar drugs’ through Public Private Partnership (PPP) initiatives, where soft loans will be made available to the Indian biotech companies for the same. Currently DBT spends reportedly around US$200 million annually towards biotechnology related initiatives.

Key success factors for rapid acceptance in the developed markets:

According to a new research finding from ‘The Decision Resources’, one of the key success factors for any such new drugs is how quickly the specialists will accept them. So far as biosimilar drugs are concerned they noted a high level of concern, if such drugs are not supported by robust sets of clinical data on the claimed treatment indications.

Conclusion:

With increasing global cost-containment pressures within the healthcare space, the emergence of a lucrative global ‘biosimilar drugs’ market now appears to be inevitable.

In the fast evolving scenario, major research based global bio-pharma and even the pure pharmaceutical companies will have two clear choices. The first choice is the conventional one of competing with ‘biosimilar drugs’ in all important markets of the world. However, the second choice of jumping into the fray, keeping undiluted focus on R&D, appears to be more prudent and perhaps will also make a shrewd horse sense. Only future will tell us, which of these two business senses will prevail, in the run up to success, for the global biotech companies.

With the above background, the report from the ‘Business Wire’ highlighting the fact, ‘the manufacture and development of a biosimilar molecule requires an investment of about US$ 10 to 20 million in India, as compared to US$ 50 to 100 million in developed countries’, vindicates the emergence of another lucrative business opportunity for India.

With around 40% cost arbitrage, as indicated above and  without compromising on the required stringent international regulatory standards, the domestic ‘biosimilar’ players  should be able to establish India as one of the most preferred manufacturing destinations to meet the global requirements for ‘biosimilar drugs’.

Experience in conforming to stringent US FDA manufacturing standards, having largest number of US FDA approved plants outside USA, India has already acquired a clear advantage in manufacturing  high technology chemical based pharmaceutical products in India. Significant improvement in conformance to Good Clinical Practices (GCP) standards will offer additional advantages.

In addition to cost efficiency, available skill sets in developing ‘biosimilar drugs’, will offer another critical advantage to the domestic players in reaching out to the international ‘biosimilar drugs’ markets either by themselves or with appropriate collaborative arrangements, just as we have recently witnessed in case of Biocon’s strategic collaboration with Pfizer in this rapidly evolving sector of the world.

Disclaimer:The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.