Tag Archives: Ipca

“Make in India” Image of Pharma Needs An Early Makeover

Posted on by
Reply

“It is never too late to be what you might have been” - George Elliot

The chronicle of events since the last couple of years or so, related to ‘Make in India’ image of the local drug industry, have been instrumental to significantly slowing down the scorching pace of pharma exports growth of the country.

The Union Ministry of Commerce estimates that India’s export of drugs and pharmaceuticals may hardly touch US$16 billion in 2014-15, against US$14.84 billion of last financial year. This would mean that pharma exports growth would just be around 5 percent, against the projected number of 10 percent for the year. This is a significant concern, as pharma exports contribute around 40 percent to the total value turnover of the sector.

Despite this fact and couple of other important reasons, as I shall discuss below, about 45 percent of listed pharma stocks in India have reportedly more than doubled in the past one year. The current tail wind in the domestic pharma market could possibly have contributed to this aberration.

According to AIOCD Pharmasofttech AWACS, the last financial year started in April 2014 with 7.3 percent domestic retail pharma growth, which accelerated to 20.9 percent in March 2015, as the year ended.

High level of optimism and positive sentiments, thus generated in this process, possibly prompted many to ignore even some of the critical storm signals for the domestic pharma industry in its totality.

Declining pharma exports growth – A key challenge:

In 2014, pharmaceutical exports contributed 39 percent to the sector’s total value turnover. Consistently strong export performance over the last few decades, has catapulted the local drug industry in the not so common trajectory of the net foreign exchange earner for India. It is worth noting, though pharma exports grew at a rate of just 1.2 per cent to reach in 2013-14, it registered a CAGR of 21 percent over the last decade.

Some analysts estimate, the chances of Indian pharma exports touching even US$16 billion in 2014-15 are indeed challenging, especially considering low growth recorded by some of the large Indian pharma companies, including Ranbaxy, Dr. Reddy’s Laboratories and Lupin, especially in the US market.

Mounting pricing pressure:

Consolidation process of pharmacy players in the US market is also affecting the profit margins of the Indian drug exporters.

Some key examples are:

  • Global alliance among three large pharmacy distributors – Walgreen, Alliance Boots and Amerisource –Bergen, in early 2013
  • Joint venture between the second largest US wholesale distributor, Cardinal Health, and CVS Caremark in December 2013
  • US pharmacy McKesson’s announced acquisition of US distributor Celesio in January 2014.
  • On April 9, 2015, Bloomberg reported that Walgreens Boots Alliance Inc.’s acting Chief Executive Officer Stefano Pessina has expressed his intent to do more deals, just months after being on the saddle of the biggest US drugstore chain.

As a result, a few dominant pharmacy players emerged with hard bargaining power, exerting tough pricing pressures on the generic drug companies and that too in a market that has been facing already facing cutthroat generic price competition.

Consequently, according to published reports, the prices of generic drugs, in general, declined by around 20 to 30 per cent over the past 19 months, in the US.

Vulnerability in the key market:

According to IBEF March 2015, the United States (US) has been the prime importer of pharmaceuticals from India, accounting for over 25 per cent of Indian pharmaceutical exports, followed by the European Union and Africa at second and third positions, respectively.

India exports over US$4 billion of pharmaceutical products to the US, out of its annual exports of around $15 billion. Large domestic companies, such as Ranbaxy, Sun Pharma and Lupin account for around US$3 billion of exports to the US and the balance comes from a large number of other Indian pharma players.

Government sites 3 reasons:

According to the Union Ministry of Commerce, there are reportedly three key reasons for the pharma export falling short of target in the financial year 2014-15, namely:

-       Delayed regulatory approvals

-       Consolidation of pharmacy players in North America (discussed above)

-       Steep depreciation of currencies in emerging markets such as, Russia, Ukraine and Venezuela

A major controllable concern seems to be out of total control:

While articulating the above three factors, the Union Ministry of Commerce seems to have missed out a very important one that has been instrumental in perpetuating the recent slow down of Indian pharma exports, significantly. It is very much a controllable too, unlike the other three, though appears to be virtually out of total control of the domestic pharma companies.

Fortunately, media kept harping on it. PTI News of January 11, 2015 reported, while Indian pharma exports expected to touch a turnover US$16 billion in 2014-15, many Indian pharmaceutical companies continue to face regulatory action by the USFDA for alleged violation of ‘Good Manufacturing Practices (GMP)’ and other irregularities at the respective drug manufacturing facilities in different parts of the country.

This report observed, a number of Indian drug-makers, including Ranbaxy, Sun Pharma, IPCA Labs, Wockhardt and Dr. Reddy’s Laboratories faced sanctions of the USFDA over different issues ranging from hygiene levels in the plant and concealment of data on failed tests to even fabrication of records. As a result, in several cases, these companies have been barred from selling their drugs in the US and other countries.

The issue involves the very top:

Sun Pharma, post acquisition of Ranbaxy, tops the pharma league table in India with around 9 percent of domestic market share.

It is much well known though, that the US drug regulator has already imposed a ban on import of medicines into the US, produced at its key constituent Ranbaxy’s India-based factories. Earlier, certain drugs produced at its Dewas plant of Ranbaxy were also barred from export to the entire EU region for non-compliance to GMP norms.

On its own, the acquirer – Sun Pharma has also faced USFDA ban on import of products made at its Karkhadi plant in Gujarat.

Taking all these into consideration, one can probably argue that the ‘Make in India’ issue for Indian pharma is humongous and quite a widespread one. Its adverse impact is very much palpable even at the very top.

The root cause:

The root cause of non-conformance of specified GMP standards probably dwells deep within the mindset of the concerned companies, as comes in the narrative of a whistleblower. In that case, the speed of progress of Indian pharma exports’ revival, alongside the industry image makeover, would possibly face a strong and silent headwind.

Pharma sector needs a health check:

On April 16, 2015, ET Intelligence Group commented that “High-flying pharma sector may be in need of a health check”, further reinforcing the case for re-rating of, especially, the export-oriented pharma sector.

The report underscored, that foreign brokerages Bank of America Merrill Lynch and CLSA have flagged concerns about valuations in pharma priced to perfection leaving little room for error. According to data from Bloomberg, since last week, ‘buy’ recommendations by analysts have dropped in stocks like Sun Pharma, Lupin, Cipla, Ipca Labs, Cadila Healthcare, Aurobindo Pharma and Torrent Pharma.

Smacks of irrational exuberance?

The article emphasized that the pharma growth story has now moved to being one that ‘smacks of irrational exuberance’.

The unprecedented interest in the sector has had the effect of shirking off negatives, like regulatory clamps by US FDA, price control, and currency fluctuations in the emerging markets and delay in drug approvals in the US.

The saga still continues:

Triggered by a whistleblower report and confirmed by a number of different adverse plant audit findings, the USFDA has stepped up scrutiny of India make generic drugs, over the last two years. It is worth noting that Indian generic drug players supply round 40 percent of such medicines sold in the United States.

As we discuss the subject, Indian pharma players continue to receive the warning letters from the USFDA, related to breach of GMP standards.

Lamentably enough, significant parts of the same continue to be the data integrity issues. Even in 2014, some large domestic players including, Sun Pharmaceuticals, Cadila Pharma and Orchid Pharma came under scrutiny of the US drug regulator.

Most recently in March 2015, USFDA banned most imports from the Ipca plants, in Pithampur in Madhya Pradesh and Silvassa in Dadra and Nagar Haveli, for non-compliance of GMP standards. Earlier, in January 2015, the US regulatory agency reportedly banned imports from another Indian manufacturing plant of Ipca.

India tops the list on the US import alerts:

According to USFDA data, from 2013 onwards, over 20 drug manufacturing facilities across India attracted ‘Import Alerts’ as against seven from China, two each from Australian, Canadian and Japanese units and one each from South African and German facilities.

Unfortunately, despite intense local and global furore on this subject, the Central Drugs Standard Control Organization (CDSCO) of India, very strangely, do not seem to be much concerned on this critical issue, at least noticeably enough, besides making some occasional public statements on its working together with the USFDA in this regard.

I discussed similar subject in my blog post of September 29, 2014 titled “Make in India…Sell Anywhere in The World: An India Pharma Perspective.

Conclusion:

As it appears to me, the USFDA import bans related to breach of GMP standards, including ‘Data Integrity’, are mostly unrelated to knowledge deficiency of any kind – technical or otherwise, in the teams handling large drug manufacturing plants of India.

The details, as listed in the USFDA website, indicate that a large number of such incidents are related to falsification of data in the critical documentation process.

Earlier in this article, I termed the problem as very much controllable with the right kind of mindset to set things right, without probably resorting to cost-saving short cuts.

Prime Minister Modi, even during his very recent trips to France, Germany and Canada, passionate appealed to all, including pharma investors both local and global, to “Make in India” and “Sell Anywhere in The World” (exports). This call deserves to be responded with the right spirit and mindset and not just with lip services.

Failure to effectively address the patients’ safety requirements related issues of the foreign drug regulators, such as USFDA, and any direct or indirect attempt to categorize this plight as international ‘conspiracy’ of any kind, could jeopardize India’s interest in pharma exports, for a much longer while.

There is not even an iota of doubt today that “Make in India” image of Indian pharma has suffered a huge set back, at least in the largest and most valuable pharmaceutical market of the world.

As the well acclaimed English novelist George Elliot once said, “It is never too late to be what you might have been”, Indian pharma industry urgently needs an image makeover in this critical area…through a demonstrable change in mindset for doing things right…in every occasion and situation, always.

This is critical, as loss of credibility and reputation too frequently can push a pharma company virtually out of major international business for good… its current clout, might and financial power, not withstanding.

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.

Alarming Incidence of Cancer: Fragile Infrastructure: Escalating Drug Prices

Posted on by
Reply

According to the ‘Fact-Sheet 2014′ of the World Health Organization (WHO), cancer cases would rise from 14 million in 2012 to 22 million within the next two decades. It is, therefore, no wonder that cancers figured among the leading causes of over 8.2 million deaths in 2012, worldwide.

A reflection of this scary scenario can also be visualized while analyzing the growth trend of various therapy segments of the global pharmaceutical market.

A recent report of ‘Evaluate Pharma (EP)’ has estimated that the worldwide sales of prescription drugs would reach US$ 1,017 bn by 2020 with a Compounded Annual Growth Rate (CAGR) of 5.1 percent between 2013 and 2020. Interestingly, oncology is set to record the highest sales growth among the major therapy categories with a CAGR of 11.2 percent during this period, accounting for US$ 153.4 bn of the global pharmaceutical sales.

The key growth driver is expected to be an exciting new class of cancer products targeting the programmed death-1 (PD-1) pathway with a collective value of US$ 14 bn in 2020, says the report.

Another recent report from the IMS Institute for Healthcare Informatics also highlights that global oncology spending touched US$ 91 billion in 2013 growing at 5 percent annually.

Consequently, Oncology would emerge as the biggest therapeutic class, more than twice of the anti-diabetic category, which features next to it.

Key global players:

Roche would continue to remain by far the largest player in the oncology market in 2020 with a 5 percent year-on-year growth between 2013 and 2020 with estimated total sales of over US$ 34bn in 2020 against US$ 25bn in 2013.

In 2020, besides Roche, other key players in the oncology segment would, in all probability, be Bristol-Myers Squibb, Celgene, Novartis, Pfizer, Johnson & Johnson, Astellas Pharma, AstraZeneca, Eli Lilly and Merck & Co, the EP report says.

Escalating costs of cancer drugs:

As IMS Health indicates, the overall cost for cancer treatments per month in the United States has now reached to US$10,000 from US$ 5,000 just a year ago. Thus, cancer drugs are fast becoming too expensive even in the developed markets, leave aside India.

The following table would help fathom how exorbitant are the costs per therapy of the common cancer drugs, though these are from the United States:

Generic                               Diagnosis

 Cost/ Dose (US$)

Cost of     Therapy/    28 days  (US$)

Cost per  Therapy      (US$)
brentuximab Hodgkins lymphoma

14,000

18,667

224,000
Pertuzumab Breast cancer

4,000

5,333

68,000
pegylated interferon Hepatitis C

700

2,800

36,400
Carfilzomib Multiple myeloma

1,658

9,948

129,324
ziv-aflibercept CRC

2,300

4,600

59,800
Omacetaxine CML

560

3,920

50,960
Regorafenib CRC

450

9,446

122,800
Bosutinib CML

278

7,814

101,580
Vemurafenib Melanoma

172

4,840

62,915
Abiraterone Prostate

192

5,391

70,080
Crizotinib NSCLC

498

27,951

363,367
Enzalutamide Prostate

248

6,972

90,637
ado-trastuzumab emtansine Breast – metastatic

8,500

8,115

105,500
Ponatinib Leukemia

319

8,941

116,233
Pomalidomide Multiple myeloma

500

10,500

135,500

(Source: ION Solutions)

Even US researchers concerned about high cancer drugs cost:

It is interesting to note, that in a review article published recently in ‘The Lancet Oncology’, the US researchers Prof. Thomas Smith and Dr. Ronan Kelly identified drug pricing as one area of high costs of cancer care. They are confident that this high cost can be reduced, just as it is possible for end-of-life care and medical imaging – the other two areas of high costs in cancer treatment.

Besides many other areas, the authors suggested that reducing the prices of new cancer drugs would immensely help containing cancer costs. Prof. Smith reportedly said, “There are drugs that cost tens of thousands of dollars with an unbalanced relationship between cost and benefit. We need to determine appropriate prices for drugs and inform patients about their costs of care.”

Cancer drug price becoming a key issue all over:

As the targeted therapies have significantly increased their share of global oncology sales, from 11 percent a decade ago to 46 percent last year, increasingly, both the Governments and the payers, almost all over the world, have started feeling quite uncomfortable with the rapidly ascending drug price trend.

In the top cancer markets of the world, such as, the United States and Europe, both the respective governments and also the private insurers have now started playing hardball with the cancer drugs manufacturers.

There are several instances in the developed markets, including the United States, where the stakeholders, such as, National Institute for Health and Care Excellence (NICE) of the United Kingdom and American Society of Clinical Oncology (ASCO) are expressing their concerns about manufacturers’ charging astronomical prices, even for small improvements in the survival time.

Following examples would give an idea of global sensitivity in this area:

  • After rejecting Roche’s breast cancer drug Kadcyla as too expensive, NICE reportedly articulated in its statement, “A breast cancer treatment that can cost more than US$151,000 per patient is not effective enough to justify the price the NHS is being asked to pay.”
  • In October 2012, three doctors at Memorial Sloan-Kettering Cancer Center announced in the New York Times that their hospital wouldn’t be using Zaltrap. These oncologists did not consider the drug worth its price. They questioned, why prescribe the far more expensive Zaltrap? Almost immediately thereafter, coming under intense stakeholder pressure, , Sanofi reportedly announced 50 percent off on Zaltrap price.
  • Similarly, ASCO in the United States has reportedly launched an initiative to rate cancer drugs not just on their efficacy and side effects, but prices as well.

India:

  • India has already demonstrated its initial concern on this critical issue by granting Compulsory License (CL) to the local player Natco to formulate the generic version of Bayer’s kidney cancer drug Nexavar and make it available to the patients at a fraction of the originator’s price. As rumors are doing the rounds, probably some more patented cancer drugs would come under Government scrutiny to achieve the same end goal.
  • I indicated in my earlier blog post that the National Pharmaceutical Pricing Authority (NPPA) of India by its notification dated July 10, 2014 has decided to bring, among others, some anticancer drugs too, not featuring in the National List of Essential Medicines 2011 (NLEM 2011), under price control.
  • Not too long ago, the Indian government reportedly contemplated to allow production of cheaper generic versions of breast cancer drug Herceptin in India. Roche – the originator of the drug ultimately surrendered its patent rights in 2013, apprehending that it would lose a legal contest in Indian courts, according to media reports. Biocon and Mylan thereafter came out with biosimilar version of Herceptin in the country with around 40 percent lesser price.

Hence, responsible pricing of cancer drugs would continue to remain a key pressure-point  in the days ahead.

Increasing R&D investments coming in oncology:

Considering lucrative business growth opportunities and financial returns from this segment, investments of global pharma players remain relatively high in oncology, accounting for more than 30 percent of all preclinical and phase I clinical product developments, with 21 New Molecular Entities (NMEs) being launched and reaching patients in the past two years alone, according to IMS Health.

However, it is also worth noting that newly launched treatments typically increase the overall incremental survival rate between two and six months.

Opportunities for anti-cancer biosimilars:

With gradual easing out of the regulatory pathways for biosimilar drugs in the developed markets, especially in the US, a new competitive dynamic is evolving in the high priced, over US$ 40 billion, biologics market related to cancer drugs. According to IMS Health, on a global basis, biosimilars are expected to generate US$ 6 to12 billion in oncology sales by 2020, increasing the level of competition but accounting for less than 5 percent of the total biologics market even at that time.

Alarming situation of cancer in India:

A major report, published in ‘The Lancet Oncology’ states that In India, around 1 million new cancer cases are diagnosed each year, which is estimated to reach 1.7 million in 2035.

The report also highlights, though deaths from cancer are currently 600,000 -700,000 annually, it is expected to increase to around 1.2 million during this period.

Such high incidence of cancer in India is attributed to both internal factors such as, poor immune conditions, genetic pre-disposition or hormonal and also external factors such as, industrialization, over growth of population, lifestyle and food habits.

The Lancet Oncology study showed that while incidence of cancer in the Indian population is only about a quarter of that in the United States or Europe, mortality rates among those diagnosed with the disease are much higher.

Experts do indicate that one of the main barriers of cancer care is its high treatment cost, that is out of reach for millions of Indians. They also believe that cancer treatment could be effective and cheaper, if detected early. Conversely, the treatment would be more expensive, often leading to bankruptcy, if detected late and would, at the same time, significantly reduce the chances of survival too.

The fact that cancer is being spotted too late in India and most patients lack access to treatment, would be quite evident from the data that less than even 30 percent of patients suffering from cancer survive for more than five years after diagnosis, while over two-thirds of cancer related deaths occur among people aged 30 to 69.

Unfortunately, according to the data of the Union Ministry of Health, 40 percent of over 300 cancer centers in India do not have adequate facilities for advanced cancer care. It is estimated that the country would need at least 600 additional cancer care centers by 2020 to meet this crying need.

Breast cancer is the most common type of cancer, accounting for over 1 in 5 of all deaths from cancer in women, while 40 percent of cancer cases in the country are attributable to tobacco.

Indian Market and key local players:

Cancer drug market in India was reported to be around Rs 2,000 Crore (US$ 335 million) in 2013 and according to a recent Frost & Sullivan report, is estimated to grow to Rs 3,881 Crore (US$ 650 million) by 2017 with a CAGR of 15.46 percent, throwing immense business growth opportunities to pharma players.

Dr.Reddy’s Laboratories (DRL) is one of the leading Indian players in oncology. DRL has already developed biosimilar version of Rituxan (Rituximab) of Roche, Filgastrim of Amgen and has also launched the first generic Darbepoetin Alfa and Peg-grafeel.

Other major Indian players in this field are Cipla, Lupin, Glenmark, Emcure, Biocon, Ipca, Natco, Intas, Reliance Life Science, Zydus Cadila and some more. These home grown companies are expected to take a leading role in the fast growing oncology segments of India, together with the major MNC players, as named above.

Analysis of detailed opportunities that would be available to these companies and consequent financial impacts could be a subject of separate discussion.

Conclusion:

Unlike many other developed and developing countries of the world, there is no system yet in place in India to negotiate prices of innovative patented drugs with the respective manufacturers, including those used for cancer. However, NPPA is now moving fast on reducing prices of cancer drugs. It has reportedly pulled up six pharma for not providing pricing data of cancer drugs sold by them.

Further, CL for all patented anti-cancer drugs may not be a sustainable measure for all time to come, either. One robust alternative, therefore, is the intense price negotiation for patented drugs in general, including anti-cancer drugs, as provided in the National Pharmaceutical Pricing Policy 2012 (NPPP 2012).

This important issue has been under consideration of the Department of Pharmaceuticals (DoP) since 2007. The report produced by the committee formed for this specific purpose, after dilly-dallying for over five years, now hardly has any takers and gathering dusts.

I reckon, much discussed administrative inertia, insensitivity and abject lack of sense of urgency of the previous regime, have desisted the DoP from progressing much on this important subject, beyond of course customary lip services, as on date. Intense lobbying by vested interests from across the world, seems to have further helped pushing this envelope deep inside an inactive terrain.

The new Government would hopefully make the DoP break its deep slumber now to resolve this critical issue decisively, in a time bound manner, assigning clear accountability, without any further delay.

At the same time, shouldn’t both the Honorable Ministers of Health and Chemicals & Fertilizers, taking the State Governments on board, put their collective resources together to create the following, expeditiously:

- A robust national health infrastructure for cancer care

- A transparent mechanism to prevent escalating cancer drug prices and other treatment costs

Hope, the good days would come to the cancer patients of India, at least, sooner than never.

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. 

Moving Up The Generic Pharma Value Chain

Posted on by
Reply

June 2014 underscores a significant development for the generic drug exporters of India. Much-delayed and highly expected launch of generic Diovan (Valsartan) is now on its way, as Ranbaxy has reportedly received US-FDA approval to launch the first generic version of this blood pressure drug in the United States.

As deliberated in my earlier blog titled “Big Pharma’s Windfall Gain From Indian Pharma’s Loss, Costs American Patients Dear”, delay in launch of the generic equivalent of Diovan caused a windfall gain for Novartis from US$ 1.7 billion US sales of this drug last year, instead of usual declining turnover of an innovative molecule post patent expiry.

The generic version of Diovan (Valsartan) is estimated to contribute around US$ 200 million to Ranbaxy’s sales and US$ 100 million to its profit after tax, during the exclusive sale period. Against these numbers, delay in the launch of generic Diovan has reportedly cost payers and consumers in America around US$ 900 million in the first 18 months.

Since four Ranbaxy manufacturing facilities in India are now facing US-FDA ‘import bans’ due to violations of ‘Good Manufacturing Practices’ of the American regulator, its Ohm Laboratories unit located in New Jersey has been allowed to make generic Valsartan for the US.

Go for gold: 

Hopefully, Ranbaxy would soon get similar approvals from the US drug regulator for its ‘first to launch’ generic versions of Nexium (AstraZeneca) and Valcyte (Roche), as well.

It is worth mentioning that around 90 percent price erosion would take place with intense competition, as soon the period of exclusivity for such ‘first to launch’ generics gets over.

Nonetheless, this is indeed a very interesting development, when the global generic pharmaceutical segment is reportedly showing signals of a tough chase for overtaking the branded pharmaceuticals sector in terms of sales turnover too.

India has a huge a stake in this ball game, as it supplies around 30 to 40 percent of the world’s generic medicines and is well poised to improve its pharma exports from around US$ 15 billion per year to US$ 25 billion by 2016. Since 2012, this objective has remained an integral part of the country’s global initiative to position India as the “pharmacy to the world.”

However, considering the recent hiccups of some Indian pharma majors in meeting with the quality requirements of the US-FDA, though this target appears to be a challenging one for now, the domestic pharma players should continue to make all out efforts to go for the gold by moving up the generic pharmaceutical value chain. In this context, it is worth noting that penetration of the generic drugs in the US is expected to increase from the current 83 percent to 86-87 percent very shortly, as the ‘Obamacare’ takes off with full steam.

Moving up the value chain:

In the largest pharma market of the world – the United States, global generic companies are increasingly facing cutthroat price competition with commensurate price erosion, registering mixed figures of growth. Even in a situation like this, some companies are being immensely benefited from moving up the value chain with differentiated generic product launches that offer relatively high margin, such as, specialty dermatologicals, complex injectibles, other products with differentiated drug delivery systems and above all biosimilars.

As a consequence of which, some Indian generic companies have already started focusing on the development of value added, difficult to manufacture and technology intensive generic product portfolios, in various therapy areas. Just to cite an example, Dr. Reddy’s Laboratories (DRL) is now reportedly set to take its complex generic drug Fondaparinux sodium injection to Canada and two other emerging markets.

Thus, those Indian pharma companies, which would be able to develop a robust product portfolio of complex generics and other differentiated formulations for the global market, would be much better placed in positioning themselves significantly ahead of the rest, both in terms of top and the bottom lines.

One such key opportunity area is the development of a portfolio of biosimilar drugs – the large molecule proteins.

Global interest in biosimilars:

According to the June 2014 report of GlobalData, a leading global research and consulting firm, the biosimilars industry is already highly lucrative. More than 100 deals involving companies focused on the development of biosimilars have been completed over the past 7 years, with a total value in excess of US$10.7 billion.

GlobalData further states, there are a number of factors driving the initiative toward global adoption of biosimilars, from austerity measures and slow economic growth in the US, to an aging population and increasing demand for healthcare in countries, such as Japan.

The costs of biosimilars are expected to be, at least, 20 to 30 percent lower than the branded biologic therapies. This still remains a significant reduction, as many biologics command hundreds of thousands of dollars for 1 year’s treatment.

According to another media report, biosimilars are set to replace around 70 percent of global chemical drugs over the next couple of decades on account of ‘safety parameters and a huge portion of biologic products going off patent’.

Biosimilar would improve patient access:

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 the 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 equivalents of novel biologics would improve access to such drugs significantly, for the patients across the globe.

Regulatory hurdles easing off:

In 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 US-FDA has already charted the regulatory pathway for biosimilar drugs, though more clarifications are still required.

Not so long ago, the EU had approved Sandoz’s (Novartis) Filgrastim (Neupogen brand of Amgen), which is prescribed for the treatment of Neutropenia. With Filgrastim, Sandoz will now have at least 3 biosimilar products in its portfolio.

Key global players:

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, Boehringer Ingelheim and Eli Lilly, the global biosimilar market is expected to be heated up and grow at a much faster pace than ever before. Removal of regulatory hurdles for the marketing approval of such drugs in the US would be the key growth driver.

Globally, the scenario for biosimilar drugs started warming up when Merck announced that the company expects to have at least 5 biosimilars in the late stage development by 2012.

Most recent global development:

A key global development in the biosimilar space has taken place, just this month, in June 2014, when Eli Lilly has reportedly won the recommendation of European Medicines Agency’s Committee for Medicinal Products for launch of a biosimilar version (Abasria insulin) of Sanofi’s Lantus insulin. This launch would pave the way for the first biosimilar version of Sanofi’s top-selling drug clocking a turnover of US$7.8 billion in 2013. Eli Lilly developed Abasria with Boehringer Ingelheim of Germany.

In May 2014, Lantus would lose patent protection in Europe. However, biosimilar competition of Lantus in the US could get delayed despite its patent expiry in February, as Sanofi reportedly announced its intention of suing Eli Lilly on this score.

Global Market Potential:

According to a 2011 study, 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 pathways for biosimilars in the US

IMS Health indicates that the US will be the cornerstone of the global biosimilars market, powering a sector worth between US$ 11 billion and US$ 25 billion in 2020, representing a 4 percent and 10 percent share, respectively, of the total biologics market.

The overall penetration of biosimilars within the off-patent biological market is estimated to reach up to 50 percent by 2020.

Challenges for India:

Unlike commonly used ‘small molecule’ chemical 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.

According to IMS Health, the following would be the key areas of challenge:

High development costs:

Developing a biosimilar is not a simple process but one that requires significant investment, technical capability and clinical trial expertise. Average cost estimates range from US$ 20-100 million against much lesser cost of developing traditional generics, which are typically around US$ 1-4 million.

Fledgling regulatory framework:

In most markets apart from Europe, but including the United States, the regulatory framework for biosimilars is generally still very new compared to the well-established approval process for NCEs and small-molecule generics.

Intricate manufacturing issues:

The development of biosimilars involves sophisticated technologies and processes, raising the risk of the investment.

Overcoming ‘Branded Mentality’:

Winning the trust of stakeholders would call for honed skills, adequate resources and overcoming the branded mentality, which is especially high for biologics. Thus, initiatives to allay safety concerns among physicians and patients will be particularly important, supported by sales teams with deeper medical and technical knowledge. This will mean significant investment in sales and marketing too.

Indian business potential:

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, such as, Dr. Reddy’s Laboratories, Lupin, Biocon, Panacea Biotech, Wockhardt, Glenmark, Emcure, Bharat Biotech, Serum Institute, Hetero, Intas and Reliance Life Sciences.

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

Domestic players on the go:

Dr.Reddy’s Laboratories (DRL) in India has already developed Biosimilar version of Rituxan (Rituximab) of Roche used in the treatment of Non-Hodgkin’s lymphoma.  DRL has also developed Filgastrim of Amgen, which enhances production of white blood cell by the body and markets the product as Grafeel in India. DRL has launched the first generic Darbepoetin Alfa in the world for treating nephrology and oncology indications and Peg-grafeel, an affordable form of Pegfilgrastim, which is used to stimulate the bone marrow to fight infection in patients undergoing chemotherapy. The company reportedly sold 1.4 million units of its four biosimilars, which have treated almost 97,000 patients across 12 countries. Besides, in June 2012, DRL and Merck Serono, of Germany, announced a partnership deal to co-develop a portfolio of biosimilar compounds in oncology, primarily focused on monoclonal antibodies (MAbs). The partnership covers co-development, manufacturing and commercialization of the compounds around the globe, with some specific country exceptions.

Another Indian pharmaceutical major Cipla, has reportedly invested Rs 300 Crore in 2010 to acquire stakes of MabPharm in India and BioMab in China and announced in June 19, 2014 collaboration with Hetero Drugs to launch a biosimilar drug with Actroise brand name for the treatment of anemia caused due to chronic kidney disease. Actorise is a biosimilar of ‘Darbepoetin alfa’, which is marketed by US-based Amgen under the brand Aranesp.

In 2011, Lupin reportedly signed a deal with a private specialty life science company NeuClone Pty Ltd of Sydney, Australia for their cell-line technology. Lupin reportedly would use this technology for developing biosimilar drugs in the field of oncology. Again, in April 2014, Lupin entered into a joint venture pact with Japanese company Yoshindo Inc. to form a new entity that will be responsible both for development of biosimilars and obtaining marketing access for products in the Japanese market.

In November 2013, The Drug Controller General of India (DCGI) approved a biosimilar version of Roche’s Herceptin developed jointly by Biocon and Mylan.

In June 2014, Ipca Laboratories and Oncobiologics, Inc. of USA reportedly announced the creation of an alliance for the development, manufacture and commercialization of biosimilar monoclonal antibody products.

Many more such initiatives reportedly are in the offing.

Oncology becoming biosimilar development hot spot:

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 around US$ 60 billion growing over 17 percent.

As per recent reports, about 8 million deaths take place all over the world per year due to cancer.

Indian Government support:

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 immune-biological, 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 and put in place ‘Regulatory Guidelines for Biosimilar Drugs’ in conformance with the international quality and patient safety standards. This is a big step forward for India in the arena of biosimilar drugs.

In June 2014, under the advanced technology scheme of Biotechnology Industry Partnership Program (BIPP), the DBT has reportedly invited fresh proposals from biotech companies for providing support on a cost sharing basis targeted at development of novel and high risk futuristic technologies mainly for viability gap funding and enhancing existing R&D capacities of start-ups and SMEs in key areas of national importance and public good.

However, the stakeholders expect much more from the government in this area, which the new Indian government would hopefully address with a sense of urgency.

Conclusion: 

According to IMS Health, biosimilar market could well be the fastest-growing biologics segment in the next few years, opening up oncology and autoimmune disease areas to this category of drugs for the first time ever. Moreover, a number of top-selling biologic brands would go off patent over the next five years, offering possibilities of reaping rich harvest for the biosimilars players of the country. Critical therapy areas such as cancer, diabetes and rheumatoid arthritis are expected to spearhead the new wave of biosimilars.

While moving up the generic pharma value chain, Indian pharma players desiring to encash on the emerging global biosimilars opportunities would require to do a thorough analysis, well in advance, to understand properly the key success factors, core value propositions, financial upsides and risks attached to investments in this area.

Indian companies would also need to decide whether moving ahead in this space would be through collaborations and alliances or flying solo would be the right answer for them. Thereafter would come the critical market access strategy – one of the toughest mind games in the long-haul pharma marketing warfare.

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.