Improving Patient Access To Biosimilar Drugs: Two Key Barriers

Posted on July 31, 2017 by Tapan Ray

Novel biologic medicines have unlocked a new frontier offering more effective treatment for a host of chronic and life-threatening diseases, such as varieties of cancer, rheumatoid arthritis and diabetes, to name just a few. However, these drugs being hugely expensive, many patients do not have any access, or adequate access, to them. According to the Biosimilar Council of GPhA, only 50 percent of severe Rheumatoid Arthritis patients receive biologic medicines, even in the United States, Europe and Japan, leave aside India.

Realizing the gravity of this situation, a need to develop high quality, reasonably affordable and similar to original biologic brands, was felt about ten years ago. These were intended to be launched immediately after patent expiry of the original biologic. Such medicines are termed as biosimilar drugs. It is worth noting, even biosimilar drug development involves complex manufacturing processes and handling, while dealing with derivatives of highly sensitive living organisms.

The regulatory approval process of these drugs is also very stringent, which demands robust clinical data, demonstrating high similarity, both in effectiveness and safety profile, to original biologic brands, known as the reference product. The clinical data requirements for all new biosimilars include data on patients switching from the originator’s brand, and also between other biosimilars. Clinical evidences such as these, are expected to provide enough confidence to physicians for use of these products.

An article published in the PharmaTimes magazine in January 2016, reiterated that over the last couple of years, a wealth of supporting data has been published in medical journals and presented at global congresses, including real-world data of patients who have been switched to the new drug from the originator. This has led to a positive change in physician and patient attitudes towards biosimilars.

The good news is, besides many other regulated markets, as of May 2017, five biosimilar drugs have been approved even by the US-FDA, and several others are in the pipeline of its approval process.

That said, in this article I shall mainly focus on the two key barriers for improving patient access to biosimilar drugs, as I see it.

Two major barriers and their impact:

As I see it, there appear to be the following two key barriers for more affordable biosimilar drugs coming into the market, improving patients’ access to these important biologic medicines:

The first barrier involves fierce legal resistance from the original biologic manufacturers of the world, on various grounds, resisting entry of biosimilar varieties of their respective brands. This compels the biosimilar drug manufacturers incurring heavy expenditure on litigation, adding avoidable cost. A glimpse of this saga, we are ‘privy’ to witness even in India, while following Roche versus Biocon and Mylan case related to ‘Trastuzumab’. This barrier is one of the most basic types, that delays biosimilar drug entry depriving many new patients to have access to lower priced effective biologic for the treatment of serious diseases.

The other major barrier that exists today, involves ‘interchangeability’ of original biologic with biosimilar drugs. It simple means that in addition to being highly similar, a biosimilar drug manufacturer would require producing indisputable clinical evidence that it gives the same result for any given patient just as the original biologic. We shall discuss the reason behind this regulatory requirement later in this article. However, this is an expensive process, and the absence of it creates a barrier, making the physicians hesitant to switch all those existing patients who are on expensive original biologic drugs with less expensive available biosimilar alternatives.

The first or the initial barrier:

The first or the initial barrier predominantly involves patent related legal disputes, that can only be settled in a court of law and after incurring heavy expenditure towards litigation. Provided, of course, the dispute is not mutually resolved, or the law makers do not amend the law.

An interesting case in India:

Interestingly, in India, a similar dispute has knocked the doors of both the high court and the Competition Commission of India (CCI). From a common man’s perspective, it appears to me that the laws under which these two institutions will approach this specific issue are seemingly conflicting in nature. This is because, while the patent law encourages no market competition or a monopoly situation for a patented product, competition law encourages more market competition among all related products. Nonetheless, in this specific case CCI is reportedly investigating on the alleged ‘abuse of the regulatory process’, as it has opined ‘abuse of regulatory process can constitute an abuse of dominance under the (CCI) Act.’

The second barrier:

I am not going to discuss in this article the relevance of this barrier, in detail. Nevertheless, this one is also apparently equally tough to comply with. The very fact that none out of five biosimilar drugs approved in the United States, so far, has been considered ‘interchangeable’ by the US-FDA, vindicates the point.

That this specific regulatory demand is tough to comply with, is quite understandable from the requirements of the US-FDA in this regard, which goes as follows:

“To support a demonstration of interchangeability, the data and information submitted to FDA must show that a proposed interchangeable product is biosimilar to the reference product and that it can be expected to produce the same clinical results as the reference product in any given patient. Also, for products that will be administered more than once, the data and information must show that switching a patient back and forth between the reference product and the proposed interchangeable product presents no greater risk to the patient in terms of safety or diminished efficacy when compared to treating them with the reference product continuously.”

The reasoning of innovative biologic drug makers:

On this subject, the stand taken by different innovative drug makers is the same. To illustrate the point, let me quote just one of them. It basically sates, while biosimilar drugs are highly similar to the original medicine, the patient’s immune system may react differently due to slight differences between the two medicines when they are alternated or switched multiple times. This phenomenon, known as immunogenicity, is not a common occurrence, though. But there have been rare instances when very small differences between biologic medicines have caused immune system reactions that changed the way a medicine was metabolized, or reduced its effectiveness.

It further reiterates, the US-FDA requirements to establish ‘interchangeability’ between a biosimilar drug and the original one, or between biosimilars may seem like nuances, but are important because ‘interchangeability’ allows pharmacists to substitute biosimilars without consulting the doctor or patient first.

It may, therefore, indicate to many that innovative biologic drug manufacturers won’t want substitution of their expensive biologic with more affordable biosimilar drugs, on the ground of patient safety issues related to immunogenicity, though its instances are rather uncommon.

Some key players in biosimilar drug development:

Having deliberated on the core subject of this article, let me now very briefly name the major players in biosimilar drug development, both in the developed world, and also in India.

The first biosimilar drug was approved by the US-FDA in 2006, and the product was Omnitrope (somatropin) of Novartis (Sandoz). It was the same in the European Union (EU), as well. Subsequently, many other companies reportedly expressed interest in this field, across the globe, including Pfizer, Merck, Johnson and Johnson, Amgen, AbbVie, Hospira, AstraZeneca and Teva, among many others.

Similarly, in India, the major players in this field include, Biocon, Sun Pharma, Shantha Biotech, Dr. Reddy’s Lab, Zydus Cadila, Panacea Biotech and Reliance Life Sciences.

As featured on the Amgen website, given the complexity and cost of development and manufacturing, biosimilars are expected to be more affordable therapeutic options, but are not expected to generate the same level of cost savings as generics. This is because, a biosimilar will cost US$100 to US$200 million and take eight to ten years to develop. Whereas, a small molecule generic will cost US$1 to US$5 million and take three to five years to develop.

The market:

According to the 2017 report titled “Biosimilar Market: Global Industry Analysis, Trends, Market Size & Forecasts to 2023” of Research and Markets, the market size of the global biosimilar market was valued over US$ 2.5 billion during 2014, and it surpassed US$ 3.30 billion during 2016. The global biosimilar market is projected to surpass US$ 10.50 billion by 2023, growing with a CAGR between 25.0 percent and 26.0 percent from 2017 to 2023.

According to this report, gradually increasing awareness, doctors’ confidence and the lower drug cost are expected to boost the demand and drive the growth of the global biosimilar market during the forecast period. Segments related to diabetes medicine and oncology are expected to attain faster growth during the forecast period. Patent expiry of several blockbuster drugs is a major basic factor for growth of the global biosimilar market, as it may encourage the smaller manufacturers to consider producing such biologic drugs in those segments.

Conclusion:

Biosimilar drugs are expected to benefit especially many of those patients who can’t afford high cost biologic medicines offering better treatment outcomes than conventional drugs, in the longer term. These drugs are now being used to effectively manage and treat many chronic and life-threatening illnesses, such cardiac conditions, diabetes, rheumatoid arthritis, psoriasis, multiple sclerosis, Crohn’s disease, HIV/AIDS and cancer.

However, improving patient access to high quality biosimilar drugs, at an affordable price, with increasing competition, could be a challenge, as two key barriers are envisaged to attain this goal. Overcoming these meaningfully, I reckon, will involve choosing thoughtfully a middle path, creating a win-win situation, both for the patients, as well as the industry.

Adequate competition in the biologic drug market is essential – not only among high-priced original biologic brands and biosimilars, but also between biosimilar drugs. This is so important to increase patient access to biologic drugs, in general, across the world, including India.

The current situation demands a sense of urgency in searching for a middle path, which may be created either through a legal framework, or any other effective means as would deem fair and appropriate, without compromising with patient safety, at least, from where it is today.

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.

Gilead: Caught Between A Rock And A Hard Place In India

Posted on September 22, 2014 by Tapan Ray

I had mentioned in my blog post of August 4, 2014, titled “Hepatitis C: A Silent, Deadly Disease: Treatment beyond reach of Most Indians” that in line with Gilead’s past approach to its HIV medicines, the company would offer to license production of sofosbuvir (brand name Sovaldi) to a number of rival low-cost Indian generic drug companies. They will be offered manufacturing knowhow, allowed to source and competitively price the product at whatever level they choose.

Sovaldi (sofosbuvir) is a once-a-day patented drug of Gilead for cure of chronic hepatitis C infection in most patients. Sovaldi has been priced at Rs 60,000 (US$ 1,000) per tablet in the developed markets with a three-month course costing Rs1.8 Crore (US$ 84,000), when it reportedly costs around U$130 to manufacture a tablet. This treatment cost is being considered very high even for many Americans and Europeans.

Gilead has also announced that it has set a minimum threshold price for Sovaldi of US$ 300 (Rs.18,000) a bottle, enough for a month. With three months typically required for a full course and taking into account the currently approved combination with interferon, the total cost of Sovaldi per patient would be about US$ 900 (Rs.54,000) for a complete treatment against its usual price of US$ 84,000 (Rs1.8 Crore). The company would offer this price to at least 80 countries.

Breaking-news in India:

On September 15, 2014, International media reported that Cipla, Ranbaxy, Strides Arcolab, Mylan, Cadila Healthcare, Hetero labs and Sequent Scientific are likely to sign in-licensing agreements with Gilead to sell low cost versions of Sovaldi in India.

It was also reported that these Indian generic manufacturers would be free to decide their own prices for sofosbuvir, ‘without any mandated floor price’.

Indian companies would require paying 7 per cent of their revenues as royalty to Gilead, which, in turn would ensure full technology transfer to them to produce both the Active Pharmaceutical Ingredients (API) and finished formulations. The generic version of Sovaldi is likely to be available in India in the second or third quarter of 2015, at the earliest.

Another reason of Gilead’s selecting the Indian generic manufacturers could possibly be, that of much of the global supply of generic finished formulations is manufactured in India, especially for the developing countries of the world.

Patent status, broad strategy and the possibility:

It is worth noting here that the Indian Patent Office (IPO) has not recognized Sovaldi’s (sofosbuvir) patent for the domestic market, just yet. This patent application has been opposed on the ground that it is an “old science, known compound.”

It is interesting that the Indian Pharmaceutical Association (IPA) and others, such as, Delhi Network of Positive People and Natco have reportedly opposed Sovaldi’s (sofosbuvir) patent application. If the patent for this drug does not come through, low priced generic versions of Sovaldi, without any licensing agreement with Gilead, would possibly capture the Indian market.

Conversely, due to unaffordable price of Sovaldi for most of the Hepatitis C patients, even if a patent is granted for this drug in India, the sword of Compulsory License (CL) on the ground of ‘reasonably affordable price’ looms large on this product.

To negate the possibility of any CL, in the best-case scenario of a patent grant, Gilead seems to have decided to enter into licensing agreement with seven other Indian generic manufacturers to create a sense of adequate competition in the market, as many believe.

However, if the IPO considers sofosbuvir not patentable in India, it would indeed be a double whammy for Gilead. Without any patent protection, all these in licensing agreements may also fall flat on the face, paving the way of greater access of much lesser priced generic sofosbuvir to patients, as indicated above.

The action replay:

If we flash back to the year 2006, we shall see that Gilead had followed exactly the same strategy for another of its patented product tenofovir, used in the treatment of HIV/AIDS.

1. Voluntary license:

At that time also Gilead announced that it is offering non-exclusive, voluntary licenses to generic manufacturers in India for the local Indian market, along with provision for those manufacturers to export tenofovir formulations to 97 other developing countries, as identified by Gilead.

Gilead did sign a voluntary licensing agreement with Ranbaxy for tenofovir in 2006.

The arrangement was somewhat like this. Gilead would charge a royalty of 5 percent on the access price of US$ 200 a year for the drug. Any company that signs a manufacturing agreement with Gilead to manufacture API of tenofovir would be able to sell them only to those generic manufacturers that have voluntary license agreements with Gilead.

Interestingly, by that time Cipla had started selling one of the two versions of tenofovir, not licensed by Gilead. Cipla’s generic version was named Tenvir, available at a price of US$ 700 per person per year in India, against Gilead’s tenofovir (Viread) price of US$ 5,718 per patient per year in the developed Markets. Gilead’s target price for tenofovir in India was US$ 200 per month, as stated above.

2. Patent challenge:

Like sofosbuvir (Sovaldi), Gilead had filed a patent application for tenofovir (Viread) in India at that time. However, the ‘Indian Network for People Living with HIV/AIDs’ challenged this patent application on similar grounds.

3. Patent grant refused:

In September 2009, IPO refused the grant of patent for tenofovir to Gilead, citing specific reasons for its non-conformance to the Indian Patents Act 2005. As a result, the voluntary license agreements that Gilead had already signed with the Indian generic manufacturers were in jeopardy.

Current status:

In 2014, while planning the launch strategy of sofosbuvir (Sovaldi) for India, Gilead seems to have mimicked the ‘Action Replay’ of 2006 involving tenofovir, at least, in the first two stages, as detailed above. Only the patent status of sofosbuvir from the IPO is now awaited. If IPO refuses patent grant for sofosbuvir, Gilead’s fate in India with sofosbuvir could exactly be the same as tenofovir, almost frame by frame.

Gilead and the two top players in India:

Very briefly, I would deliberate below the strategic stance taken by two top generic players in india, from 2006 to 2014, in entering into voluntary licensing agreements with Gilead for two of its big products, as I understand.

Ranbaxy:

In my view, the stand of Ranbaxy in Gilead’s India strategy of voluntary licensing in the last eight years has remained unchanged. It involves both sofosbuvir and tenofovir.Thus, there has been a clear consistency in approach on the part of Ranbaxy on this issue.

Cipla:

Conversely, an apparent shift in Cipla’s strategic position during this period has become a bone of contention to many. For tenofovir, Cipla did not sign any voluntary license agreement with Gilead. On the contrary, it came out with its own version of this product, that too much before IPO refused to grant patent for this drug.

However, unlike 2006, Cipla decided to sign a voluntary license agreement with Gilead for sofosbuvir (Sovaldi) in 2014, though no patent has yet been granted for this product in India.

Has Cipla changed its position on drug patent?

I find in various reports that this contentious issue keeps coming up every now and then today. Some die-hards have expressed disappointments. Others articulated that the new dispensation in Cipla management, has decided to take a different stance in such matter altogether.

In my view, no tectonic shift has taken place in Cipla’s position on the drug patent issue, just yet.

The owner of Cipla, the legendary Dr.Yusuf Hamied has always been saying: ‘I Am Not Against Patents … I Am Against Monopolies’

He has also reportedly been quoted saying: “About 70 per cent of the patented drugs sold worldwide are not invented by the owning companies”.

He had urged the government, instead of having to fight for CL for expensive lifesaving medicines by the generic drug makers, where voluntary licenses are not forthcoming, the government needs to pass a law giving the generic players “automatic license of rights” for such drugs, making these medicines affordable and thereby improving access to patients. In return, the local generic manufacturers would pay 4 percent royalty on net sales to patent holders. He was also very candid in articulating, if Big Pharma would come into the developing markets, like India, with reasonable prices, Cipla would not come out against it.

According to Dr. Hamied, “When you are in healthcare, you are saving lives. You have to have a humanitarian approach. You have to take into account what it costs to make and what people can pay.”

Considering all these, I reckon, the core value of Cipla and its stand on patents have not changed much, if at all, for the following reasons:

The voluntary license agreement of Cipla with Gilead for sofosbuvir (Sovaldi) along with six other generic manufacturers of India, unlike tenofovir, still vindicates its strong opposition to drug monopoly, respecting product patents.

Cipla along with manufacturing of sofosbuvir, maintains its right to market the product at a price that it considers affordable for the patients in India.

Conclusion:

Indian Patents Act 2005 has the requisite teeth to tame the most aggressive and ruthless players in drug pricing even for the most feared diseases of the world, such as, HIV/AIDS, cancer, Hepatitis C and others.

Many global drug companies, resourceful international pharma lobby groups and governments in the developed world are opposing this commendable Act, tooth and nail, generating enormous international political pressure and even chasing it in the highest court of law in India, but in vain. Glivec case is just one example.

Some pharma majors of the world seem to be attempting to overcome this Act, which serves as the legal gatekeeper for the patients’ interest in India. Their strategy includes not just voluntary licenses, but also not so transparent, though well hyped, ‘Patient Access Programs’ and the so called ‘flexible pricing’, mostly when the concerned companies are able to sense that the product patents could fail to pass the scrutiny of the Indian Patents Act 2005.

It has happened once with even Gilead in 2006. The drug was tenofovir. Following the same old strategy of voluntary licenses and relatively lower pricing, especially when its drug patent is pending with IPO post patent challenges, Gilead intends to launch Sovaldi in India now.

Carrying the baggage of its past in India, Gilead seems to have been caught between a rock and the hard place with sofosbuvir (Sovaldi) launch in the country. On the one hand, the risk of uncertain outcome of its patent application and on the other, the risk of CL for exorbitant high price of the drug, if the patent is granted by the IPO. Probably considering all these, the company decided to repeat its 2006 tenofovir strategy of voluntary licenses, yet again in 2014, for Sovaldi in India.

As of today, Sovaldi strategy of Gilead in India appears to be progressing in the same direction as tenofovir, the way I see it. However, the final decision of IPO on the grant of its patent holds the key to future success of similar high-voltage, seemingly benign, marketing warfare of pharma majors 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.

Loss of Ranbaxy, Gain of Big Pharma…And Two Intriguing Coincidences

Posted on March 17, 2014 by Tapan Ray

In March 2014, the largest pharma player of India by market capitalization, Sun Pharma, became the latest of the large Indian pharma exporters facing the US-FDA ‘Import Ban’ for drugs manufactured at its Gujarat-based plant. This news came as a shocking surprise to many, including the stock market, as the home grown company has now attained an international stature being governed by a professional management team and steered by a Board that is chaired by a well-regarded non-Indian with decades of experience in the global pharmaceutical industry.

Just before that in January 2014, being slapped with the US-FDA drug ‘Import Ban’ of Active Pharmaceutical Ingredients (API) manufactured in its Toansa Plant of Punjab, the pharmaceutical business of Ranbaxy in the United States, with the products manufactured in its approved manufacturing facilities in India, came to a screeching halt.

It is worth noting that similar ‘Import Bans’ are already in place for the same company’s Dewas, Paonta Sahib, and Mohali production facilities. The combined impact of these bans now makes Ohm Laboratories plant of Ranbaxy, located in New Jersey, its sole generic drug manufacturing facility for the US market.

Considering that the US sales of Ranbaxy reportedly used to be around 57 percent of its total global turnover even in 2012, these import bans are undoubtedly a huge blow to the company, both financially as well as in terms of its business reputation.

Thus, the top priority of Ranbaxy under this situation is effectively addressing all the issues as raised by the US-FDA, especially in the area of documentation, as in the buyers’ market sellers cannot be the choosers.

A ‘Double Whammy’:

Meanwhile, prompted by theses ‘Import Bans’ on product quality ground and adding further woes to the company, the Supreme Court of India on March 15, 2014 reportedly issued notices to both the Central Government and Ranbaxy on a Public Interest Litigation (PIL) seeking not just cancellation of the manufacturing licenses of the company, but also a probe by the Central Bureau of Investigation (CBI) on the allegation of supplying adulterated drugs in the country.

Thus, it is a double whammy for Ranbaxy. The company would now require convincing the top court of the country that it manufactures and sells quality medicines for consumption of the patients in India.

However, Ranbaxy reportedly insisted that the drugs sold by it in the Indian market are safe and effective and that the company complies with all regulations of the country.

Could the situation now get even murkier?

During the process of judicial scrutiny, if the Supreme Court gets convinced with the above reply of Ranbaxy on this issue, the question that could possibly emerge is, how come the same company produces high quality drugs for the patients in India and allegedly substandard quality drugs for the patients of the United States? This could make the subject more complicated, if not murkier, internationally.

Two intriguing coincidences:

In the midst of all these, while connecting various similar looking and important dots, emerged during the last few years, a couple of clear coincidences comes to the fore, as follows:

1. Is the drug quality issue in India for exports limited only to US-FDA?

This brings us to the first interesting coincidence of drug ‘Import Bans’, involving large Indian drug exporters, coming mostly, if not only, from the US-FDA, although there are so many other drug importing countries, including rest of the developed world.

Moreover, none of the Indian domestic companies had ever faced similar number of USFDA ‘Import Bans’ in the past, though they have been exporting to the United States from their FDA approved and inspected plants since quite a while. Therefore, it is worth figuring out why has it started happening now, that too repeatedly, and involving some of the largest global generic drug manufacturers from India.

Ranbaxy too is a large global player for generic pharmaceutical products. Besides India and the United States, the company markets its products both in East and West Europe, Latin America, Africa, Middle East, South Asia, South-East Asia and Asia-Pacific regions. Interestingly, though its saga related to US-FDA cGMP conformance in the four plants, culminating into drug ‘Import Bans’ in the United States, commenced as early as 2008, the company does not seem to have any issue with any other drug regulator anywhere in the world, not just yet.

According to the media report, UK and Australian drug regulators had commented that they are assessing the impact of the US action on Ranbaxy products sold in their countries. However, as on date Ranbaxy’s drug export to all those countries continue to remain as normal as before.

If over a period of time, it is proved that other foreign drug regulators do not have any similar quality related issues with Ranbaxy manufactured products, a serious joint evaluation of the entire chain of events related to Ranbaxy and others by the global regulatory experts would perhaps be warranted to provide a lasting solution on the subject.

2. Missed opportunities for ‘first to launch’ generic versions of blockbuster drugs:

The second coincidence is related to a series of missed opportunities, especially for Ranbaxy, related to ‘first to launch’ generic versions of several patent expired blockbuster drugs in the United States.

When the emerging dots associated with such lost opportunities for drugs like, Lipitor (Pfizer), Diovan (Novartis) and Nexium (AstraZeneca) are connected, a clear pattern emerges favoring Big Pharma and obviously adversely affecting companies like Ranbaxy.

Saga started with uncertainty over Lipitor generic Launch:

Like many other large Indian players, ‘first to launch’ strategy with new generic drugs has been the key focus of Ranbaxy since long, much before its serious trouble with the US-FDA begun in 2008. ‘Import Bans’ on two of its manufacturing facilities by the US regulator in that year created huge uncertainty in its launch of a generic version of Pfizer’s anti-lipid blockbuster drug Lipitor in 2011. On time launch of a generic version of Lipitor was estimated to have generated a turnover of around US $ 600 million for Ranbaxy in the first six months.

Despite its neck deep trouble with the US-FDA at that time, Ranbaxy ultimately did manage to launch generic Lipitor, after partnering with Teva Pharmaceutical of Israel.

The story continued with indefinite delay of Diovan generic launch:

Lipitor story was just the beginning of Ranbaxy’s trouble of not being able to translate its ‘first to launch’ advantage of patent-expired blockbuster drugs into commercial success, thus allowing the Big Pharma constituents to enjoy the market monopoly with their respective blockbuster drugs even after patent expiry.

Despite Ranbaxy holding the exclusive rights to market the first generic valsartan (Diovan of Novartis and Actos of Takeda) for 180 days, much to its dismay, even after valsartan patent expiry in September 2012, a generic version of the blockbuster antihypertensive is yet to see the light of the day. However, Mylan Inc. has, now launched a generic combination formulation of valsartan with hydrochlorothiazide.

US-FDA drug ‘Import Ban’ from the concerned manufacturing facility of Ranbaxy gave rise to this hurdle favoring the Big Pharma, as discussed above.

As a result, Novartis in July 2013 reportedly raised its guidance announcing that the company now expects full-year sales to grow at a low single-digit rate, where it had earlier predicted net sales to turn up flat. It also guided for core earnings to decline in the low single digits, revising guidance for a mid-single-digit drop.

Would it also delay the launch Nexium generic?

Ranbaxy had earlier created for itself yet another opportunity to become the first to launch a generic version of the blockbuster anti-peptic ulcerant drug of AstraZeneca – Nexium in the United States, as the drug goes off patent on May 27, 2014. However, due to another recent US-FDA import ban from the concerned plant of Ranbaxy, it now seems to be a distant reality.

That said, it has now been reported that Ranbaxy is in talks with at least two companies on sourcing ingredients for the generic version of Nexium to be able to launch its generic formulations in the United States immediately after the patent expiry.

In this context, any delay in the launch of generic Nexium, which incidentally is the second-biggest seller of AstraZeneca, would have a big impact on the company’s profit.

With the global sales of Nexium at US$ 3.87 billion and US sales at US$ 2.12 billion in 2013, retaining its monopoly status in the all-important US market beyond the end of May would not only limit a forecast decline in AstraZeneca’s 2014 earnings, but would also protect bonuses for top management of the British pharma giant, the above report says.

No Machiavellian Hypothesis:

By highlighting these coincidences, I have no intention to even attempting to postulate something like a ‘Machiavellian Hypothesis’. I just want to establish that intriguing coincidences do exist whatever may be the reasons.

Probably an in-depth study by independent experts in this field would be able to ferret out the real reasons behind these coincidences, including, why are the cGMP issues repeatedly arising only with the US-FDA?

Conclusion:

Be that as it may, delayed generic launches of Nexium (AstraZeneca) with US sales of US$ 2.12 billion, together with the same for Actos (Takeda) and Diovan (Novartis) recording a combined sales for US$ 8.55 billion, have indeed created almost a wind-fall gain for the respective ‘Big Pharma’ constituents and consequent huge losses for Ranbaxy. The first-to-file bonus on Actos alone was estimated to be more than US$ 200 million.

Though the US-FDA Commissioner Margaret Hamburg has reportedly clarified that the United States is ‘not targeting’ Indian pharma companies but just following a strict quality control regime for all products being imported into America, the following critical questions still float at the top of mind:

- Are all these missed opportunities of Ranbaxy, which favored Big Pharma immensely, just sheer coincidences of clash in timings between USFDA ‘Import Bans’ from four of its manufacturing facilities and the respective launch dates in the United States for the first generic versions of the three blockbuster drugs?

- When Indian generic drug manufacturers continue to export across the world without any problem thus far, why is a series of unprecedented ‘Import Bans’ on quality grounds now coming from the US-FDA in a quick succession decimating the image of Indian generic drug manufacturers?

At the end of the narrative, some wise men could well say that I am trying to connect the dots that do not exist at all. These are all imaginary or at best, sheer coincidences. It could well be just that, who knows? But…

By: Tapan J. Ray

Just Born A Pharma Goliath: Would India Be Impacted?

Posted on March 3, 2014 by Tapan Ray

Just born a potential pharma Goliath, as Actavis – the Dublin-based one of the largest global generic drug makers, in its biggest ever purchase, acquires New York based R&D based pharma major – Forest Laboratories, for a whopping US$ 25 billion.

It is worth noting that as on date Actavis has grown mainly through Mergers and Acquisition (M&A) route. In 2012, the company took over American generic drug major Watson Pharma for €4.5 bn and then Ireland’s Warner Chilcott, marketing patented drugs for gastrointestinal and urological conditions, for US $8.5 bn. Post buy out of Forest Laboratories, Actavis would have annual sales turnover of US$15 bn.

So far, mostly R&D based Pharma players acquired generic drug makers:

This acquisition is interesting. The reason being, since the last few years, mostly research based global pharmaceutical companies are taking over generic pharma players in the emerging markets with a reasonable speed. To cite a few examples:

In June, 2010, British drug major GlaxoSmithKline (GSK) announced acquisition of ‘Phoenix’, a leading Argentine pharmaceutical company focused on the development, manufacturing and marketing of branded generic products, for a cash consideration of around US $253 million. With this acquisition, GSK planned to accelerate its business growth in Argentina and the Latin American region.

Similarly, Paris based Sanofi with the acquisition of Zentiva, became an important player in the European generic drug market. Zentiva, is also a leading generic player in the Czech, Turkish, Romanian, Polish, Slovak and Russian markets, besides the Central and Eastern European region. In addition to Zentiva, in the same year 2009, Sanofi also acquired other two important generic players, Medley in Brazil and Kendrick in Mexico.

In February 2014, the German Drug major Bayer reportedly announced that it would buy Dihon Pharmaceutical Group Co of China, expanding the German company’s footprint in a key growth country. Dihon’s products are also sold in Nigeria, Vietnam, Myanmar and Cambodia. Privately held Dihon specializes in ‘Over-The-Counter (OTC)’ and herbal ‘Traditional Chinese Medicine (TCM)’ products.

Back home, MNCs acquired the following generic companies from 2006 to 2011:

Year	Indian Companies	Multinational Companies	Value ($Mn)	Type of Deal
2006	Matrix Labs	Mylan	736	Acquisition
2008	Ranbaxy Labs	Daiichi Sankyo	4,600	Acquisition
	Dabur Pharma	Fresenius Kabi	219	Acquisition
2009	Shantha Biotech	Sanofi-aventis	783	Acquisition
2010	Orchid Chemicals	Hospira	400	Acquisition
	Piramal Healthcare	Abbott	3,720	Acquisition
	Paras Pharma	Reckitt Benckiser	726	Acquisition
2011	Universal Medicare	Sanofi	110	Acquisition
2013	Mylan	Agila Specialities	1750	Acquisition

Key drivers for generic acquisition:

From 2012 to 2015 patented drugs with a combined turnover of US$ 183 billion have already faced or would face intense generic competition resulting in, as high as, around 90 percent price erosion for those products. It is not just patent expirations that are exerting pressure on innovator companies. Added to this, a relatively weak R&D pipeline and increasing focus of various governments to reduce healthcare costs, have forced many research based global pharma players to imbibe the inorganic growth strategy in the generic space to quickly grab a sizable share of this large and fast growing market, especially in the emerging economies of the world.

Actavis acquisition is different:

In the above light Actavis’s acquisition of Forest Laboratories is quite different. Here, instead of a predominantly research-based company’s acquiring a generic player, a basically generic drug major has bought a research based global pharmaceutical player.

Interestingly, Forest Laboratories follows a unique R&D model. It is focused on, instead of discovering on its own, identifying strong medically relevant product candidates and guiding them through the complex development lifecycle, from proof-of-concept through post-marketing.

Strong global portfolio of both generic and patented drugs:

Post buy out, Actavis would have a strong combo-portfolio of generic drugs together with a relatively robust line-up of a diverse range of patented products, spanning across therapy areas such as Anti-Infective, Respiratory, Cardiovascular, Central Nervous System, Gastrointestinal, Obstetrics and Pain Management and that too not just in the emerging markets, but globally, unlike many others.

In addition, acquisition of Forest Laboratories would also provide Actavis access to former’s large US sales teams, transforming the merged entity a formidable force to reckon with in the topmost pharmaceutical market of the world, besides many others.

An intriguing recent decision:

That said, it is interesting to note that in January 2014, Actavis, then the second-biggest generic drug maker by market capitalization, announced that it would quit China as “It is not a business friendly environment… China is just too risky”. This is indeed intriguing, because by 2015, China’s generic market is expected to be close to US$ 82 billion.

Be that as it may, post acquisition Actavis would be in a position to offer all its customers in all the markets of the world a rainbow of products from patented to generics, carving out a critical strategic advantage for itself in the global pharmaceutical market.

Impact in India:

The question now boils down to what would be the impact of the just born Goliath on the domestic pharmaceutical industry in India.

Differentiated generic business:

The generic drugs market is usually classified as simple generics, super-generics and biosimilars. To differentiate, by adding value in the generic medicines, many domestic players are gradually entering into the ‘Super Generic’ and ‘biosimilar’ category of drugs. For example, Dr Reddy’s Laboratories has reportedly chosen to go for a difficult to copy drug formulation with its blood-thinner Fondaparinux. Sun Pharma, on the other hand, is focusing on innovative delivery platforms for its ophthalmic drugs and oral contraceptives. Cadila is looking at newer drug delivery modes for its painkiller Diclofenac. So is Lupin in other areas. In the biosimilar arena, Biocon has already developed Trastuzumab formulation of Roche. Moreover, the biosimilar business of Dr Reddy’s Laboratories continues with its impressive growth trend, besides many other Indian players in the same fray.

Simultaneously, India is improving its effectiveness in ‘Contract Research and Manufacturing Services (CRAMS) space. As we have recently witnessed in India the alliances between Merck & Co and Cipla and earlier with Sun Pharma. Even prior to that, collaborative agreements of Pfizer with Aurobindo Pharma; GSK with Dr Reddy’s Laboratories; Abbott India with Cadila and many more, would vindicate this point.

Merck Serono of Germany also announced a partnership to co-develop a portfolio of biosimilar compounds in oncology, primarily focused on monoclonal antibodies (MAbs) with Dr. Reddy’s Laboratories. The partnership covers co-development, manufacturing and commercialization of the compounds around the globe, with some specific country exceptions. Mylan has also signed similar agreement with Biocon.

Glenmark Pharma has chosen yet another route, by entering into collaboration with Forest Laboratories (now Actavis) in 2013, for the development of a novel mPGES-1 inhibitor for chronic inflammatory conditions, including pain management.

Advantage India, provided…

Global generic drugs market would get its next booster dose with reportedly around 46 drugs going off patent opening a market of another US$ 66 billion from monopolistic to intense generic competition in 2015.

Details of ANDA status from the US-FDA source, as I indicated in my earlier blog post, probably indicate that several Indian players have already started moving in that direction at a brisk pace, keeping their eyes well fixed on the crystal ball. Over 30 percent of Abbreviated New Drug Applications (ANDAs) and around half of the total Drug Master Filings (DMF) now come from the Indian Companies. In 2013 alone, the US-FDA granted 154 ANDAs and 38 tentative ANDAs to the Indian companies.

Despite all these, a serious apprehension does creep in, which finds its root in much-publicized fraudulent behavior of a few large Indian drug manufacturers, seriously compromising with the cGMP standards of some high profile global drug regulators. This challenge has to be overcome, sooner, to reap rich harvest out of the emerging global opportunities in the space of generic drugs.

Conclusion:

Geographically, North America is the largest consumer of generic drugs followed by Europe and Japan. However, the highest growth of the generic drugs market is observed in the Asia-Pacific region. Besides Actavis, some of the major generic drugs manufacturers of the world are Mylan, Apotex, Hospira, Par Pharmaceutical., Sandoz International and Teva Pharmaceutical.

From India, Ranbaxy Laboratories (before the recent fiasco), Dr. Reddy’s Laboratories, Lupin and Sun Pharma, besides many others, are competing quite well in the global generic drugs market with success.

Though Actavis has its manufacturing operations in India with its registered office located in Mumbai, the company is not yet engaged in serious local marketing operations in the country. In 2006 as Watson Pharma Pvt Ltd., the company acquired Sekhsaria Chemicals in a move to push forward its generic drug agenda globally. In 2005, it acquired a manufacturing facility in Goa from Dr. Reddy’s Laboratories to produce solid dosage generic drugs for the US market.

Taking all these into considerations, if much deliberated cGMP issues with the foreign drug regulators are resolved sooner, Actavis is not expected to make any major difference for Indian pharma players either in the domestic market or for that matter globally, any time soon.

Thus Indian pharma players are unlikely to be adversely impacted with the emergence of this new potential Goliath in the global pharmaceutical landscape.

By: Tapan J. Ray

‘Herceptin Biosimilars’ Seriously Questioned

Posted on February 7, 2014 by Tapan Ray

The news struck as an anticlimax, close on the heels of high decibel product launch of ‘Herceptin Biosimilars’ in India, being hyped as the first in the world, bringing much needed relief to many diagnosed breast cancer patients for their economical pricing.

At the same time, this legal challenge has now come as an acid test for the regulator to prove that ‘Caesar’s wife must be above suspicion’ for any new drug approval and especially if it is a complex biosimilar used for the treatment of patients suffering from dreaded diseases, such as, breast cancer.

It’s not patent this time:

Interestingly, this is not a patent infringement case, as Roche has reportedly given-up its patent on Trastuzumab (Herceptin) in India last year.

Alleged violations:

The above media report highlights, in Delhi High Court Roche has sued Biocon of India and its US based generic partner – Mylan along with the Drug Controller General of India (DCGI) related to launch of ‘Herceptin Biosimilar’ versions in India.

The allegation against Biocon and Mylan is that their recently launched drugs are being misrepresented as ‘biosimilar Trastuzumab’ or ‘biosimilar version of Herceptin’ without following the due process in accordance with the ‘Guidelines on Similar Biologics‘, necessary for getting approvals of such drugs in India.

‘Caesar’s wife’ under suspicion too:

The DCGI has also been sued by Roche for giving permission for launch of this product allegedly not in conformance with the above biosimilar guidelines, which were put in place effective August 15, 2012.

Roche reportedly argued that the above guidelines on similar biologics laid down a detailed and structured process for comparison of biosimilar with the original product and all the applications for manufacturing and marketing authorization of biosimilars are necessarily required to follow that prescribed pathway before obtaining marketing approval from the DCGI. Roche has also stated that there is no public record available, in the clinical trial registry India (CTRI) or elsewhere to show that these two players actually conducted phase-I or II clinical trials for the drug.

According to report Roche claims that DCGI has approved the “protocol and design study for testing” of Biocon related to the proposed drug just before the above regulatory guidelines were made effective, predominantly for patients’ health and safety reasons.

Interim restrain of the Delhi High Court:

In response to Roche’s appeal, the Delhi High Court has reportedly restrained Mylan and Biocon from “relying upon” or “referring to Herceptin” or any data relating to it for selling or promoting their respective brands Canmab (Biocon) and Hertaz (Mylan) till the next hearing.

The relevance of ‘Guidelines on Similar Biologics’:

The ‘Guidelines on Similar Biologics’ clearly articulated:

“Since there are several biosimilar drugs under development in India, it is of critical importance to publish a clear regulatory pathway outlining the requirements to ensure comparable safety, efficacy and quality of a similar biologic to an authorized reference biologic.”

Thus for patients’ health and safety interest the above regulatory pathway must be followed, the way these have been prescribed without any scope of cutting corners. This is even more important when so important pharmacovigilance system is almost non-functional in India.

Attempts to dilute the above guidelines from some quarters:

It was earlier reported that strong representations were made to the drug regulator in writing by powerful domestic players in this area urging to dilute the above ‘Guidelines’, otherwise it will be difficult for them to compete with the pharma MNCs.

This argument is ridiculous by any standard and smacks of putting commercial considerations above patients’ health interest.

The key issue:

As I see it, four quick questions that float at the top of my mind are as follows:

If the ‘Guidelines on Similar Biologics’ have not been followed either by the applicants or by the DCGI, how would one establish beyond an iota of doubt that these drugs are biosimilar to Trastuzumab, if not ‘Biosimilar to Herceptin’?

If these drugs are not proven biosimilar to Trastuzumab, as specified in the ‘Guidelines on Similar Biologics’, how can one use Trastuzumab data for their marketing approvals and the DCGI granting the same?

If these drugs were not biosimilars to Trastuzumab, would these be as effective, reliable and safe as Herceptin in the treatment of breast cancer?

Further, how are references related to Herceptin being used to promote these drugs both pre and post market launch?

Conclusion:

I guess, predominantly commercial considerations prompted Roche to sue Biocon, Mylan and also the DCGI on ‘Trastuzumab biosimilars’, launched recently in India.

Be that as it may, for the interest of so many diagnosed breast cancer patients in the country, there is crying need for the facts to come out in the open, once and for all. Are these drugs truly Trastuzumab biosimilars with comparable safety, efficacy, quality and reliability of Herceptin?

If the answer comes as yes, there would be a huge sigh of relief from all corners inviting millions of kudos to Biocon and Mylan.

However, if by any chance, the allegations are proved right, I do not have an iota of doubt that the honorable Delhi High Court would ferret out the truth, unmask the perpetrators and give them exemplary punishments for playing with patients’ lives.

By: Tapan J. Ray

Herceptin Biosimilar Expands Drug Access to Breast Cancer Patients in India

Posted on January 24, 2014 by Tapan Ray

Come February 2014, much to the relief of more than 145,000 patients diagnosed with breast cancer in India, Herceptin of Roche, a critical drug for the treatment of the dreaded disease, will face competition, for the first time, from a less expensive biosimilar equivalent. The product named Canmab developed together with Mylan by Biocon has been priced 25 percent less than Herceptin.

Patient access issue for newer cancer therapy:

Herceptin has been a very critical drug, though equally expensive, for breast cancer patients globally.

Mainly because of its unusual high price, the product created an access barrier to majority of patients in India. Arising out of complexity of the problem faced by the cancer patients, hugely compounded by the affordability issue, on January 12, 2013, it was first reported that in a move that is intended to benefit thousands of cancer patients, Indian Government has started the process of issuing Compulsory Licenses (CL) for three commonly used anti-cancer drugs:

- Trastuzumab (or Herceptin, used for breast cancer),

- Ixabepilone (used for chemotherapy)

- Dasatinib (used to treat leukemia).

For a month’s treatment drugs like, Trastuzumab, 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.

Pricing issue needs a systemic resolution:

While there is no single or only right way to arrive at the price of a patent protected medicine, how much the pharmaceutical manufacturers will charge for such drugs still remains an important, yet complex and difficult issue to resolve, both locally and globally. Even in the developed nations, where an appropriate healthcare infrastructure is already in place, this issue comes up too often mainly during price negotiation for reimbursed drugs.

A paper titled, “Pharmaceutical Price Controls in OECD Countries”, published by the U.S. Department of Commerce, after examining the drug price regulatory systems of 11 OECD countries, concluded that all of them enforce some form of price control to limit spending on pharmaceuticals. The report also indicated that the reimbursement prices in these countries are often treated as de facto market price.

Though there is no such system currently prevailing in India, the Government is mulling to put in place a similar mechanism for patented medicines, as captured in the National Pharmaceutical Pricing Policy (NPPP) 2012.

Further, some OECD governments regularly cut prices of even those drugs, which are already in the market. The value of health outcomes and pharmacoeconomics analysis is gaining increasing importance for drug price negotiations/control by the healthcare regulators even in various developed markets of the world to ensure responsible pricing of IPR protected medicines. For various reasons, no such process is followed either for such product pricing in India, as on date.

Roche changed Herceptin strategy for India:

To effectively address the challenge of pricing of patented medicines in India, Roche reportedly entered into a ‘never-before’ technology transfer and manufacturing contract for biologics with a local Indian company – Emcure Pharma for its two widely acclaimed ‘Monoclonal Antibodies’ anti-cancer drugs – Herceptin and MabThera.

Consequently, Roche introduced its ‘made in India’ brand Herclon (Herceptin) with a much-reduced maximum retail price of about Rs. 75,000 for a 440 mg vial and started co-marketing the product with Emcure Pharma in India.

Although Herceptin patent remains valid in the United States (US) until 2018, Roche decided to discontinue its patent rights for Herceptin in India in 2013.

The pharma major reportedly lost this patent earlier in Europe. This vindicates the views of many experts that Herceptin patent was weak, as it would probably not be able to clear the litmus test of a stringent scrutiny under the Patent Acts of India. The report, therefore, argues that core reason for withdrawal of Herceptin patent in India by Roche cannot be attributed, even remotely, to the ‘weak IP ecosystem’ in India.

Biocon Pricing:

According to reports Biocon’s Canmab, the biosimilar version of Herceptin, will be available in 440 mg vial with a maximum retail price of Rs. 57,500 and also in 150 mg vial at Rs. 19,500.

Lower price would lead to greater patient access – Roche argued earlier:

It was reported, when Roche switched over to Herclon with around 30 percent discounted price from very high price Herceptin, access to the drug improved. In fact, that was the logic cited by Roche for the launch of Herclon in India at that time.

Just to recapitulate, media reports indicated at that time that Roche intends to offer to Indian patients significantly cheaper, local branded version of Herceptin sooner. The same news item also quoted Roche spokesperson from Basel, Switzerland commenting as follows:

“The scope is to enable access for a large majority of patients who currently pay out of pocket as well as to partner with the government to enable increased access to our products for people in need”.

Conclusion:

It is beyond doubt that even with significantly lower price, Canmab would not be able to guarantee 100 percent access to the drug for all breast cancer patients in the country.

However, applying the same logic of Roche, as mentioned above, with further 25 percent price discount for Canmab by Biocon, the access to this drug should expand significantly for over 145,000 diagnosed breast cancer patients in India even, for an argument’s sake, all other factors, including inadequate number diagnostic facilities etc. remain the same. Isn’t that better?

By: Tapan J. Ray

Pharma Horizon: Cloud, Rainbow And Smear

Posted on December 9, 2013 by Tapan Ray

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

Pharma FDI: Damning Report of Parliamentary Panel, PM Vetoes…and Avoids Ruffling Feathers?

Posted on August 19, 2013 by Tapan Ray

An interesting situation emerged last week. The Parliamentary Standing Committee (PSC) on Commerce proposed a blanket ban on all FDI in brownfield pharma sector. Just two days after that, the Prime Minister of India vetoed the joint opposition of the Department of Industrial Policy and Promotion (DIPP) and the Ministry of Health to clear the way for all pending pharma FDIs under the current policy.

On August 13, 2013, Department related Parliamentary Standing Committee on Commerce laid on the Table of both the Houses of the Indian Parliament its 154 pages Report on ‘FDI in Pharmaceutical Sector.’

The damning report of the Parliamentary Standing Committee flags several serious concerns over FDI in brownfield pharma sector, which include, among others, the following:

1. Out of 67 FDI investments till September 2011, only one has been in green field, while all the remaining FDI has come in the brown field projects. Moreover, FDI in brown field investments have of late been predominantly used to acquire the domestic pharma companies.

2. Shift of ownership of Indian generic companies to the MNCs also results in significant change of the business model, including the marketing strategy of the acquired entity, which are quite in sync with the same of the acquirer company. In this situation, the acquired entity will not be allowed to use flexibilities such as patent challenges or compulsory license to introduce new affordable generic medicines.

The withdrawal of all patent challenges by Ranbaxy on Pfizer’s blockbuster medicine Lipitor filed in more than eight countries immediately after its acquisition by Daiichi-Sankyo is a case in point.

3. Serial acquisitions of the Indian generic companies by the MNCs will have significant impact on competition, price level and availability. The price difference between Indian ‘generics’ and MNCs’ ‘branded generic’ drugs could sometimes be as high as 80 to 85 times. A few more larger scale brownfield takeovers may even destroy all the benefits of India’s generics revolution.

4. FDI inflow into Research & Development of the Pharma Industry has been totally unsatisfactory.

5. FDI flow into brown field projects has not added any significant fresh capacity in manufacturing, distribution network or asset creation. Over last 15 years, MNCs have contributed only 5 per cent of the gross fixed assets creation, that is Rs 3,022 crore against Rs 54,010 crore by the domestic companies. Further, through brownfield acquisitions significant strides have not been made by the MNCs, as yet, for new job creation and technology transfer in the country.

6. Once a foreign company takes over an Indian company, it gets the marketing network of the major Indian companies and, through that network, it changes the product mix and pushes the products, which are more profitable and expensive. There is no legal provision in India to stop any MNC from changing the product mix.

7. Though the drug prices may not have increased significantly after such acquisitions yet, there is still a lurking threat that once India’s highly cost efficient domestic capacity is crushed under the weight of the dominant force of MNCs, the supply of low priced medicines to the people will get circumvented.

8. The ‘decimation’ of the strength of local pharma companies runs contrary to achieving the drug security of the country under any situation, since there would be few or no Indian companies left having necessary wherewithal to manufacture affordable generics once a drug goes off patent or comply with a Compulsory License (CL).

9. Current FIPB approval mechanism for brownfield pharma acquisitions is inadequate and would not be able to measure up to the challenges as mentioned above.

The Committee is also of the opinion that foreign investments per se are not bad. The purpose of liberalizing FDI in pharma was not intended to be just about takeovers or acquisitions of domestic pharma units, but to promote more investments into the pharma industry for greater focus on R&D and high tech manufacturing, ensuring improved availability of affordable essential drugs and greater access to newer medicines, in tandem with creating more competition.

Based on all these, The Committee felt that FDI in brown field pharma sector has encroached upon the generics base of India and adversely affected Indian pharma industry. Therefore, the considered opinion of the Parliamentary Committee is that the Government must impose a blanket ban on all FDI in brownfield pharma projects.

PM clears pending pharma FDI proposals:

Unmoved by the above report of the Parliamentary Committee, just two days later, on August 16, 2013, the Prime Minister of India, in a meeting of an inter-ministerial group chaired by him, reportedly ruled that the existing FDI policy will apply for approval of all pharmaceutical FDI proposals pending before the Foreign Investments Promotion Board (FIPB). Media reported this decision as, “PM vetoes to clear the way for pharma FDI.”

This veto of the PM includes US $1.6-billion buyout of the injectable facility of Agila Specialties, by US pharma major Mylan, which has already been cleared by the Competition Commission of India (CCI).

This decision was deferred earlier, as the DIPP supported by the Ministry of Health had expressed concerns stating, if MNCs are allowed to acquire existing Indian units, especially those engaged in specialized affordable life-saving drugs, it could possibly lead to lower production of those essential drugs, vaccines and injectibles with consequent price increases. They also expressed the need to protect oncology facilities, manufacturing essential cancer drugs, with assured supply at an affordable price, to protect patients’ interest of the country.

Interestingly, according to Reserve Bank of India, over 96 per cent of FDI in the pharma sector in the last fiscal year came into brownfield projects. FDI in the brownfield projects was US$ 2.02 billion against just US$ 87 million in the green field ventures.

Fresh curb mooted in the PM’s meeting:

In the same August 16, 2013 inter-ministerial group meeting chaired by the Prime Minister, it was also reportedly decided that DIPP will soon float a discussion paper regarding curbs that could be imposed on foreign takeovers or stake purchases in existing Indian drug companies, after consultations with the ministries concerned.

Arguments allaying apprehensions:

The arguments allaying fears underlying some of the key apprehensions, as raised by the Parliamentary Standing Committee on Commerce, are as follows:

1. FDI in pharma brownfield will reduce competition creating an oligopolistic market:

Indian Pharmaceutical Market (IPM) has over 23,000 players and around 60,000 brands. Even after, all the recent acquisitions, the top ranked pharmaceutical company of India – Abbott enjoys a market share of just 6.6%. The Top 10 groups of companies (each belonging to the same promoter groups and not the individual companies) contribute just over 40% of the IPM (Source: AIOCD/AWACS – Apr. 2013). Thus, IPM is highly fragmented. No company or group of companies enjoys any clear market domination.

In a scenario like this, the apprehension of oligopolistic market being created through brownfield acquisitions by the MNCs, which could compromise with country’s drug security, needs more informed deliberation.

2. Will limit the power of government to grant Compulsory Licensing (CL):

With more than 20,000 registered pharmaceutical producers in India, there is expected to be enough skilled manufacturers available to make needed medicines during any emergency e.g. during H1N1 influenza pandemic, several local companies stepped forward to supply the required medicine for the patients.

Thus, some argue, the idea of creating a legal barrier by fixing a cap on the FDIs to prevent domestic pharma players from selling their respective companies at a price, which they would consider lucrative otherwise, just from the CL point of view may sound unreasonable, if not protectionist in a globalized economy.

3. Lesser competition will push up drug prices:

Equity holding of a company is believed by some to have no bearing on pricing or access, especially when medicine prices are controlled by the NPPA guidelines and ‘competitive pressure’.

In an environment like this, any threat to ‘public health interest’ due to irresponsible pricing, is unlikely, especially when the medicine prices in India are cheapest in the world, cheaper than even Bangladesh, Pakistan and Sri Lanka (comment: whatever it means).

India still draws lowest FDI within the BRIC countries:

A study of the United Nations has indicated that large global companies still consider India as their third most favored destination for FDI, after China and the United States.

However, with the attraction of FDI of just US$ 32 billion in 2011, against US$ 124 billion of China, US$ 67 billion of Brazil and US$ 53 billion of Russia during the same period, India still draws the lowest FDI among the BRIC countries.

Commerce Minister concerned on value addition with pharma FDI:

Even after paying heed to all the above arguments, the Commerce Minister of India has been expressing his concerns since quite some time, as follows:

“Foreign Direct Investment (FDI) in the pharma sector has neither proved to be an additionality in terms of creation of production facilities nor has it strengthened the R&D in the country. These facts make a compelling case for revisiting the FDI policy on brownfield pharma.”

As a consequence of which, the Department of Industrial Policy and Promotion (DIPP) has reportedly been opposing FDI in pharma brownfield projects on the grounds that it is likely to make generic life-saving drugs expensive, given the surge in acquisitions of domestic pharma firms by the MNCs.

Critical Indian pharma assets going to MNCs:

Further, the DIPP and the Ministry of Health reportedly fear that besides large generic companies like Ranbaxy and Piramal, highly specialized state-of-the-art facilities for oncology drugs and injectibles in India are becoming the targets of MNCs and cite some examples as follows:

Through the big-ticket Mylan-Agila deal, the country would lose yet another critical cancer drug and vaccine plant.

In 2009 Shantha Biotechnics, which was bought over by Sanofi, was the only facility to manufacture the Hepatitis B vaccine in India, which used to supply this vaccine at a fraction of the price as compared to MNCs.

Mylan, just before announcing the Agila deal, bought over Hyderabad based SMS Pharma’s manufacturing plants, including some of its advanced oncology units in late 2012.

In 2008, German pharma company Fresenius Kabi acquired 73 percent stake in India’s largest anti-cancer drug maker Dabur Pharma.

Other major injectable firms acquired by MNCs include taking over of India’s Orchid Chemicals & Pharma by Hospira of the United States.

With the US market facing acute shortage of many injectibles, especially cancer therapies in the past few years, companies manufacturing these drugs in India have become lucrative targets for MNCs.

An alternative FDI policy is being mooted:

DIPP reportedly is also working on an alternate policy suggesting:

“It should be made mandatory to invest average profits of last three years in the R&D for the next five years. Further, the foreign entity should continue investing average profit of the last three years in the listed essential drugs for the next five years and report the development to the government.”

Another report indicated, a special group set up by the Department of Economic Affairs suggested the government to consider allowing up to 49 per cent FDI for pharma brownfield investments under the automatic route.However, investments of more than 49 per cent would be referred to the Foreign Investment Promotion Board (FIPB).

It now appears, a final decision on the subject would be taken by the Prime Minister after a larger inter-mimisterial consultation, as was decided by him on August 14, 2013.

The cut-off date to ascertain price increases after M&A:

Usually, the cut off point to ascertain any price increases post M&A is taken as the date of acquisition. This process could show false positive results, as no MNC will take the risk of increasing drug prices significantly or changing the product-mix, immediately after acquisition.

Significant price increases could well be initiated even a year before conclusion of M&As and progressed in consultation by both the entities, in tandem with the progress of the deal. Thus, it will be virtually impossible to make out any significant price changes or alteration in the product-mix immediately after M&As.

Some positive fallouts of the current policy:

It is argued that M&As, both in ‘Greenfield’ and ‘Brownfield’ areas, and joint ventures contribute not only to the creation of high-value jobs for Indians but also access to high-tech equipment and capital goods. It cannot be refuted that technology transfer by the MNCs not only stimulates growth in manufacturing and R&D spaces of the domestic industry, but also positively impacts patients’ health with increased access to breakthrough medicines and vaccines. However, examples of technology transfer by the MNCs in India are indeed few and far between.

This school of thought cautions, any restriction to FDI in the pharmaceutical industry could make overseas investments even in the R&D sector of India less inviting.

As listed in the United Nation’s World Investment Report, the pharmaceutical industry offers greater prospects for future FDI relative to other industries. Thus, restrictive policies on pharmaceutical FDI, some believe, could promote disinvestments and encourage foreign investors to look elsewhere.

Finally, they highlight, while the Government of India is contemplating modification of pharma FDI policy, other countries have stepped forward to attract FDI in pharmaceuticals. Between October 2010 and January 2011, more than 27 countries and economies have adopted policy measures to attract foreign investment.

Need to attract FDI in pharma:

At a time when the Global Companies are sitting on a huge cash pile and waiting for the Euro Zone crisis to melt away before investing overseas, any hasty step by India related to FDI in its pharmaceutical sector may not augur well for the nation.

While India is publicly debating policies to restructure FDI in the ‘Brownfield’ pharma sector, other countries have stepped forward to attract FDI in their respective countries. Between October 2010 and January 2011, as mentioned earlier, more than 27 countries and economies have adopted policy measures to attract foreign investment.

Thus the moot question is, what type of FDI in the pharma brownfield sector would be good for the country in the longer term and how would the government incentivize such FDIs without jeopardizing the drug security of India in its endeavor to squarely deal with any conceivable eventualities in future?

Conclusion:

In principle, FDI in the pharma sector, like in any other identified sectors, would indeed benefit India immensely. There is no question about it…but with appropriate checks and balances well in place to protect the national interest, unapologetically.

At the same time, the apprehensions expressed by the Government, other stakeholders and now the honorable members of the Parliament, across the political party lines, in their above report, should not just be wished away by anyone.

This issue calls for an urgent need of a time bound, comprehensive, independent and quantitative assessment of all tangible and intangible gains and losses, along with opportunities and threats to the nation arising out of all the past FDIs in the brownfield pharma sector.

After a well informed debate by experts on these findings, a decision needs to be taken by the law and policy makers, whether or not any change is warranted in the structure of the current pharma FDI policy, especially in the brownfield sector. Loose knots, if any, in its implementation process to achieve the desired national outcome, should be tightened appropriately.

I reckon, it is impractical to expect, come what may, the law and policy makers will keep remaining mere spectators, when Indian Pharma Crown Jewels would be tempted with sacks full of dollars for change in ownerships, jeopardizing presumably long term drug security of the country, created painstakingly over decades, besides leveraging immense and fast growing drug export potential across the world.

The Competition Commission of India (CCI) can only assess any possible adverse impact of Mergers & Acquisitions on competition, not all the apprehensions, as expressed by the Parliamentary Standing Committee and so is FIPB.

That said, in absence of a comprehensive impact analysis on pharma FDIs just yet, would the proposal of PSC to ban foreign investments in pharma brownfield sector and the PM’s subsequent one time veto to clear all pending FDI proposals under the current policy, be construed as irreconcilable internal differences…Or a clever attempt to create a win-win situation without ruffling MNC feathers?

By: Tapan J. Ray

PILMAN

A Tapan Ray Website

Tag Archives: Mylan

Improving Patient Access To Biosimilar Drugs: Two Key Barriers

Gilead: Caught Between A Rock And A Hard Place In India

Loss of Ranbaxy, Gain of Big Pharma…And Two Intriguing Coincidences

Just Born A Pharma Goliath: Would India Be Impacted?

‘Herceptin Biosimilars’ Seriously Questioned

Herceptin Biosimilar Expands Drug Access to Breast Cancer Patients in India

Pharma Horizon: Cloud, Rainbow And Smear

Pharma FDI: Damning Report of Parliamentary Panel, PM Vetoes…and Avoids Ruffling Feathers?