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Focus On Core Competencies – Regardless of Generic Or Innovative Drug Business

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On February 11, 2021, by two different Press Releases, two global pharma majors – GSK and Novartis simultaneously made interesting announcements. Both were related to three generic cephalosporin antibiotics.

GSK revealed, ‘it has reached an agreement with Sandoz – a division of Novartis, to sell its Cephalosporin antibiotics business. Sandoz will pay GSK USD 350 million at closing, plus additional milestone payments up to USD 150 million, subject to the terms of the transaction.’

While articulating the purpose of hiving of its generic cephalosporin brands, the company reasoned: GSK is now dividing itself into two companies – one with core competencies focused on OTC products, and the other – prescription drugs and vaccines. The company emphasized: ‘The transaction aligns with GSK’s strategy to prioritize and simplify its portfolio and invest in the company’s innovative R&D pipeline and new product launches.’ Other brands in GSK’s antibiotics portfolio, are not impacted by this divestment. In other words, this would possibly mean that the generic drug business doesn’t fall within the core competencies of GSK, any longer.

Whereas, Novartis disclosed, the company’s Sandoz division, ‘has signed an agreement to acquire GSK’s cephalosporin antibiotics business, reinforcing its leading global position in antibiotics.’ Its noteworthy that Sandoz’s core competencies lie in the generic drug business.

While explaining the purpose of this acquisition, Novartis explained, cephalosporins being the largest antibiotic segment by global sales, acquiring these 3 leading brands - Zinnat, Zinacef and Fortum,“will further position Sandoz as a global leader in antibiotics – truly essential medicines that are the backbone of modern healthcare systems.”

The above transactions bring to the fore the criticality of focusing on core competencies for business excellence, regardless of innovative drug business and in multiple situations, such as:

  • Bringing organizational focus back on core competencies when these tend to get diluted.
  • Increasing the focus on core competencies as opportunities arise.

In this article, I shall revisit this critical management concept in the current perspective.

A brief recap:

The concept of core competencies of a business organization was introduced by two global pioneers in business management – C.K. Prahalad and Gary Hamel with the article – ‘The Core Competence of the Corporation.’ This was published in the May-June 1990 edition of the Harvard Business Review.

The relevance of focusing on ‘core competencies’:

The quality and quantum of commercial dividend in consistently focusing on ‘core competencies’ in any space, spanning across individual professionals to business organizations, have been profound. This calls for defining these in detail and collectively, at the top rungs of organizational leadership. Then, cultivate, and leverage the core competencies to differentiate an organization from its competition, creating a company’s long-term competitive and sustainable advantage in the marketplace – for business excellence.

What constitutes core competencies to gain strategic strength?

Core competencies – whether for individuals or for businesses, comprise primarily of resources, such as, special skills, capabilities and rewarding experience in those activities as strategic advantages of a business. Garnering financial resources would usually follow, thereafter. Thus, core competencies are always considered as a strategic strength, everywhere. That said, core competencies require continuous monitoring to always be in-sync with changing market dynamics. Otherwise, the strategies are likely to fail.

Broad examples – from pharma perspective:

Broadly speaking, discovering, developing and successfully marketing new drugs, identifying repurposed drugs for new clinical trials, and churning out novel vaccines quickly, may be considered as core competencies for innovative drug makers. They have demonstrated this skill even during Covid-19 pandemic. Similarly, immaculate skills in reverse engineering of existing drug molecules and high efficiency in process research to gain price-competitiveness, may be construed as core competencies of generic drug companies.

Examples of shifting focus on core competencies:

Although, it is desirable that pharma players stick on core competencies for sustainable long-term performance excellence, regardless of being in primarily innovative or generic drug business, we have witnessed this focus shifting on several occasions for both. However, expected success did not generally follow those companies with such tweaking in the strategic business models.

Nevertheless, some drug companies did get tempted to deviate from their core competencies. For example, innovative drug players tried to expand into low-risk generic medicines, which, in the long run, did not deliver expected results for many companies. However, this deviation wasn’t without any compelling reasons.

There were some valid reasons, though:

As is much known, traditionally, global R&D companies prefer to focus only on the business of innovative prescription medicines. Low margin generic business wasn’t their cup of tea. Subsequently, this trend shifted. Especially in those cases, where the pipeline of high potential new drug molecules did not meet the concerned company’s expectations. To stick to the knitting, some companies with deep pockets, explored another model of Mergers and Acquisitions (M&A) of innovative patented products and companies with rich new drug pipelines. Interestingly, in this M&A business model, low risk, low cost and high-volume turnover of generic business also started attracting several R&D based companies, alongside.

Which is why, an increasing number of R&D based companies started planning to expand their business in less risky generic drug business. This appeared to be a quick fix to tide over the crisis, as the generic drug business model won’t require going through lengthy R&D processes. Besides, compliance with ever increasing stringent regulatory approval protocols, particularly in the developed markets of the world.

Examples of why focus on core competencies matter, even in new normal: 

There are several examples of large companies to illustrate this point – both from the old and the new normal. Just to give a flavor of the relevance of focusing on core competencies of organizations, I shall draw upon three interesting examples. Each of these, highlight different organizational visions and perspectives at different times, particularly the relevance of focus on core-competencies for a corporation. These are as follows:

  • The first one is Daiichi Sankyo of Japan’s acquisition of India’s generic drug major of that time – Ranbaxy, in June 2008. The parent company claims: “We provide innovative products and services in more than 20 countries around the world. With more than 100 years of scientific expertise, our company draws upon a rich legacy of innovation and a robust pipeline of promising new medicines to help patients.” It is much known today, what happened to this acquisition, thereafter, for various reasons, including faulty pre-acquisition due diligence. However, later on, the domestic pharma leader – Sun Pharma, acquired Ranbaxy. Nonetheless, at least from Daiichi Sankyo’s narrative, its areas of core competencies, appear closer to any R&D-based drug company.
  • The second example is US-based Abbott Laboratories acquisition of domestic formulations business of Primal Heath care in India in May 2010. Like Daiichi Sankyo, this acquisition was also a part of Abbott’s strategy to enter into ‘generic drug business’ -dominated emerging markets. Abbott, at that time, apparently decided to expand its strategic focus beyond its core competencies in business, primarily of patented products. However, by the end of 2012, the company separated into two leading healthcare companies. Abbott became a diversified medical products company. The other one – a totally separate company was formed, with the name – AbbVie, as a new researched-based global biopharmaceutical organization. AbbVie now operates in India, as well – with erstwhile Abbott’s innovative brands. In this case, by an innovative restructuring of the parent organization, Abbott brought back its sharp focus on core competencies of both the companies with both doing well in India.
  • The third example is a recent move of reverting to the original focus of core competencies, when moving beyond these did not yield results. In that sense, this example is different from the second one. On November 16, 2020, Pfizer also announced the creation of ‘the new Pfizer’, as it reverted to its original core competencies of “developing breakthrough treatments and delivering innovative, life-changing medicines to patients around the world.” On that day, Pfizer completed transaction to spin off its Upjohn generic drug business and combined it with Mylan to create a new entity – Viatris Inc. Earlier, the company had sold its veterinary business, a baby formula unit and its consumer products division as part of a deal with GSK – for similar reasons. Earlier, the company’s moving beyond its core competencies to pluck low hanging fruits of generic drug business, did not yield dividend, as Pfizer’s profit in the generic drug sector, reportedly, had gone South.

Conclusion:

According to Pharma Intelligence, several large players, such as, Novartis, Sanofi, AstraZeneca are now focusing on core competencies, as they start recovering from their unsettling patent cliff and other headwinds. Meanwhile, one may expect to witness more of Spin-offs, Carving-out, Splitting-off or further strengthening of core-competencies of organizations – for a sustainable long-term business excellence in the years ahead.

Spin-off and acquisition of Cephalosporin generic business by GSK and Sandoz Division of Novartis, respectively, is a part of the same ball game. Thus, maintaining or reverting focus on core competencies – regardless of generic or innovative drug business, I reckon, are the new imperatives of commercial success, even in the new normal.

By: Tapan J. Ray      

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

 

The Game is Changing: Ensure Better Treatment Outcomes: Leverage Technology

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Today, several pharma players, mostly ‘encouraged’ by many non-pharma tech companies, are trying to gain, at least, a toehold in the digital health care space. It is visible even within the generic drug industry. Such initiatives, as they gain a critical mass, will remold the process of doing – almost everything in the pharma business, catapulting the concerned drug companies to a much higher growth trajectory, as many believe.

This is quite evident from an interview of Fierce Pharma with the senior management of Sandoz – the generic drug arm of Novartis, that was published on May 14, 2019. The honchos said: “We’re looking across the whole value chain to make sure we’re embracing digital and technology wherever we can. So that means from the way that we innovate, to the way that we sell and the way that we operate and do day-to-day business.” The process covers “a whole range of activities from how you use AI and automation, all the way through to prescription digital therapies.”

I discussed about leveraging technology in the pharma space to address many burning issues – both for patients and the pharma industry. One such article, “Focus on Patient Compliance To Boost Sales…And More…”, was published in this blog on May 20, 2019. It establishes that even world-class sales and marketing programs can, at best, ensure higher prescription generations, but can’t prevent over 50 percent revenue loss from those prescriptions, due to patient non-compliance.

Interestingly, the issue of ‘nonadherence to treatment’ is being debated, since several decades. Various conventional measures were suggested and also taken. But the problem still persists in a huge scale, with probably an increasing trend. Thus, fresh measures, preferably by leveraging modern technology, are of high relevance in this area.

In this article, I shall illustrate the above point, with one of the most exciting areas in the digital space – the digital therapeutics. This is a reality today and marching ahead at a much faster pace than many would have anticipated.

Unfolding another disruptive innovation in healthcare:

One of the articles that I wrote on this subject is ‘Unfolding A Disruptive Innovation in Healthcare,’ which highlights a different facet of the same subject. Thus, let me begin today’s discussion with a recapitulation of some important aspects of a drug, particularly the following ones:

  • A large number of patients don’t find many drugs accessible and affordable during the entire course of treatment.
  • Drugs have to be administered orally, systemically or through any other route
  • Alongside effective disease prevention or treatment, many drugs may bother patients with long and short-term side-effects, including serious ones.
  • Treatment outcomes can’t often be easily measured by patients.

These are, of course, known to many, but several questions come up in this area, which also deserve serious answers, such as:

  • Are drugs indispensable for the treatment of all types of disease?
  • Can a holistic disease treatment be made more accessible and affordable with radically different measures?
  • Can the same effectiveness of a drug, if not more, be achieved with no side-effects with a non-drug therapy?
  • Can outcomes be significantly improved following this process, as compared to drugs?

In search of answers to these questions – arrive digital therapeutics:

In search of answers to the above questions, a number of tech savvy whiz kids. dared to chart an uncharted frontier by asking themselves: Is it possible to treat a disease with a software – having no side-effects, but providing better cost effectiveness and treatment outcomes to patients?

Today, with the signs of healthy growth of the seed – sown with the above thoughts, ushers in – yet another game changing pathway for disease treatment. The quest for success of these pathfinders can benefit both – the drug innovators and also the generic players, in equal measure, besides patients. Digital therapeutics is an upshot of this pursuit.

Its ‘purpose’ outlines – why it’s one of the most exciting areas in digital space: 

The Digital Therapeutics Alliance well captures the purpose of digital therapeutics, as, “Improving healthcare quality, outcomes, and value through optimizing the use and integration of digital therapeutics.”

What do digital therapeutics actually do?

There are several, but quite similar descriptions of digital therapeutics. For example, Deloitte described digital therapeutics as software products used in the treatment of medical conditions, enabling patients to take greater control over their care and are focused on delivering clinical outcomes. It also highlights, ‘digital therapeutics are poised to shift medicine’s emphasis from physically dosed treatment regimens to end-to-end disease management based on behavioral change.’

Digital therapeutics offers all positives of a drug and more:

In indications where digital therapy is approved and available, the new approach offers all positive attributes of an equivalent drug, with no side-effect. There isn’t any need of its physical administration to patients, either. Deloitte elucidated this point very aptly: “As software and health care converge to create digital therapeutics, this new breed of life sciences technology is helping to transform patient care and deliver better clinical outcomes.” More importantly, all this can be made available for better compliance and at a cheaper cost in many cases.

For example, according to the article published in the MIT Technology Review on April 07, 2017, carrying the title ‘Can Digital Therapeutics Be as Good as Drugs?’: “Some digital therapeutics are already much cheaper than average drug. At Big Health, people are charged $ 400 a year, or about $ 33 a month to use the insomnia software. The sleeping pill Ambien, by contrast, costs $ 73 for six tablets of shut-eye.”

Two basic types of digital therapeutics:

The Digital Therapeutics Alliance also underscores: “Digital therapeutics rely on high quality software to deliver evidence-based interventions to patients to prevent, manage, or treat disease.” It further elaborates: “They are used independently or in concert with medications, devices, or other therapies to optimize patient care and health outcomes.” In line with this description, the above MIT Technology Review article, as well, classifies digital therapy into two basic categories:

  • For medication replacement
  • For medication augmentation

It also says that the digital therapy for sleep (sleep.io), belongs to the first category, making sleeping pill most often unnecessary and with outcomes better than those of tablets. Whereas, the second category includes various disease specific software apps that improve patient compliance with better self-monitoring, just as co-prescription of drugs.

Nonetheless, the same MIT article gave a nice example of ‘medication augmentation’ with digital therapy. The paper mentioned, Propeller Health – a digital company, has inked a deal with GlaxoSmithKline for a ‘digitally guided therapy’ platform. The technology combines GSK’s asthma medications with Propeller Health made sensors that patients attach with their inhalers to monitor when these are used. Patients who get feedback from the app, end up using medication less often, the study reported.

The first USFDA approved digital therapy:

Let me give one example each of the launch of ‘medication replacement’ and ‘medication augmentation’ digital therapy, although there were other similar announcements.

  • On November 20, 2018, by a media release, Sandoz (Novartis) and Pear Therapeutics announced the commercial availability of reSET – a substance use disorder treatment that was the first software-only digital therapeutic cleared by the US-FDA, for medical prescriptions.
  • Closely followed by the above, on December 21, 2019, Teva Pharmaceutical announced US-FDA approval for its ProAir Digihaler for treatment and prevention of bronchospasm. Scheduled for launch in 2019, it is the first and only digital inhaler with built-in sensors that connects and transmit inhaler usage data to a companion mobile application, providing insights on inhaler use to asthma and COPD patients – for prevention and better treatment of the disease.

Many other projects on digital therapeutics are fast progressing.

Conclusion:

Stressing a key importance of digital therapeutics in chronic disease conditions, McKinsey article of February 2018, titled ‘Digital therapeutics: Preparing for takeoff’, also underlines: ‘Digital therapeutics tend to target conditions that are poorly addressed by the healthcare system today, such as chronic diseases or neurological disorders.’

It also, further, emphasized that digital therapeutics can often deliver treatment more cheaply than traditional therapy, by demonstrating their value in clinical terms. It illustrated the point with US-FDA’s approval for a mobile application that helps treat alcohol, marijuana, and cocaine addiction, well-supported by clinical trial data. The results showed 40 percent of patients using the app abstained for a three-month period, compared with 17.6 percent of those who used standard therapy alone.

I now come back to where I started from. The pharma ball game is changing, and that too at a faster pace.Ensuring and demonstrating better treatment outcomes for patients – both for patented drugs and the generic ones, will increasingly be the cutting-edge to gain market share and grow the business. Thus, leveraging technology to its fullest is no longer just an option for pharma companies. The evolution of digital therapeutics as a game changer, vindicates the point.

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.

Prescription Digital Therapy Now A Reality

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The pursuit of offering ‘prescription digital therapeutics’ or ‘digiceuticals’ by Big Pharma, to ensure better clinical outcomes for patients, has apparently come to fruition now.

On April 18, 2018, by a media release, Novartis announced that the Sandoz Division of the Company has entered into collaboration with Pear Therapeutics to commercialize and continued development of digital therapeutics, designed to effectively treat disease and improve clinical outcomes for patients.

The collaboration brings on to the table, a synergy between Sandoz expertise in launching and commercializing various disease treatments, with Pear’s leading experience in digital therapeutics design and implementation. This deal has attracted attention of many. Mainly because, any pharma player will, for the first-time, detail a digital therapy treatment directly to the medical profession, and seek their prescription support.

It is worth noting that Pear’s flagship digital therapeutic – reSET is the first USFDA-cleared mobile medical application with both a safety and efficacy label to help treat patients with Substance Use Disorder, in September 2017. According to published reports, several studies have established that it is two-times more effective than conventional in person therapy sessions. Interestingly, the rate of treatment efficacy increases even up to tenfold, in refractory patients.

Just the beginning of a long run: 

The above market launch of a digital therapy by Novartis signals just the beginning of a long run in changing in the disease treatment archetype for better outcomes. Incidentally, prior to this announcement, on March 1, 2018, the same Company had announced, “Novartis and Pear Therapeutics to collaborate on prescription software applications aimed to treat patients with schizophrenia and multiple sclerosis.”

The media release underscored:“Psychiatric and neurodegenerative diseases place a heavy physical, mental and economic burden on patients and their families. With widespread adoption of digital devices, prescription digital therapeutics could potentially play an important role in future treatment models for a range of diseases with high unmet medical need”.

The scope and potential:

An article titled – ‘Digital therapeutics: Preparing for takeoff’,published by McKinsey & Company in February 2018, captures its scope succinctly. It says, “digital therapeutics tend to target conditions that are poorly addressed by the healthcare system today, such as chronic diseases or neurological disorders. In addition, they can often deliver treatment more cheaply than traditional therapy by reducing demands on clinicians’ time.”

A separate McKinsey interview article, titled ‘Exploring the potential of digital therapeutics’, published in the same month, elucidated the potential of digital therapy equally well.  It highlighted:“A digital therapeutic is an intervention based on software as the key ingredient, which has a direct impact on a disease. This is what distinguishes this category from the broader term digital health. We will see digital therapeutics and digital diagnostics integrate into the health system…”

‘Prescription digital therapy’ are not just ‘Fitness and Well-being’ Apps:

Prescription digital therapy are not just to monitor a person’s general fitness level against pre-identified parameters, and overall well-being. Whereas, digital therapeutics help patients to regularly and consistently monitor relevant and tailor-made disease related data - in real-time to detect behavioral, lifestyle and requisite biological changes on a daily basis. However, this is not ‘a so well-realized necessity’ today, especially, in the treatment of certain serious disease conditions, to ensure significantly better clinical outcomes for patients.

Digital therapeutics can ensure making a favorable change in patient behavior, which is not merely as efficient as administering medicines, but could also ensure greater effectiveness than conventional medications. Further, it assists patients to better understand, manage and control several disease conditions, and more importantly, sans any untoward side-effects.

Besides, with digital therapy, the required treatment interventions will reach patients faster than traditional treatment processes. Both the patient request and the medical response for the same can be quickly exchanged, together with relevant data support, through smartphones or other wearable digital interfaces – either in the form of voice or text or both. I shall dwell on this later in the article. Thus, digital therapy may not require patients to meet the doctor every time a need arises.

Moreover, fitness and wellbeing Apps do not require marketing approval from a country’s drug regulator. Mostly because, they help monitoring general and generic fitness parameters, capturing some low-risk changes. Whereas, a custom-made prescription digital therapy would necessarily require such regulatory nod.

In tandem, various studies are also being conducted on wearables, such as an Apple Watch, as an interface. The following are examples of some of these studies:

Digital therapy study with Apple Watch as an interface:

In February 2017, Takeda Pharmaceuticals U.S.A. and Cognition Kit Limited, announced a collaboration to pilot the use of a specially designed app on an Apple Watch wearable to monitor and assess cognitive function in patients with Major Depressive Disorder (MDD).

In November 2017, they presented results from ‘Digital Wearable Technology Study’ in patients with MDD. The observational study involved 30 participants, aged 18-65, with a clinical diagnosis of mild to moderate depression who have been prescribed antidepressant monotherapy for MDD.

The study also evaluated feasibility and participant compliance with measures of mood and cognition on wearable technology; and compared measures of mood and cognition on wearable technology using traditional neuropsychological testing and patient reported outcomes on depression symptoms at 6 weeks. Participants were provided with an Apple Watch on which brief cognitive and mood tests were administered daily.

The researchers observed that patients were compliant with the wearable Apple Watch device on a daily basis to evaluate mood (95 percent) and cognition (96 percent). The study also demonstrated that abbreviated daily assessments delivered through the wearable Apple Watch device corresponded with objective Cambridge Neuropsychological Test Automated Battery (CANTAB) cognitive tests and full-length patient reported outcomes, PHQ-9 and PDQ-D, assessed during weeks 1, 3 and 6. No adverse events were reported in the study.

According to another report, this user interface with Apple’s smart-watch versions 2 and 3 is now being used in a number of studies for chronic conditions, such as Parkinson’s disease – combining biometric data with user input. Again, in February 2017, Johns Hopkins University announced a project to use the smart-watch for research on possible triggers of epileptic seizures.

When used as an interface with prescription digital therapy, the provision of e-SIM and GPS in Apple Watch Series 3, I reckon, would also help patients to immediately communicate with the remote therapy centers using the same device, anytime – as and when the patients want.

Digital therapy initiatives in India:

Initiative on digital therapy has already started rolling in India, as well. Its pace is also quite encouraging. For example, Wellthy Therapeutics is building a patient centric solution for diabetes through digital intervention and management. On February 20, 2018, the Company, reportedly, shared the interim results of an ongoing real-world pilot to evaluate the effectiveness of the Wellthy Diabetes Smartphone App (WD). The results were shared at the 11th International Conference on Advanced Technologies and Treatments for Diabetes (ATTD 2018) in Vienna, Austria.

The data demonstrated how the use of WD improved glycemic control. On completion of 16 weeks, participants showed a reduction in their HbA1c by (-0.61%) on average, with 61.5% of participants having showed significant reduction in their HbA1c with an average of (-1.17%) reduction.

Conclusion:

As indicated in my article titled, ‘Digiceuticals: A Force Multiplier to Contain Chronic Diseases’, published in this blog on October 23, 2017,prescription digital therapies are primarily of two types – one for “medication augmentation” and the other for “medication replacement.”

Be that as it may, prescription digital therapyimproves clinical outcomes for patients by manifold. It also shows potential to take over from traditional treatment with medicines in several serious and virtually crippling ailments, mostly related to human behavior and lifestyle, such as a host of chronic diseases, and without causing any side-effects.

Thus, prescription digital therapy is now a reality. It has come to stay for long – can’t be wished away, any longer.

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.

Biosimilar Drugs: Why Prescriptions Aren’t Still Enough?

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On September 3, 2015, in a Press Release, Novartis announced, “Zarxio(TM) (filgrastim-sndz) is now available in the United States. Zarxio is the first biosimilar approved by the US Food and Drug Administration (FDA) and the first to launch in the US.” Zarxio is being marketed by the generic drug unit of Novartis – Sandoz.

The company highlighted: “With the launch of Zarxio, we look forward to increasing patient, prescriber and payor access to filgrastim in the US by offering a high-quality, more affordable version of this important oncology medicine.” This statement may be interpreted as an acknowledged of a research based global pharma major that high-priced biologics create a notable access barrier to a large number of patients, even in a rich country such as the United States. It also underscores the increasing prescription opportunities for cheaper biosimilar drugs.

Zarxio will initially be available with a 15 percent discount. This needs to be viewed against usual price drop of around 20-30 percent for biosimilar drugs in Europe, as compared to the original molecules. It is expected that price differences between biosimilar drugs and the original ones, would vary widely from as low as 10 percent to a hefty 60 percent, in the global markets.

Prior to Novartis’s Press Release, USFDA announced Zarxio’s approval in a separate ‘FDA News Release on March 6, 2015, indicating that it can be prescribed by a health care professional for:

  • patients with cancer receiving myelosuppressive chemotherapy
  • patients with acute myeloid leukemia receiving induction or consolidation chemotherapy
  • patients with cancer undergoing bone marrow transplantation
  • patients undergoing autologous peripheral blood progenitor cell collection and therapy a
  • patients with severe chronic neutropenia.

Though such types of drugs are available in the important markets such as, Europe, Australia and India, the launch of Zarxio heralds the dawn of a new era of biosimilar drugs in the United States – the numero uno of the global pharma market.

Incidentally, USFDA’s approval of biosimilar drugs is an outcome of a relatively recent healthcare reform in the United States, when President Obama signed into law the ‘Affordable Care Act’ on March 23, 2010.

The key benefit:

In its above ‘Press Release’, Novartis captured well the key benefits of biosimilar drugs , as follows:

“While biologics have had a significant impact on how diseases are treated, their cost and co-pays are difficult for many patients and the healthcare budget in general.  Biosimilars can help to fill an unmet need by providing expanded options, greater affordability and increased patient access to life-saving therapies.”

Major growth drivers:

According to July 2015 report of ‘MarketsandMarkets (M&M)’ the global biosimilars market is expected to grow to US$6.22 Billion by 2020 from US$2.29 Billion in 2015, growing at a CAGR of 22.1 percent from 2015 to 2020.

The major growth drivers of the global biosimilars market are expected to be:

  • Growing pressure to curtail healthcare expenditure
  • Growing demand for biosimilar drugs due to their cost-effectiveness
  • Rising incidences of various life-threatening diseases
  • Increasing number of off-patented biologics
  • Positive outcome in the ongoing clinical trials
  • Rising demand for biosimilars in different therapeutic applications such as rheumatoid arthritis and blood disorders.

European Union (EU) had a head start of 5 to 7 years to put its regulatory pathway for biosimilar drug development and approval process. Thus, at present practically most the entire value sales of biosimilar drugs take place in the EU.

As, cheaper biosimilars would continue to hit the US market, insurance companies are expected to encourage the use of such drugs instead of highly expensive original ones.

According to Express Scripts report released in December 2014, the US healthcare system could clock savings in drug costs around US$250 billion in the first decade of availability of biosimilars drugs and the approval of Zarxio would help patients saving more than US$5 billion in the the world’s largest market for biologics.

By 2020, several blockbuster biological products with global sales of more than US $67 billion would go or are going off-patent, creating great opportunities for biosimilar drugs the world over. Some of these drugs are Avastin (Roche), Humira (AbbVie), Synagis (AstraZeneca), Aranesp (Amgen) and Enbrel (Amgen, Pfizer).

However, the crux of its success, to a great extent, would lie on physicians’ confidence to prescribe large molecule biosimilar drugs, as these are new and not exact replicas of the original biologic molecules, unlike the small molecule generic drugs.

Possible growth barriers:

The success requirements of large molecule biosimilar drugs would not mimic the same for small molecule generics, anywhere in the world.

In my view, there are two types of critical barriers to success with biosimilars, both tangible and intangible in nature.

The same M&M report lists the following factors as possible tangible barriers to fast growth of biosimilar drugs:

  • High manufacturing complexities and costs
  • Stringent regulatory requirements in countries
  • Innovative strategies by biologic drug manufacturers to restrict the entry of new players

I would very briefly touch upon each one of these, hereunder:

I. High manufacturing complexities and costs:

This is primarily because, the therapeutic characteristics of biosimilar drugs are significantly influenced by their manufacturing methods. For example, it is quite possible that based on the manufacturing system that is adopted, the same starter ingredients may give substantially different results.

II. Stringent regulatory requirements:

Among many other stringent regulatory requirements, I would highlight in this article just the following two:

A. The labeling:

It is noteworthy that USFDA has named Zarxio with the placeholder nonproprietary name “filgrastim-sndz” and not as ‘filgrastim’, the nonproprietary name for Amgen’s, Neupogen, for which Zarxio has been approved as a biosimilar.

To quickly recapitulate its background, in July 2014, the World Health Organization (WHO), which oversees the system of International Nonproprietary Names (INN), recommended that biosimilar drugs would receive the same nonproprietary name, but with a four-letter code at the end.

This is primarily because, innovator biologic drug companies and also some doctors’ groups argue that molecular structures of biosimilar drugs are similar, but not exact replicas of the original ones. Hence, there is a need to differentiate them, while assigning INN.

They reiterate that giving biosimilars the same INN as the original biologic molecule may cause confusion among both the doctors and the patients. It could also make the tracking of adverse reactions, as and when these will be reported, more challenging.

Consequently, it has now been accepted by the regulators that biosimilars would receive the same nonproprietary name but with a four-letter code at the end to differentiate such drugs from the original biologics.

B. Interchangeability:

The above labelling issue, in turn, creates a barrier to possible interchangeability or automatic substitution of expensive original biologics with much cheaper equivalent of biosimilar drugs. I reckon, this could pose a critical obstacle in the initial take-off of the later.

According to a July 4, 2015 article, titled “Fate of cost-saving biosimilar drugs may hinge on naming policy”, published in ‘Modern Healthcare’, the USFDA has the following two pathways for licensing of biosimilar drugs:

  • For being designated as “similar” in efficacy and safety to an original biologic.
  • For being approved as being “interchangeable,” which requires a much higher review standard and could take years and millions of dollars to obtain the needed clinical trial data.

According to this article, none of the biosimilar products currently under USFDA review are in the interchangeable pathway.

III.  Innovative strategies to restrict entry of new players:

All the above innovative strategic moves and arguments, where biologic drug manufacturers are allegedly involved, may seriously restrict not just the entry of newer biosimilars, but also their faster prescription throughput.

Safety concern (immunogenicity):

Additionally, a critical safety concern on biosimilar drugs is being raised by the manufacturers of original biologics. This concern involves immunogenicity, which means the way a biosimilar drug provokes an immune response in the body. Original biologic drug manufacturers contend, since biosimilar molecules are not exactly the same as originals and their long term safety, related to immunogenicity, has not been tested, these drugs cannot be construed as having the same safety profile as the innovators’ biologics.

Besides, ‘Free-Trade-Agreements (FTAs)’ are also likely to be cleverly used by the original biologic drug manufacturers through their respective Governments, to the extent possible, for safeguarding the beachhead from the marketing onslaught of biosimilar drugs.

A perception barrier too:

Here comes an important perception-based intangible barrier to desirable prescription growth for biosimilar drugs.

Probably gauging it, post Zarxio launch, none other than the CEO of Novartis – Joe Jimenez, reportedly said: “He’s not expecting too much of a splash before 2020.”

This is understandable, as the doctors’ favorable disposition towards biosimilar drugs would be a crucial factor for prescription growth of these medicines.

A recent doctor community survey from QuantiaMD primarily captures the doctors’ thoughts and feelings on biosimilar drugs. This study was done with 300 specialists and primary care physicians.

Some of the notable findings of the report are as follows:

  • While 78 percent of the doctors polled said they were familiar with the term “biosimilar,” only 38 percent could name a biosimilar that’s under consideration for USFDA approval and would be relevant to their patient population.
  • Only 33 percent could name a biosimilar at all.

Researchers then narrowed down the original 300 physicians polled into a group of 120 “prescribing specialists.” This group of 120 doctors are currently prescribing biologics and most likely to prescribe biosimilar drugs in the years ahead. The study reported:

  • Only 17 percent of that segment said they are “very likely” to prescribe biosimilars.
  • And 70 percent said they either aren’t sure or are “somewhat likely’” to prescribe a biosimilar.
  • Only 12 percent of prescribing specialists are “very confident” that biosimilars are as safe as the original biologic version of the drug.

That said, 12-year ‘Data Exclusivity’ period for biologics in the United States, is one additional barrier to early introduction of cheaper biosimilar drugs, as considered by many.

On this issue GPhA – the generic drug makers’ group in America reportedly issued a statement, criticizing a paper of Biotechnology Industry Organization (BIO), saying:

“Market exclusivity acts as an absolute shield to their weak patents. Thus, from a practical perspective, extending market exclusivity beyond the Hatch-Waxman period would block the introduction of generic competition for almost 20 years, derailing any potential cost savings by Americans.”

The challenges ahead:

Considering all these together, the challenges ahead for quick acceptance of biosimilar drugs are indeed mind-boggling. The situation necessitates enough innovative and painstaking work by all concerned to gain the doctors’ confidence on biosimilar medicines. It goes without saying that success in generation of enough prescriptions for these drugs is the fundamental requirement to benefit the patients, which, in turn, would lead to significant savings in health care cost, as estimated above.

As more innovator companies start joining the biosimilar bandwagon, the physicians’ perception on these medicines, hopefully, would change sooner.

The status in India:

Although it appears strange, but a fact nonetheless. Biosimilar drugs approved in India till August 2012, followed the requirements of the regulators as provided mostly in the Drugs and Cosmetics Act for small molecule drugs, which are incidentally quite a different kettle of fish.

According to GaBI-online, the first locally produced biosimilar drug was approved and marketed in the year 2000. India announced implementation of its ‘Guidelines’ for ‘Similar Biologics’ much later, on September 15, 2012.

Indian ‘Guidelines’ for ‘Similar Biologics’ were jointly developed by the Department of Biotechnology (DoB) and the Central Drugs Standard Control Organization (CDSCO). The ‘Guidelines’ outline requirements for pre-clinical evaluation of biological products, claiming ‘similar to already approved biologics’. Thus, Indian regulators will partly rely on data from the already approved products to ensure safety, purity, potency and effectiveness of these drugs.

A wide variety:

A wide variety of biosimilar drugs have been approved and marketed in India, since then.

According to International Journal of Applied Basic Medical Research (2014 Jul-Dec; 4.2: 63–66), biosimilars in India consist primarily of vaccine, monoclonal antibodies, recombinant proteins and diagnostics, insulin, erythropoietin, hepatitis B vaccine, granulocyte colony stimulating factor, streptokinase, interferon alpha-2B and epidermal growth factor receptor.

The above article states that there are about 100 biopharmaceutical companies actively involved in research and development, manufacturing and marketing of biosimilar therapeutic products in India. Only 14 therapeutic drugs (similar biologics) were available in 50 brands in 2005. This number had grown to 20 therapeutic drugs in 250 brands in 2011.

The status of similar biologics approved and marketed in India is elaborated in this Table 1.

Some of the key Indian players of biosimilar drugs are Dr. Reddy’s Laboratory (DRL), Lupin, Zydus Cadila, Serum Institute of India, Biocon, Reliance Life Sciences, Wockhardt, Zenotech Laboratories and Intas.

I wrote on a related subject in this blog dated December 15, 2014 titled, “A Great News! But…Would This ‘Golden Goose’ Lay Golden Eggs?”

Conclusion:

Opportunities for biosimilar drugs are expected to expand significantly all over the world, basically driven by the need for affordable biologics and healthcare cost containment pressure in many countries.

As I had articulated before, unlike small molecule generics, unlocking the true potential of large molecule biosimilar drugs in a sustainable way would demand innovative, clear, razor sharp and highly focused business strategies across the value chain.

For faster growth in prescriptions, biosimilars would call for a hybrid marketing model of small molecule (branded) generics and large molecule original biologics. Ability to craft impactful value proposition and ensuring its effective delivery for each stakeholder, smart and innovative use of interactive and participative digital tools both for doctors’ and patients’ engagement, of course sans complexities, would decide the ultimate commercial fate for each of these types of products.

To effectively reap rich harvest from the new space thus being created, the challenges are also too many. The concerns expressed on biosimilars may also be genuine, but the regulators should take care of those before granting marketing approval to benefit the patients, in a meaningful way.

Overall key drivers and barriers for success with biosimilar drugs would remain almost the same, both for global and local players. However, carving out and thereafter expanding share in this market, sizably, won’t be a piece of cake for any company, understandably.

Quite naturally, the innovator companies for biologics would go all out to retain their turf as much as possible, despite the entry of cheaper biosimilars. This is expected to continue by reinforcing the belief of the physicians and the patients that biosimilars are not quite the same as the original biologic molecules.

Effective proactive measures need to be initiated, soon, by the regulators and all other stakeholders to spread the right message, protecting the patients’ interest. Otherwise, apprehension of the doctors on biosimilars in general, regarding safety, efficacy, substitution and interchangeability may persist for some time to come, negatively impacting faster and desirable prescription growth of these drugs all over the world, including India.

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.

 

Does Patent Expiry Matter Less For Difficult To Copy Drugs?

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“Patent expiry matters much less for difficult to copy drugs”.

Not so long ago, this is what many used to believe in the pharma industry. However, looking at the current trend involving the tech savvy generic players, it appears, gone are those days even for the home grown companies in India. As we witness today, a number of global generic players, including some from India, are overcoming the tough challenge of technological barrier of the original drugs with technology, boldly and squarely, and that too with reasonably good speed.

A global CEO felt quite the same:

Possibly encouraged by this commercial dogma, the Chief Executive of GlaxoSmithKline (GSK) Sir Andrew Witty reportedly felt in not too distant past that his company’s blockbuster drug Advair/Seretide, used for the treatment of asthma, would continue to remain a major product, despite losing US patent in end 2010. Witty thought so considering the intricate technology involved in making its high tech inhalation drug delivery system with exacting precision.

Technology based entry barrier:

Although, Advair/Seretide is a respiratory inhalation drug, it is not quite like a typical aerosol inhaler consisting of a pressurized canister filled with liquid medicine formulation. In such system, as the canister is compressed, the liquid inside comes out as a spray that is breathable in an amount as required for desirable clinical efficacy for the patients.

With the application of complex technology, Advair/Seretide was formulated not as a liquid, but as pre-determined fixed dose combination of powders that patients inhale into their respiratory tracts with a device called ‘Diskus’, which involves a complex and difficult to copy inhaler technology with a long patent life.

This precision technology was expected to create the requisite entry barrier for generic equivalents of this important medicine.

“Diskus” patent to continue:

It is important to note, though Advair/Seretide had gone off patent in end 2010, the patent protection for the “Diskus” device that dispenses the powder version of the fixed dose drugs combination, continues till 2016. For the inhaler device that dispenses the aerosol version of the same drugs, the patent remains valid until 2025.

New USFDA guidance:

Keeping these factors in mind, the USFDA in its latest guidance has clearly enunciated the characteristics that an inhaler should have, including a similar size and shape to Diskus. This new USFDA guidance for inhaled drugs, like Advair/Seretide, now requires only “relatively basic” preclinical tests and a short clinical trial.

Many believe that this new guidance is mainly to ensure that other generic devices also qualify for the GSK’s asthma drug combo, after its patent expiry.

Nevertheless a challenging task:

Despite this new USFDA guidance for inhaled drugs, some large generic manufacturers apprehended, even way back in 2010, that they doubt whether it will be possible for them to adequately replicate Advair/Seretide to meet the stringent “substitution” requirements of the USFDA on generics. This is exactly what Witty had envisaged earlier.

Almost two years after its patent expiry, in October 2012, the world’s largest generic drug maker Teva also announced that the company does not expect to see true substitutes for Advair/Seretide before 2018.

No immediate sales impact post-patent expiry:

As a result, in 2012, even a couple of years after its patent expiry, Advair/Seretide could successfully weather the impending storm, though GSK reported a lackluster overall business performance. The brand at that time was virtually immune to substitution threats from generic equivalents. The key reason being, as stated above, much unlike a patented chemical drug substance, the ‘Diskus’ system of the GSK inhaler is a hell of a task to copy by meeting the regulatory requirements of substitution.

In 2013, close to three years after its patent expiry, Advair/Seretide ranked fourth within the top 10 global best-selling drugs of that year, clocking annual revenue of US $8.25 billion.

The first competition:

In the midst of all these, the first generic equivalent of Advair/Serevent with a new inhalation device, carrying a name AirFluSal Forspiro from the Sandoz unit of Novartis, started warming up to obtain regulatory approval from several countries within the European Union (EU).

The product was first approved in Denmark on December, 2013 with subsequent marketing authorizations received in Germany, Sweden, Hungary, Romania, Bulgaria, and Norway.

The heat started being felt now:

The overall position of the brand started changing thereafter. According to published reports, sales trend of Advair/Seretide in Europe and other markets are on the decline in 2014. In Europe, the drop was around 3 percent and in the US around 19 percent in the last quarter, due to a combined impact of many factors.

According to Bloomberg, the sales of Advair/Seretide are expected to drop from US$8.25 billion in 2013 to US$5.9 billion in 2016 with the entry of generics.

A large and growing market to invest into:

According to the World Health Organization (WHO), in every 10 seconds, Chronic Obstructive Pulmonary Disease (COPD) that includes conditions such as chronic bronchitis and emphysema kills one person globally. It is expected to be the third leading cause of death worldwide by 2030.  However, though more number of people suffers from asthma globally, its mortality rate is still much less, WHO says.

Bloomberg estimates that COPD market, including asthma, is expected to reach over US$30 billion by 2018.

Cipla came next crossing the ‘technology hurdle’:

Though the leader in the global generic market – Teva, expressed its inability to introduce the generic version of Advair/Seretide before 2018, this month, the Indian pharma major Cipla introduced its version of the product in two European countries, just next to Novartis. Consequently, Cipla demonstrated its ability to overcome the technological hurdle of the product faster than most others and mastering the intricate NDDS technology in record time, with precision.

The Cipla product is named as ‘Serroflo’ in Germany and ‘Salmeterol/Fluticasone Cipla’ in Sweden. As reported in the media quoting Cipla Chairman Dr. Yusuf Hamied, the product has also been launched in Croatia. By now, Cipla has obtained regulatory approvals of this product in 10 countries in total, with an approval pending in the GSK’s own domestic turf, the United Kingdom (UK). Other country-wise launches in Europe would probably take place much before the end of 2014, according to Dr. Hamied.

The product is expected to be launched in the US in the next three to four year’s time, though one media report mentioned about its 2015 launch in that market. Dr. Hamied also said that his company is now planning its first-ever manufacturing plant in America, which might focus on producing HIV medicines.

On a conservative estimate, the market analysts expect Cipla to generate around US$50 million in sales from the EU markets by 2016 and around US$110 million by 2018, as the company gains increasing market access with not more than 4-5 generic competitors competing in this segment.

Be that as it may, getting regulatory approval for launch of a generic version of Advair/Seretide in the regulated markets, by itself, is a huge achievement of technological prowess that Cipla has demonstrated, yet again.

Not too many generic competition expected:

Because of high quality technological requirements to develop a replaceable generic version of the GSK product, not too much competition is expected in this segment.

Thus far, another global generic drug major Mylan is expected to file for a generic version of Advair/Seretide in the US by the third quarter of 2015 for a 2016 launch. Besides Cipla and Novartis, Mylan, Teva and Actavis are expected come out with the generic version of this drug.

Opportunities in ‘difficult to copy’ drugs:

According to a recent ‘RnR Market Research Report’, over 1,400 drugs with New Drug Delivery System (NDDS) have since been approved globally. This includes inhalation devices too.

The oral drugs contribute the largest share of the overall NDDS market with over 52 percent of the total pie. This segment is expected to attain a turnover of over US$90 billion by 2016 at a CAGR of 11 percent. The injectable new drug delivery market is expected to reach a turnover of over US $29billion by 2015, according to this report.

I have deliberated this subject in one of my earlier blog posts titled. “Moving Up The Generic Pharma Value Chain”.

Another high tech area – biosimilar drugs:

As the high priced biologic drugs of the innovator companies go off patent, large molecule biosimilar drugs, involving high technology, would emerge as another lucrative growth opportunity for the generic players having requisite wherewithal.

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. Some of the Indian companies that have already entered into the biosimilar segment are Dr. Reddy’s Laboratories (DRL), Lupin, Biocon, Panacea Biotech, Wockhardt, Glenmark, Emcure, Bharat Biotech, Serum Institute, Hetero, Intas and Reliance Life Sciences, besides others.

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.

Overall improvement in the quality of ANDA filings:

In the last few years, overall quality of ANDA filings of the domestic Indian pharma players has also improved significantly. Their regulatory filing schedules now include many complex molecules, injectibles, oral contraceptives, ophthalmic preparations, inhalers/other drug delivery systems and biosimilars, beside Para IV/FTFs. All these are now contributing a growing share in their new product initiatives for the regulated markets.

Conclusion:

In the largest pharma market of the world – the United States, global generic companies are increasingly facing cutthroat price competition with steep price erosion, registering mixed figures of business performance and growth.

However, a new trend is fast emerging. Even when global innovator companies are including increasing number of difficult to copy medicines in their product portfolio, some pharma players are reaping a rich harvest by moving up the value chain with the generic versions of those products, post patent expiry. These copycats offer much higher margin than non-differentiated generics.

Some Indian generic companies too have started focusing on building value added, difficult to manufacture, and technology intensive generic product portfolios in various therapy areas. DRL is reportedly all set to take its complex generic drug Fondaparinux sodium injection to Canada and two other emerging markets.

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 now be much better placed in positioning themselves significantly ahead of the rest, both in terms of top and the bottom line performance.

The myth, as epitomized in the good old saying, “Patent expiry matters less for difficult to copy drugs”, seems to be partly true in delaying entry of generics immediately after the end of the monopoly period, at least, for now. However, I reckon, this gap of delay would eventually get much reduced, if not eliminated altogether, as we move on. Armed with cutting edge technology Cipla has almost busted the myth, as it came close second to Novartis with the launch of a complex generic equivalent of Advair/Seretide in the EU and other markets.

Pharma majors of the country, such as, DRL, Cipla, Lupin and Biocon, to name a few, are taking great strides, setting examples for many others to emulate and excel in this area. The groundswell has already begun for a long haul global journey of the Indian pharma into the El Dorado of high tech generics fetching higher rewards.

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.