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“Make in India…Sell Anywhere in The World”: An Indian Pharma Perspective

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In his Independent Day speech from the ramparts of the Red Fort on August 15, 2014, Indian Prime Minister Modi gave a clarion call to all investors of the world, “Come, make in India”, “Come, manufacture in India”, “Sell in any country of the world, but manufacture here”.

The Prime Minister did not stop there. In his inimitable style, following it through on September 25, 2014 he gave an official status to ‘Make in India’ slogan and launched a global campaign.

“My definition of FDI for the people of India is First Develop India. This is also a responsibility for the people of India,” he further clarified.

An Indian perspective:

If I juxtapose this vision of the Prime Minister in the Indian pharmaceutical industry perspective, one finds that many small, medium and large size local domestic manufacturers are currently manufacturing drugs not just for the domestic market, but are also exporting in large quantities to various countries of the world, including, North America, South America and Europe.

The United States (US) is one of the most critical markets for majority of the Indian drug exporters. This transaction was taking place without any major regulatory hitches since quite some time. Unfortunately, over the last few years, mostly the Federal Drug Administration of the US (USFDA) and the United Kingdom (UK)’s Medicines and Healthcare Products Regulatory Agency (MHRA) have started raising serious doubts on the quality of medicines manufactured in India, making a significant impact on the drug exports of the country.

Most of these quality issues are related to ‘Data Integrity’ in the dug manufacturing and its documentation processes.

The impact:

According to industry data, in 2013-14, Indian drug exports registered the slowest growth in nearly the last 15 years. In this fiscal year, pharma exports of the country with a turnover of US$ 14.84 billion grew at a meager 1.2 percent. Pharmexcil attributed its reason to USFDA related regulatory issues and increasing global competition.

US accounts for about 25 percent of India’s pharma exports and its Federal Drug Administration (USFDA) has been expressing, since quite a while, serious concerns on ‘Data Integrity’ at the agency’s  previously approved production facilities of a large number of Indian pharma players.

The issue is causing not just a serious concern to USFDA and some other overseas drug regulatory agencies, but also posing a huge threat to future growth potential of Indian drug exports.

It is worth noting that Indian government had set an objective, in its strategy document, to register a turnover of US$ 25 billion for pharma exports in 2014-15. In all probability, it would fall far short of this target at the end of this fiscal, predominantly for related reasons.

Why is so much of ‘fuss’ on ‘Data Integrity’?

Broadly speaking, ‘Data Integrity’ in pharmaceutical manufacturing ensures that finished products meet pre-established specifications, such as, for purity, potency, stability and sterility. If data integrity is breached in any manner or in absence of credible data, the product becomes of dubious quality in the eyes of drug regulators.

Manufacturing related ‘Data Integrity’ is usually breached, when data from a database is deliberately or otherwise modified or destroyed or even cooked.

Over the last several years, ‘Data Integrity’ related issues in India are attracting enormous attention of both the USFDA and the MHRA, UK. As a result, concerned pharma manufacturing facilities are receiving Import Alerts/Warning Letters from the respective overseas drug regulators, refusing entry of those medicines mostly in the United States and some in the UK.

Recent warning letters:

Just over a year – from May 2013 to July 2014, around a dozen ‘Warning Letters’ have been sent to the Indian drug manufacturers by the USFDA on ‘Data Integrity’ related issue, as follows:

Recent ‘Warning Letter’ issued to: Date of issue
1. Marck Biosciences Ltd. 08. 07. 2014
2. Apotex Pharmachem India Pvt Ltd. 17. 06. 2014
3. Sun Pharmaceutical Industries 07. 05. 2014
4. Canton Laboratories Private Limited 27. 02. 2014
5. USV Limited 06. 02. 2014
6. Wockhardt Limited 25. 11. 2013
7. Agila Specialties Private Limited 09. 09. 2013
8. Posh Chemicals Private Limited 02. 08. 2013
9. Aarti Drugs Limited 30. 07. 2013
10. Wockhardt Limited 18. 07. 2013
11. Fresenius Kabi Oncology Ltd 01. 07. 2013
12. RPG Life Sciences Limited 28. 05. 2013

(Source: RAPS, 19 August 2014)

Another report states that USFDA has, so far, banned at least 36 manufacturing plants in India from selling products in the US.

Importance of US for Indian generic players:

Generic drugs currently contribute over 80 percent of prescriptions written in the US. Around 40 percent of prescriptions and Over The Counter (OTC) drugs that are sold there, come from India. Almost all of these are cheaper generic versions of patent expired drugs. Hence, India’s commercial stake in this area is indeed mind-boggling.

The ‘Data Integrity’ issue is not restricted to just US or UK:

A report quoting researchers led by Roger Bate, an American Enterprise Institute scholar and funded by the The Legatum Institute and the Humanities Research Council of Canada, concluded that many Indian pharma companies follow double manufacturing standards, as they are sending poor quality drugs to Africa compared to the same pills sold in other countries. This study was based on tests of 1,470 samples produced by 17 Indian drug manufacturers.

Besides India, the researchers took drug samples from pharmacies in Africa and middle-income countries, including China, Russia and Brazil.

According to this paper, the researchers found that 17.5 percent of samples of the tuberculosis therapy rifampicin sold in Africa tested substandard, which means the drug has less than 80 percent of the active ingredient than what it should otherwise. Against this number, in India, 7.8 percent of the medicine sampled was found substandard.

Moreover, Almost 9 percent of samples of the widely used antibiotic ciprofloxacin sold in Africa tested substandard, as compared to 3.3 percent in India.

Thorny issues around golden opportunities:

Much reported breach in manufacturing ‘Data Integrity’ detected at the manufacturing sites in India, are throwing fresh doubts on the efficacy and safety profile of generic/branded generic medicines, in general, produced in the country and more importantly, whether they are putting the patients’ health at risk.

A new analysis by the U.S. National Bureau of Economic Research pointed out some thorny issues related to ‘Data Integrity’ of drugs produced by the Indian pharmaceutical companies, which supply around 40 percent of the generic drugs sold in the United States, as stated above.

The researchers examined nearly 1,500 India-made drug samples, collected from 22 cities and found that “up to 10 percent of some medications contained insufficient levels of the key active ingredients or concentrations so low, in fact, that they would not be effective against the diseases they’re designed to treat.”

The report also highlighted that international regulators detected more than 1,600 errors in 15 drug applications submitted by Ranbaxy. The Bureau Officials commented that these pills were “potentially unsafe and illegal to sell.”

Frequent drug recalls by Indian pharma majors:

The above findings came in tandem with a series of drug recalls made recently by the Indian pharma companies in the US.

Some of the reported recent drug recalls in America, arising out of manufacturing related issues at the facilities of two well-known Indian pharma majors, which are going to merge soon, are as follows:

  • Sun Pharmaceuticals recalled nearly 400,000 bottles of the decongestant cetirizine (Zyrtec) and 251,882 of the antidepressant venlafaxine (Effexor) this May, because the pills failed to dissolve properly. The drugs were distributed by the drug maker’s US subsidiary Caraco Pharmaceutical Laboratories, but were manufactured in India.
  • In the same month – May, Ranbaxy recalled 30,000 packs of the allergy drugs loratadine and pseudo-ephedrine sulphate extended release tablets because of manufacturing defects in packaging.
  • In March, Sun Pharma recalled a batch of a generic diabetes drug bound for the US after an epilepsy drug was found in it. A patient discovered the error after noticing the wrong medication in the drug bottle.
  • Again in March, Ranbaxy recalled nearly 65,000 bottles of the statin drug atorvastatin calcium (Lipitor) after 20-milligram tablets were found in sealed bottles marked 10-milligrams. A pharmacist in the U.S. discovered the mix up.

Indian media reinforces the point:

Indian media (TNN) also reported that there is no quality control even for life-saving generic drugs and the government is apathetic on ensuring that the quality protocol of these drugs is properly observed.

This happens, as the report states, despite government’s efforts to push generic drugs, as they are more affordable. The report gave an example of a life-saving drug, Liposomal Amphotericin B, which is used to treat fungal infections in critically ill patients.

Are all these drugs safe enough for Indian Patients?

Though sounds awkward, it is a fact that India is a country where ‘export quality’ attracts a premium. Unintentionally though, with this attitude, we indirectly accept that Indian product quality for domestic consumption is not as good.

Unfortunately, in the recent years, increasing number of even ‘export quality’ drug manufacturing units in India are being seriously questioned, warned and banned by the overseas drug regulators, such as USFDA and MHRA, UK, just to ensure dug safety for the patients in their respective countries.

Taking all these into consideration, and noting increasing instances of blatant violations of cGMP standards and ‘Data Integrity’ requirements for ‘export quality’ drugs, one perhaps would shudder to think, what could possibly be the level of conformance to cGMP for the drugs manufactured solely for the consumption of local patients in India.

A cause of concern, as generic drugs are more cost effective to patients:

It has been widely recognized globally that the use of generic drugs significantly reduces out-of-pocket expenditure of the patients and also payers’ spending.

The findings of a study conducted by the Researchers from Brigham and Women’s Hospital (BWH), Harvard Medical School and CVS Health has just been published in the Annals of Internal Medicine on September 15, 2014. In this study the researchers investigated whether the use of generic versus brand name statins can play a role in medication adherence and whether or not this leads to improved health outcomes. The study concluded that patients taking generic statins were more likely to adhere to their medication and also had a significantly lower rate of cardiovascular events and death.

In this study, the mean co-payment for the generic statin was US$10, as against US$48 for brand-name statins. It is generally expected that the generic drugs would be of high quality, besides being affordable.

I deliberated on a related subject in one of my earlier blog posts of November 11, 2013 titled, “USFDA” Import Bans’: The Malady Calls For Strong Bitter Pills”.

Conclusion:

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

Unfortunately, despite intense local and global furore on this subject, Indian drug regulators at the Central Drugs Standard Control Organization (CDSCO), very strangely, do not seem to be much concerned on the ‘Data Integrity’ issue, at least, not just yet.

In my view, ‘Data Integrity’ issues are mostly not related to any technical or other knowledge deficiency. From the “Warning Letters” of the USFDA to respective Indian companies, it appears that these breaches are predominantly caused by falsification or doctoring of critical data. Thus, it basically boils down to a mindset issue, which possibly pans across the Indian pharma industry, irrespective of size of operations of a company.

Indian Prime Minister’s passionate appeal aimed at all investors, including from India, to “Make in India” and “Sell Anywhere in The World”, extends to pharma industry too, both local and global. The drug makers also seem to be aware of it, but the ghost keeps haunting unabated, signaling that the core mindset has remained unchanged despite periodic lip service and public utterances for corrective measures by a number of head honchos.

Any attempt to trivialize this situation, I reckon, could meet with grave consequences, jeopardizing the thriving pharma exports business of India, and in that process would betray the Prime Ministers grand vision for the country that he epitomized with, “Make in India” and “Sell Anywhere in 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.

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.

 

Scandalizing Biosimilar Drugs With Safety Concerns

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With the patent expiry of exorbitantly priced biologic medicines, introduction of biosimilar drugs are expected to improve their access to millions of patients across the world, saving billions of dollars in healthcare costs in the subsequent years. According to an article published in Forbes, it is estimated that the potential savings in the United States alone from just 11 biosimilar drugs over a period ranging from 2014 to 2024 could easily be U$250 billion.

However, the flip side of this much awaited development would make commensurate dent on the sales performance of original brand name biologics, now being marketed by the global pharma majors armed with patent monopoly rights.

Innovating hurdles to negate the impact:

Facing this stark reality, global innovators of biotech drugs allegedly want to fast germinate a strong apprehension in the minds of all concerned on the safety and replaceability of biosimilar drugs. Consequently, this would severely restrict the usage of this new class of products, sacrificing patients’ health interest.

To translate this grand plan into reality, garnering additional support from ten medical societies and a physicians’ group, the global players, which mostly hold various patents on biologics, reportedly urged the USFDA to require biosimilars to have distinct names from the original biologics, on the pretext that different names would make it easier for prescribers to distinguish between medicines that “may differ slightly” and also track adverse events and side effect reports that appear in patient records.

However, other stakeholders have negated this move, which is predominantly to make sure that no substitution of high priced original biologics takes place with the cheaper versions of equivalent biosimilars to save on drug costs.

Intense lobbying to push the envelope:

Interestingly, this intense lobbying initiative of big pharma to assign a distinct or different name for biosimilar drugs, if accepted by the USFDA, would provide a clear and cutting-edge commercial advantage to the concerned pharma and biotech majors, even much after their respective biologic drugs go off patent.

Thus, the above allegedly concerted move does not surprise many.

Mounting protests against industry move:

Biosimilar drug makers, on the other hand, have suggested to the USFDA to make biosimilars fall under the same International Non-Proprietary Name (INN) system, like all generic prescription drugs.  They believe that new names would create confusion and the physicians and pharmacists may face difficulties in ascertaining whether biosimilar drugs serve the same purpose with similar dosing and regimens.

The protest seems to have a snowballing effect. In July 2014, by a letter to the Commissioner Hamburg of USFDA, different groups representing pharmacy, labor unions, health insurance plans and others, have reportedly urged her not to go for different INNs for the original biologic and a biosimilar drug, for the same reason as cited above. The letter reinforces that the industry move, if accepted by the USFDA could increase the possibility of medication errors, besides adversely affecting the substitution required to bring down overall health care costs for high priced specialized biologics, thereby slowing down the uptake of biosimilars significantly.

Global pharma investors also raising voices in support of biosimilars:

Another similar and major development followed soon. A letter titled, “Investor Statement on Board Oversight of Biosimilar Issues”, written by a group of 19 institutional investors that manages about US$430 billion in assets, to the boards of several big pharma and biotech companies, flagged that some pharma majors have been scandalizing the safety concerns of biosimilar drugs. This is happening despite the fact that this class of drugs already has a well-established track record in Europe.

They emphasize that recent actions taken by some big pharma companies could raise concerns on the overall acceptance of biosimilar drugs, which would forestall any projected savings on that subject. They also reportedly expressed serious concern that shareholder interests could be adversely affected, if the pharma and biotech players pursue those policies that undermine corporate transparency and medical innovation.

The letter underscores, “Companies seeking to downplay the patient safety record of European biosimilars have also challenged the capacity of the FDA to promulgate rules and determine when biosimilars may be substituted for biologics.”

Among other points, the letter reiterates:

  • Though the important role of biologics in treating cancer, rheumatoid arthritis, anemia, multiple sclerosis and many other conditions is well recognized, the costs of these medicines are on an unsustainable trajectory, with some biologics costing as much 22 times more than other drugs. This critical issue seriously impedes patients’ access to biologics, as well as, acceptance by providers and insurance companies.
  • Biosimilars hold the promise of lowering costs of treating conditions for which biologics are indicated. At the same time, the recent adoption of a regulatory pathway to approval of biosimilars in the US market and the continued growth of biosimilars in the European Union, Japan, Canada, Australia and South Korea, pose a formidable business challenge for the companies that market patented biologic medicines.
  • Financial experts project that biosimilars too have the potential for significant market penetration and attractive returns on investments.
  • Assigning different INN would communicate to providers that the biosimilar is less effective, prompting them not to prescribe this class of medicines and making it difficult for the pharmacists to dispense too. Besides, different names could lead to prescribing errors.
  • In short, the boards of directors of the pharma and biotech majors were urged by these investors to use the following principles to guide their decision-making related to biosimilars:

-       Policy and educational information provided on biosimilars should be balanced, accurate and informed by the patient safety experience of biosimilars in the European Union and other biosimilar drug markets.

-       Lobbying expenditures for federal and state activities related to biosimilars should be fully disclosed and the boards should ensure that political activities are aligned with the interests of investors and other stakeholders.

-       Key information about any partnership or business deal related to biosimilars should be fully disclosed to investors, including information about the value, terms and duration of the deal.

The WHO proposal:

In this context it is worth recapitulating, the World Health Organization (WHO) that oversees the global INN system has held a number of meetings to resolve this issue. The WHO proposal suggests that the current system for choosing INNs to remain unchanged, but that a four-letter code would be attached at the end of every drug name. However, individual regulatory agencies in each country could choose whether to adopt such coding or not.

Let us wait to see what really pans out of this flexible WHO proposal on the subject.

Biosimilars go through stringent regulatory review:

It is important to note that the drug regulators carefully review biosimilars before giving marketing approval for any market, as these drugs must prove to be highly similar without any clinically meaningful differences from the original biologic molecules. The interchangeability between biosimilars and the original biologics must also be unquestionably demonstrated to be qualified for being substitutable at the pharmacy level without the need for intervention by a physician.

Thus, there does not seem to be any basis for different INN, other than to severely restrict competition from biosimilars.

12-year data exclusivity period for biologics – another hurdle created earlier:

Another barrier to early introduction of cheaper biosimilar drugs in the United States is the 12-year data exclusivity period for biologics.

On this issue GPhA – the generic drug makers’ group in the United States 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 market potential of biosimilars:

A new report by Allied Market Research estimates that the global biosimilars market would reach US$35 billion by 2020 from the estimated US$1.3 billion in 2013. During the next four years, over 10 blockbuster biologic drugs clocking aggregated annual sales turnover of US $60 billion would go off patent in the United States and in Europe. Humira – a US$10 billion drug of Abbvie that loses patent protection in 2016 is at the top of list.

In tandem, facilitation of regulatory pathways of marketing approval for this class of drugs in many developed markets is expected to drive its growth momentum through greater market penetration and access.

Asia Pacific region is likely to emerge as the leader in the biosimilar drugs market, primarily due to heightened interest and activity of the local players. Collaboration between Mylan and Biocon to commercialize biosimilar version of trastuzumab of Roche in India and the approval of first biosimilar version of monoclonal antibody drug by Hospira in Europe are the encouraging indications.

High growth oncology and autoimmune disease areas are expected to attract more biosimilars developers, as many such biologics would go off patent during 2014 to 2019 period.

Monoclonal antibodies (mAbs) and erythropoietin would possibly be key to the growth drivers. Similarly, follitropins, interferons, and insulin biosimilars would emerge as high potential product segments over a period of time.

As we know, among the developed markets, Europe was the first to draft guidelines for approval of biosimilars in 2006. Consequently, the first biosimilars version of Granulocyte colony-stimulating factor (G-CSF) was introduced in the European Union under the regulatory guidance of European Medical Agency (EMA) in 2008. At present, there are three biosimilar versions of G-CSF available in the European market. Insulin biosimilars also show a good potential for the future.

India:

India is now well poised to encash on this opportunity, which I had deliberated in one of my earlier blog post titled, “Moving Up The Generic Pharma Value Chain”.

Current global usage of biosimilars:

Though regulatory pathways for biosimilar drugs are now in place in the United States, no biosimilar has yet been approved there. However, the US drug regulator has for the first time accepted an application for the approval of a biosimilar version of Neupogen (Filgrastim) of Amgen, which treats patients with low white blood cell counts. Sandoz has already been selling the biosimilar version of this drug in more than 40 countries outside the US.

According to the research organization ‘Pharmaceutical Product Development’, as on March 2013, at least 11 countries and the European Union (EU) approve, regulate and allow clinical trials of biosimilars. As of February 2012, the EU has approved at least 14 biosimilar medicines. The following table shows these countries by region:

Region

Countries
North America Canada
Europe E.U. (including U.K.)
Asia and Pacific China, India, Singapore, South Korea, Taiwan
Central and South America Argentina, Brazil, Mexico
Eastern Europe Russia, Turkey

Source: Pharmaceutical Product Development

Conclusion:

With the opening up of the United States for biosimilar drugs, the entire product class is expected to be catapulted to a high growth trajectory, provided of course no more allegedly concerted attempts are made to create regulatory hurdles on its path, as we move on. This is mainly because around 46 percent of the world biologic market as on 2010 was in the United States.

However, intense lobbying and power play against biosimilar or interchangeable biologics, allegedly sponsored by the big pharma, are acting as a barrier to this much awaited development solely to benefit the patients. Such activities also undermine attractiveness of investing in safer and more affordable interchangeable biologics.

It is indeed intriguing that all these are happening, despite the fact that the regulatory approval standards for biosimilars are very stringent, as each of these drugs:

  • Must be highly similar to the reference product
  • Cannot have clinically meaningful differences from the original ones
  • Must perform the same in any given patient
  • Would have the same risk associated with switching as the reference product

Thus, scandalizing biosimilar drugs by raising self-serving ‘safety concerns’ in an orchestrated manner, just to extend product life cycles of original biologics even beyond patent expiries, is indeed a very unfortunate development. In this process, the vested interests are creating a great commercial uncertainty for this new class of medicines in the global scenario.

Be that as it may, all these seemingly well synchronized moves against biosimilars, solely to protect business interest, pooh-poohing patients’ health interests, have once again caste a dark shadow on not so enviable image of the big pharma…without even an iota of doubt.

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.

 

Patented Drug Pricing: Relevance To R&D Investments

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The costs of most of the new life saving drugs, used in the treatment of dreaded diseases such as cancer, have now started going north at a brisk pace, more than ever before.

From the global pharma industry perspective, the standard answer to this disturbing phenomenon has remained unchanged over a period of time. It continues to argue; with the same old emphasis and much challenged details that the high drug price is due to rapidly escalating R&D expenses.

However, experts have reasons to believe that irrespective of R&D costs, the companies stretch the new drug prices to the farthest edge to maximize profits. Generation of highest possible revenue for the product is the goal. Passing on the benefits of the new drug to a large number of patients does not matter, at all.

How credible is the industry argument?

In this context, let me take the example of Hepatitis C drug – Sovaldi of Gilead. Many now know that for each patient Sovaldi costs US$ 30,000 a month and US$ 84,000 for a treatment course.

According to an article published in Forbes, one health executive estimated that the annual price tag for Sovaldi could reach US$ 300 Billion because so many people have Hepatitis C infection worldwide.  This mindboggling amount is more than all spending on all drugs in the United States, currently.  A more realistic number might be between US$7 Billion and $12 Billion a year.  Even that amount is roughly five times the amount Gilead spends each year on research.

Like Sovaldi, in many other instances too, industry argument of recovering high R&D investment through product pricing would fall flat on its face.

Need to put all the cards on the table:

The distinguished author underscores in his article the expected responsibilities of the experts in this area to ask the global pharma industry to connect the dots for all us between:

  • The societal goals they aim to achieve
  • The costs they incur on R&D
  • The profits they should reasonably be earning.

Public investments in R&D:

Another article titled, “Putting Price On Life”, argues that R&D projects are mainly initiated in the public sphere through tax-funded research. Unfortunately, patients do not derive any benefit of these public investments in terms of reduction in prices for the related drugs. On the contrary, they effectively pay for these new products twice – once through tax-funded research and then paying full purchase price of the same drug.

Additionally, industry corners the praise for the work done by others in tax-funded research, while at the same time making R&D less risky, as public funded research groups carry out most of the initial risk prone and breakthrough innovation.

The article also highlights that global pharma companies receive other tax credits over billions of dollars for their expenditure on R&D. However, the R&D figures that are produced are not adjusted to take into account the tax credits, thereby inflating costs and the prices of drugs.

All these tax credits significantly lower the private costs of doing the R&D in the United States, increasing the private returns. Interestingly, there does not seem to be any public information regarding who gets the tax credit and what the credit is used for, while the government does not retain any rights in the R&D.

Does pharma R&D always create novel drugs?

According to a report, US-FDA approved 667 new drugs from 2000 to 2007. Out of these only 75 (11 percent) were innovative molecules having much superior therapeutic profile than the available drugs. However, more than 80 percent of 667 approved molecules were not found to be better than those, which are already available in the market.

Thus, the question that very often being raised by many is, why so much money is spent on discovery and development of ‘me-too’ drugs, and thereafter on aggressive marketing for their prescription generation? This is important, as the patients pay for the entire cost of such drugs including the profit, after being prescribed by the doctors?

Should Pharma R&D move away from its traditional models?

The critical point to ponder today, should the pharmaceutical R&D now move from its traditional comfort zone of expensive one company initiative to a much less charted frontier of sharing drug discovery involving many players? If this approach gains acceptance sooner, it could lead to significant increase in R&D productivity at a much lesser cost, benefiting the patients at large.

Finding the right pathway in this direction is more important today than ever before, as the R&D productivity of the global pharmaceutical industry, in general, keeps going south and that too at a faster pace.

Current IPR mechanism failing to deliver:

Current mechanism of Intellectual Property Rights (IPR), especially in the pharmaceutical space, undoubtedly facilitates spiraling high drug prices with no respite to patients and payers, as access to these drugs gets severely restricted to the privileged few, denying ‘right to life’ to many.

Moreover, the current global ‘Pharma Patent System’ does not differentiate between qualities of innovations. The system extends equal incentives for pricing the drugs as high as possible, even if those offer little advantages to patients. Fortunately, this loophole has been plugged in the Indian Patents Act 2005, to a large extent.

That said, there is no well-structured incentive available to develop clinically superior drugs with public funding, even in India, so that prices could be significantly lower with equally lesser risks to the companies too.

Conclusion:

Current pricing system of patented medicines is even more intriguing, as these have no direct or indirect co-relationship with R&D expenditures incurred by the respective players. On the contrary, drug prices allegedly go up due to other avoidable high expenditures, such as, physicians’ gratification oriented marketing, which includes even reported bribing, high profile political lobbying and private jet setting key executives lifestyle with exorbitant compensation packages, besides others.

To effectively address this issue, besides public R&D funding, there has been a number of suggestions for creation of a win-win pathway like, creation of “Health Impact Fund’. There are other inclusive, sustainable and cost effective R&D models too, such as ‘Open Innovation’ and ‘Accelerating Medicines Partnership (AMP)’, to choose from.

A recent HBR Article titled “A Social Brain Is a Smarter Brain” also highlighted, “Open innovation projects (where organizations facing tricky problems invite outsiders to take a crack at solving them) always present cognitive challenges, of course. But they also force new, boundary-spanning human interactions and fresh perspective taking. They require people to reach out to other people, and thus foster social interaction.” This articulation further reinforces the relevance of a new, contemporary and inclusive drug innovation model for greater patient access with reasonable affordability.

Be that as it may, ‘Patented Drug Pricing’ does not seem to have any relevance to a company’s investments towards R&D. On the contrary, the companies charge the maximum price that they could possibly handle to maximize profits on these life saving medicines.

In an environment of indifference like this, it is the responsibility of other stakeholders, especially the government, to ensure, by invoking all available measures, that life saving medications for dreaded diseases such as cancer, can get to those who need them the most, come what may.

Is the ever-alert new Government listening?

By: Tapan J. Ray

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

Moving Up The Generic Pharma Value Chain

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

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

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

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

Go for gold: 

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

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

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

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

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

Moving up the value chain:

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

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

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

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

Global interest in biosimilars:

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

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

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

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

Biosimilar would improve patient access:

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

It has been widely reported that the cost of treatment with innovative and patented biologic drugs can vary from US$ 100,000 to US$ 300,000 a year. A 2010 review on biosimilar drugs published by the Duke University highlights that biosimilar equivalents of novel biologics would improve access to such drugs significantly, for the patients across the globe.

Regulatory hurdles easing off:

In the developed world, European Union (EU) had taken a lead towards this direction by putting a robust system in place, way back in 2003. In the US, along with the recent healthcare reform process of the Obama administration, the US-FDA has already charted the regulatory pathway for biosimilar drugs, though more clarifications are still required.

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

Key global players:

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

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

Most recent global development:

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

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

Global Market Potential:

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

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

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

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

Challenges for India:

Unlike commonly used ‘small molecule’ chemical drugs, ‘large molecule’ biologics are developed from living cells using very complex processes. It is virtually impossible to replicate these protein substances, unlike the ‘small molecule’ drugs. One can at best develop a biologically similar molecule with the application of high degree of biotechnological expertise.

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

High development costs:

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

Fledgling regulatory framework:

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

Intricate manufacturing issues:

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

Overcoming ‘Branded Mentality’:

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

Indian business potential:

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

Recombinant vaccines, erythropoietin, recombinant insulin, monoclonal antibody, interferon alpha, granulocyte cell stimulating factor like products are now being manufactured by a number of domestic biotech companies, such as, Dr. Reddy’s Laboratories, Lupin, Biocon, Panacea Biotech, Wockhardt, Glenmark, Emcure, Bharat Biotech, Serum Institute, Hetero, Intas and Reliance Life Sciences.

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

Domestic players on the go:

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

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

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

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

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

Many more such initiatives reportedly are in the offing.

Oncology becoming biosimilar development hot spot:

Many domestic Indian pharmaceutical companies are targeting Oncology disease area for developing biosimilar drugs, which is estimated to be the largest segment globally with a value turnover of around US$ 60 billion growing over 17 percent.

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

Indian Government support:

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

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

The DBT together with the Drug Controller General of India (DCGI) has now prepared and put in place ‘Regulatory Guidelines for Biosimilar Drugs’ in conformance with the international quality and patient safety standards. This is a big step forward for India in the arena of biosimilar drugs.

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

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

Conclusion: 

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

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

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

By: Tapan J. Ray

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

 

Drugs From The Same Indian Plant: Safe For Europe, Unsafe For America, Why?

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Good number of stories on US-FDA banning several drug manufacturing facilities of major domestic players of India over serious quality related issues, have been doing the rounds since about a year and almost at a regular interval.

The quagmire has snowballed into serious apprehensions on the quality of Indian generic drugs, across the globe. Various statements of US-FDA Commissioner Margaret Hamburg, during her much talked about maiden visit to India, in February 2014, added further credence to the issue.

“If you want our market, meet our standards”:

During Hamburg’s India visit, her reported candid warning to the Indian drug exporters to America added further fuel to the above concern in India. She clearly underscored:

“If you want our market, meet our standards.”

Even in the face of this stern warning, when major drug manufacturers of India, such as, Ranbaxy, Wockhardt, Sun Pharma and some others continued to fail in meeting US-FDA drug quality standards in their respective plants, I wrote the following in one of my earlier blog posts titled, “Does India Believe in Two Different Drug Quality Standards?”:

“In a situation like this, especially when many Indian manufacturers are repeatedly failing to meet the American quality standards, the following questions come up:

  • Is the US-FDA manufacturing requirement too troublesome, if not oppressive?
  • If not, do the Indian and other patients too deserve to have drugs conforming to the same quality standards?

Answers to these questions are absolutely vital to convince ourselves, why should Indian patients have access to drugs of lower quality standards than Americans, with consequential increase in their health risks?”

The first question on ‘troublesomeness’ now partly answered?

This is because another recent media report brought to the fore that, having completed their assessment of drug manufacturing violations at Ranbaxy’s facility in Toansa, European regulators have said although deficiencies were found, they pose no risk to public health. The regulators said they were satisfied by corrective measures put in place by the company after U.S. regulators found deviations in January.

The report also highlights that this assessment of the European regulators stands in stark contrast to the response of US regulators to the deficiencies found at the same plant.

It is worth noting that US-FDA continues to restrict Ranbaxy from making and selling pharmaceutical ingredients from the Toansa facility “to prevent substandard quality products from reaching US consumers.”

The same plant meets drug safety standards of Europe, but ‘unsafe’ for America!

Quite contrary to the above stern statement of US-FDA, according to the above report from Reuters, European drug regulators commented as follows:

“The inspection team concluded that there was no evidence that any medicines on the EU market that have an active pharmaceutical ingredient manufactured in Toansa were of unacceptable quality or presented a risk to the health of patients taking them.” 

The further added, “This conclusion was supported by tests of samples of these medicines, all of which met the correct quality specifications.”

Regulatory audit standards were the same for both EU and US regulators:

It is also interesting to note from the report that according to a statement from the US-FDA:

“EMA and FDA inspected the Toansa facility using similar quality standards and underlying principles of current good manufacturing practices.”

Was the decision of US-FDA ‘import ban’ subjective?

This critical question arises because of another US-FDA statement that states as follows:

“While inspections were similar, the two regulatory authorities applied their own, differing, regulatory and legal standards to address the violations.”

Subjectivity in decision-making could encourage “Conspiracy Theory”:

Generic drugs currently contribute over 80 percent of prescriptions written in the US. Around 40 percent of prescriptions and Over The Counter (OTC) drugs that are now sold in the United States come from India. Almost all of these are cheaper generic versions of patent expired drugs. Total annual drug export of India, currently at around US$ 15 billion, is more than the domestic turnover of the pharma industry. Hence, India’s commercial stake in this area is indeed mind-boggling.

In a situation like this, the apprehension of subjectivity in the decision making process of US-FDA related to ‘import bans’, if linked with, say for example, even the missed opportunities for ‘first to launch’ generic versions of several patent-expired blockbuster drugs in the United States by Ranbaxy, could lead to much undesirable ‘Conspiracy Theory’, further souring the relationship between India and America.

As I mentioned in one of my earlier blog posts titled “Loss of Ranbaxy Gain of Big Pharma…And Intriguing Coincidences”, when the emerging dots associated with the missed opportunities for ‘first to launch’ generic versions of drugs like, Lipitor (Pfizer), Diovan (Novartis) and Nexium (AstraZeneca) are connected, an uncomfortable pattern could emerge favoring Big Pharma and obviously adversely affecting Indian companies like Ranbaxy.

The First Dot: Uncertainty over Lipitor generic launch:

Like many other large Indian players, ‘first to launch’ strategy with the 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 and commensurate loss to Pfizer for the generic entry.

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

The Second Dot: Indefinite delay in 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 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.

The Third Dot: Delay in Nexium generic launch:

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 went off patent on May 27, 2014. However, due to recent US-FDA import ban from its Toansa plant, this opportunity too seems to be fading away for Ranbaxy.

Delay in the launch of generic Nexium, which incidentally is the second-biggest seller of AstraZeneca, would make a big impact on the predator-chased 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, as the above report says.

Conclusion:

Let me hasten to add yet again, while highlighting the stark differences of interpretations on drug quality standards of the same plant between the European and American regulators and connecting the dots of significant missed opportunities of the Indian drug manufacturers, I do not intend to postulate any ‘Machiavellian Hypothesis’.

I just wanted to establish that both alleged ‘subjective’ decision making process of the US-FDA and coincidences of a series of missed opportunities encountered by the Indian drug manufacturers related to first to launch generics in America are now realities, which if remain unaddressed could germinate into a ‘Conspiracy Theory’, at least in some corners. This could further sour existing Indo-US relationship.

While, I am confident that the new government of India with its, so far, well demonstrated ‘Can Do’ spirit would take these critical issues up in the ensuing bilateral ministerial level meetings, an immediate and in-depth study should also be initiated with valuable inputs from the independent experts to ferret out the real reasons behind these facts, including:

  • Why are the cGMP related issues in India repeatedly arising mainly with the US-FDA?
  • Are  the requirements of the US-FDA though too onerous for the Indian drug manufacturers, yet reasonable as per global norms?
  • If so, how come the drugs manufactured in the same Indian plant though declared unsafe by the US-FDA, considered safe by the European regulators?

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 India Believe in Two Different Drug Quality standards?

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“Maintain and sharpen your intellectual honesty so that you’re always realistic. See things as they are, not way you want them to be.”

The above profound statement is what the Management Guru Ram Charan made in his book titled, ‘Execution: The Discipline of Getting Things Done’ co-authored by Larry Bossidy.

Placing the content of this book against current series of events plaguing the Indian pharmaceutical industry, a pertinent question floats at the top of mind. Are these books meant to hone the corporate leadership practices at all level or for preserving in the bookshelves, just as another collector’s item?

This is probably a good question to deliberate upon. Otherwise, why do we keep on encountering barrage of newspaper reports on rampant fraudulent practices within the pharmaceutical industry, especially related to quality of drugs and pricing?

Today’s flavor of ongoing practices:

Just to give a flavor of ongoing practices, following are what appeared in today’s newspaper headlines, besides umpteen numbers of instances reported in the past:

  • “USFDA says team threatened during Wockhardt inspection”
  • Or “FDA caution on Wockhardt US unit”
  • Or even “GSK Consumer fined for overcharging” Crocin Advance tablets

All these similar and unabating instances of “short changing” the systems by the business leadership, vindicate the point that much sought after management Pandits’ precious wisdom to corporate honchos seems to be falling in deaf ears, as a sizable section of the Indian pharmaceutical industry apparently sacrificing the “Intellectual Honesty” in the alter of greed and quick profit making.

“Medicine is for people, not for the profits” – George Merck:

To exemplify “Intellectual Honesty” in the above book, Ram Charan and Larry Bossidy deliberated on ‘The 10 Greatest CEOs Ever’. One of these 10 greatest CEO is George Merck of the global pharmaceutical giant Merck & Co, who articulated his vision for his Company way back in 1952 as follows:

“Medicine is for people, not for the profits.” 

George Merck believed that the purpose of a corporation is to do something useful, and to do it well, which also ensures decent profits.

Some say, those were the good old days of ethics and values. Things do not seem to be quite the same in today’s India, for various reasons. ‘Walking the Talk’ clutching the ethics and values close to one’s heart, is glaringly missing in a large section of pharma leadership of date.

Currently, all indications confirm that the market would keep growing at a decent pace, despite all odds, as we move on. To achieve sustainable success in the rapidly changing business environment, especially in the healthcare space, globally accepted quality standards of products and services, delivered in a credible and equitable way with built in scalability, would matter the most

Does India believe in two different drug manufacturing quality standards?

Not withstanding the possible opportunities galore, as stated above, the spate of ‘Warning Letters’ from the US-FDA have brought to the fore existence of two different quality standards for drug manufacturing in India:

  • High quality plants dedicated to serving the largest market of the world – the United States and following the US-FDA regulations.
  • Other plants, with much less regulations, to cater to the needs of the Indian population and other developing non-regulated markets.

In a situation like this, especially when many Indian manufacturers are repeatedly failing to meet the American quality standards, the following questions come up:

  • Is the US-FDA manufacturing requirement too troublesome, if not oppressive?
  • If not, do the Indian and other patients too deserve to have drugs conforming to the same quality standards?

Answers to these questions are absolutely vital to convince ourselves, why should Indian patients have access to drugs of lower quality standards than Americans, with consequential increase in their health risks?

Different strokes for different folks:

To immediately alleviate the business risk of Indian exporters through resumption of business with those banned drugs in the United States, the only immediate solution is to ensure strict conformance to US-FDA regulations by enhancing organizational ethics and value systems to the desired level of acceptance of the US regulator, as most of these were identified as fraudulent practices and alleged ‘threats’, as reported above.

However, for getting answer to the question of dual drug manufacturing quality standards in India, Indian Ministry of Health has already made the public understanding on the subject even more complicated.

This is due to conflicting acts of two responsible officials in the Ministry of Health of India on the same issue, as follows:

  • On February 10, 2014, Dr. Keshav Desiraju, the then Secretary of Health signed a “Statement of Intent” with Dr. Margaret A. Hamburg, Commissioner of US-FDA to encourage collaboration between American and Indian regulators to effectively address this issue.
  • The very next day, on February 11, 2014, the Drug Controller General of India, while addressing the media expressed his great apprehension against over regulation of the US regulator.

It is, therefore, amazing to note the above different strokes for different folks by the same ministry and on the same very sensitive subject, creating a snowballing effect of confusion within the stakeholders.

Conclusion:

To reap rich harvest out of the emerging gold-plated opportunity, as stated above, not just coming from India, but across the world, Indian pharma does need a strong leadership with unflinching belief in business practices weaved in corporate ethics and values.

Even to come out of the episodes of repeated ‘Warning Letters’ from US-FDA, casting aspersions on the quality of Indian drug manufacturing standards, which are mainly related to alleged fraudulent business practices, strong corporate leadership with high ethics and value standards at all level is of absolute necessity.

Equally important is to follow the visionary statement of the pharma iconoclast George Merck, made way back in 1952 that “Medicine is for people, not for the profits”.

Moving towards this direction, would the newly formed Ministry of Health clarify expeditiously, without any ambiguity and with intellectual honesty that Indian patients are taking as safe and effective medicines as their counterparts, living in any other corner of the developed world, including the United States?

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.

Is Sun Pharma Sailing In The Same Boat As Ranbaxy?

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A ‘Warning Letter’ of May 7, 2014 from the USFDA to Sun Pharmaceuticals – the no.1 pharma major by market capitalization in India has nailed its Karkhadi, Vadodara, Gujarat based plant in India for similar data deletions as found at Ranbaxy.

Such data manipulation reportedly got Ranbaxy into so much trouble that it last year paid U$ 500 million and agreed to plead guilty to 7 felony charges.

The concerned Gujarat based plant of Sun pharma manufacturers the antibiotic cephalosporin.

This development came to the fore just weeks after Sun Pharmaceutical announced a US$ 3.2 billion deal to buy the much troubled, yet the largest generic drug company of India – Ranbaxy.

My earlier apprehensions on this deal:

At that time in my blog post of April 14, 2014, I expressed my apprehensions on this deal on four key areas, with as many words as follows:

1. Sun Pharma too is under USFDA radar:

As we know that along with Ranbaxy, Wockhardt and some others, Sun Pharma also had come under the USFDA radar for non-compliance of the Current Good Manufacturing Practices (cGMPs).

Under the prevailing circumstances, I apprehended, it would indeed be a major challenge for Sun Pharma to place its own house in order first and simultaneously address the similar issues to get USFDA ‘import bans’ lifted from four manufacturing plants of Ranbaxy in India that export formulations and API to the United States.

This could be quite a task indeed for Sun Pharma.

 2. Pending Supreme Court case on Ranbaxy:

Prompted by a series of ‘Import Bans’ from US-FDA on product quality grounds, the Supreme Court of India on March 15, 2014 reportedly issued notices to both the Central Government and Ranbaxy against 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.

Ranbaxy/ Sun pharma would, therefore, require convincing the top court of the country that it manufactures and sells quality medicines for the consumption of patients in India.

 3. CCI scrutiny of the deal:

Out of the Top 10 Therapy Areas, the merged company would hold the highest ranking in 4 segments namely, Cardiac, Neuro/CNS, Pain management and Gynec and no. 2 ranking in two other segments namely, Vitamins and Gastrointestinal.

Noting the above scenario and possibly many others, the Competition Commission of India (CCI), after intense scrutiny, would require taking a call whether this acquisition would adversely affect market competition in any of those areas. If so, CCI would suggest appropriate measures to be completed by the two concerned companies before the deal could take effect.

This would also be a task cut out for the CCI in this area.

 4. SEBI queries:

Securities and Exchange Board of India (SEBI), has already sought information from Sun Pharmaceutical on stock price movement and the deal structure.

According to reports, it is due to “Ranbaxy shares showing good movement on three occasions: first in December, then in January and subsequently in March 2014, just before the deal was announced.” This has already attracted SEBI’s attention and has prompted it to go into the details.

The matter is now subjudice.

The current scenario:

Out of my four identified areas of challenges, Sun Pharma has already started feeling the heat in the following two areas:

1. Quality issues with FDA:

The issue is extremely important, as to turn around Ranbaxy, this has to be addressed to the complete satisfaction of the USFDA. Otherwise, the game is a non-starter.

2. SEBI queries on stock price movement and the deal structure:

In this area, just today the Supreme Court reportedly refused to stay the Andhra Pradesh High Court order that stalled the US$ 4 billion Sun Pharma merger with Ranbaxy. Daiichi Sankyo and Ranbaxy had approached the Supreme Court seeking vacation of the stay of the status quo order by the High Court, which on April 25, 2014 directed the BSE and NSE not to approve the merger while admitting a petition by retail investors alleging insider trading in the US$ 4 billion deal.

The vacation bench comprising of Justices B S Chouhan and A K Sikri also directed the High Court to decide on Sun Pharma’s application seeking vacation of the status quo order within two days and posted the matter for further hearing on May 29. The judges observed that the Andhra High Court has no territorial jurisdiction over the merger process.

The outcome of this case would indeed be interesting and crucial for Sun Pharma.

Conclusion:

Even if one keeps aside the three issues out of above four as the legal ones, the very first challenge related to USFDA on drug quality, would continue to remain as the ‘make or break’ area, for this deal to be commercially successful for Sun Pharma.

When USFDA reportedly nailed Sun Pharma’s Karkhadi , Vadodara, Gujarat based plant for similar data deletions as found at Ranbaxy, it may give a feeling that the acquirer Sun Pharma possibly is also sailing in the same boat as the acquiree Ranbaxy.

If this apprehension makes any sense, the moot question that comes up:

“Can one blind man show the right direction to another blind man sailing in the same boat in the midst of a storm?”

Let us wait for the eternal time to tell us the answer.

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.