MUMBAI: Domestic generic companies have more reasons to smile this year. Around $3-4 billion worth opportunity will be up for grabs in the wake of blockbuster drugs going off patent (losing patent protection) in the US over 2011-2012.
Around $30-40 billion worth drugs, including top-selling drugs like
Lipitor (Pfizer), Nexium (Astra Zeneca) and Plavix ( Bristol Myers Squibb), are facing patent expirations, starting this year. Once a patent of the original developer/ innovator expires, it allows a generic version to be sold in the US market. This will be a huge opportunity for domestic generic companies, including Dr Reddy’s, Ranbaxy, Cipla, Glenmark and Lupin over the next few years. In fact, Ranbaxy is expected to launch generic Lipitor, the largest-selling drug in the world, in November under the settlement with Pfizer.
Industry experts feel that after allowing 90% price erosion once generic drug versions appear in the market, and due to intense competition, the actual pie will be around $3-4 billion. (When generic products become available, market competition often leads to substantially lower prices for both the original brand and me-too versions)
This opportunity can be segregated in two parts. First, the highly lucrative first-to-file (FTF) applications filed by generic companies which ensure 180-day market exclusivity to the drug manufacturer. (FTF status is given to the first generic applicant who challenges a patent) The first-to-file Para IV certification on cholesterol-lowering drug Lipitor is with Ranbaxy.
The second part pertains to authorized generic agreement under which an innovator partners a generic company to sell a copycat version, allowing the former to hold on to a larger share of a revenue stream, once the drug loses patent protection. The strategy is a win-win for both the innovator and its partner, while the entry of generic company gets delayed. (Merck entered into an agreement with Dr Reddy’s to launch generic versions of simvastatin (Zocor) and finasteride (Proscar) in the US market)
“The opportunity for domestic generics is huge, but competition will be fierce as all generic companies both Indian, Western (Teva) and also big MNC pharma such as Pfizer (with their generic arms) will also be competing for the same pie,” says Sujay Shetty, leader life sciences, PwC
India. Some important launches include Dr Reddy’s, Aurobindo, Ranbaxy, Torrent and Wockhardt of generic diabetes drug Actos (innovator Takeda), while Sun Pharma and Lupin have settled with Wyeth for anti-depressant pill Effexor last year. Both are block-busters -Actos’ annual sales stood at $3.5 billion, while that of Effexor were $4 billion.
HDFC Securities, said: “The full benefit (of patent expirations) will be available to generic companies only from next fiscal. During this year we will see only a part of the contribution.” A reasonably large kitty will be available for these companies since generic drugs account for over 70% of all prescriptions dispensed in the US.
“The smarter companies like Glenmark, Sun Pharma and Lupin are targeting the smaller molecules-here the market size may be less, but competition is lower (for example Pfizer’s Xalatan),” says Muralidharan Nair, partner business advisory,
Confirming this, Glenmark Pharma CEO and MD Glenn Saldanha says: “Our strategy has been to enter niche and complex to manufacture segments which will not only accelerate growth but will also enhance profitability. We have presently over 60 products being sold in the US market and have nearly 40 ANDAs pending for approval there. We will also continue to aggressively file new ANDAs in line with our strategy of strengthening presence in niche segments.”