Generic Drugs Business Editors' Blog

Company acquisitions continue apace

2010-07-20T15:56:00.002+01:00

A number of company acquisitions were made in June, which will have a bearing on the global generic markets, with acquisitions taking place in the Americas and Europe. In addition, a new strategic agreement was signed in South Africa.

In Argentina, GlaxoSmithKline announced that it had acquired Laboratorios Phoenix. GlaxoSmithKline commented that it was making the acquisition to help accelerate sales growth and further extend its product portfolio in Argentina and Latin America. Laboratorios Phoenix was founded in Buenos Aires in 1939, and manufactures branded generic products covering therapeutic areas such as cardiovascular, gastroenterology, metabolism and urology. GlaxoSmithKline's acquisition follows a recent trend of branded firms taking a closer interest in generic firms.

Along similar lines, although not an acquisition, was the announcement made by Adcock Ingram and Merck & Co, through its MSD trading name, of a strategic collaboration in South Africa. The collaboration is to co-promote and distribute a number of MSD products in South Africa, including both prescription medicines and over-the-counter products. Merck reasoned that it sees the emerging markets as becoming an important contributor for future performance and growth, and expects such markets to account for over 25% of its global pharmaceutical and vaccine revenues in 2013. Merck has thus become one of a number of large branded companies in recent times to see a future in the emerging and developing markets, leading to strategic tie-ins with local firms. There has been most notably a surge of multinational firms making deals with particularly Indian generic companies.

However, the Indian firms themselves have also shown this to be a two-way street. India's Orchid Chemicals & Pharmaceuticals announced in June that it was to acquire a US-based generic manufacturing and sales services company, Karalex Pharma. Orchid declined to name its price; the acquisition was completed on 2nd July. Orchid aims for the acquisition to help it create itself as a US-based generic pharmaceutical company, and the move gives the firm a presence in the front-end US market. Separately, in March 2010, Orchid sold its generic injectable business to Hospira, completing a US$400 million deal which was announced in December 2009. Coincidentally, alongside Orchid's Karalex acquisition, Hospira announced its first generic drug launch from its Orchid acquisition, with the launch of its meropenem for injection, a generic equivalent of AstraZeneca's Merrem IV.

Elsewhere, in Europe, Lithuania's Sanitas announced that it had sold the manufacturing site of its Slovakian subsidiary, HBM Pharma, to a Latvian firm, Liplats 2000. HBM Pharma had, prior to Sanitas' own acquisition of it, been known as Hoechst Biotika, and Sanitas had acquired it in 2005 from sanofi-aventis. However, Sanitas is keeping hold of HBM Pharma's marketing, sales and regulatory divisions, located in Bratislava and Prague. After Sanitas acquired HBM Pharma from sanofi-aventis, the firm worked to integrate the business into the Sanitas group as a manufacturing unit and as a hub to commence sales and marketing in neighbouring countries. This part of the business is clearly still of interest to Sanitas.

Ian Platts – Editor, World Generic Markets

SOHM branches out

2010-06-18T15:01:00.000+01:00

In late May 2010, SOHM announced that it was branching out, with a sales and marketing agreement to sell its branded generics in Uganda, Tanzania and Zambia and a purchase order for generics for distribution in the Philippines. SOHM is a relative newcomer to the generics industry; it has global headquarters located in North America but has manufacturing sites in India; the firm chose to set up its manufacturing operations in India in order to take advantage of the country's strong marketing set up, low prices and the fact that it uses English as a business language. The firm produces and markets generics with an eye on distribution in the emerging markets in Africa, Latin America and Southeast Asia. SOHM's strategy is to increase its market share in the firm's defined key markets in the emerging world, arguing that growth is shifting away from the developed markets of the United States and Europe and toward emerging markets as less developed countries prosper and spend more on healthcare.

The recently-announced Philippines purchase order is worth US$750,000, and covers primarily metformin and sildenafil citrate; a rather odd combination of a type 2 diabetes treatment and the generic form of Pfizer's Viagra, which says as much about SOHM's production capabilities as it does about medical and lifestyle conditions that are becoming increasingly profitable in the Philippines. In July 2009, the firm announced that it had received Philippine Bureau of Food and Drug Administration (BFAD) registration for generic pharmaceutical sales. SOHM was more circumspect about its new African operations, declining to name either the branded drugs at the heart of the sales and marketing agreement or the African partner it was teaming up with.

SOHM has over the past 18 months made agreements with a number of companies, and has, on the whole, been careful not to divulge too much information. In January 2009, the firm announced an exclusive private label and development agreement with an Indian firm, which it refused to name, but noted that the two firms had formed a global platform for the introduction of the SOHM brand of generics into the African, Latin American and Southeast Asian markets. Under this agreement, generics would be labelled under the SOHM brand and would be distributed directly under the firm's manufacturing licence in India. In September 2009, SOHM announced that it had launched 26 branded generics in India, adding that it had appointed two distributors in Northern India, which were again unnamed. In February this year, the firm announced it had signed another marketing agreement which would add 75 branded generics for distribution across India, taking the firm's total offerings to 135; again the name of the company it had signed the agreement with was not revealed. Around the same time, SOHM reported that it had signed a strategic alliance with an injectable manufacturing unit in India. The firm said little else, but noted that the agreement would add another 89 injectable and drops-based generics to its portfolio, bringing the total to 279. In May, the firm announced this figure had risen to 280.

Aside from generics, the SOHM has also recently announced that it has expanded its manufacturing operations in Ahmadabad, India, to include improved nutraceutical product production. A new facility will concentrate on neutracueticals, leaving the pharmaceutical manufacturing facility free to focus on generic drug orders exclusively. At the same time, the firm announced a purchase order for nutraceutical products in India valued at US$350,000.

The dollar figures SOHM is dealing in are perhaps small by the standards of most generic firms with international operations, and certainly tiny in comparison to other generic firms based in North America. The Philippine drug order and the Indian nutraceutical order have a combined value of US$1.1 million, which is a reasonable total, but far from stellar. Nonetheless, SOHM's talk is all about expansion and tapping into growing markets in previously under-represented regions. This can be seen in the firm's financial performance. In May 2010, the firm announced revenues for the first quarter ended 31st March 2010 worth US$200,324; again, tiny by international standards, but an improvement over the prior year period's US$29,598 of over 600%. Especially in the current economic climate and despite countries in North America, Europe and Japan announcing determination to increase generic spending to reduce healthcare budgets, the vast majority of generic firms around the world can only dream of increasing revenues by such an amount.

Ian Platts - Editor, World Generic Markets

Orbus files for bankruptcy

2010-06-08T15:05:00.000+01:00

Canada's Orbus Pharma announced in May 2010 that it had gained protection from its creditors under the provisions of the Bankruptcy and Insolvency Act. The move came as a result of a number of financial difficulties the firm has faced in recent times. Orbus was originally known as Bovar, created in Calgary, Alberta in June 1977. In May 2002, the firm completed the purchase and subsequent amalgamation with Orbus Life Sciences, a firm which had begun operations in April 2000. Bovar changed its name to Orbus Pharma in May 2003 to better reflect the activity of the company. Orbus develops generic versions of oral dosage products, which it then licenses to sales and marketing organisations which then distribute the products under their own names, ideally under five year supply agreements. The firm targets Europe and Canada as its primary markets, but had an eye on the United States as well.

Orbus' website lists four prescription products which have been completed. Amitriptyline, which was completed in the first quarter of 2009; cefuroxime axetil, which has been approved in Denmark and Canada; oxcarbazepine, which was completed in the third quarter of 2009; and moduret hydrochloride / amiloride. Another three products are listed as being under development: fluvastatin XR, metoprolol XR and a 600 mg oxcarbazepine tablet. Over the years, Orbus has signed a number of agreements with a range of companies, with a view to marketing its products in various countries. Amongst the most recent has been an agreement with Intas Pharmaceutical for worldwide rights, excluding the US and China, for Orbus' metoprolol succinate.

However, despite the progress which the firm had made in its product portfolio, Orbus suffered from financial weaknesses; in its most recent annual report, for 2008, the firm noted it had seen disappointing results in both product development timelines as well as the large amount of cash used in operations. This led to the President and CEO stepping down from his position. The new interim manager reviewed the company's business, and found weaknesses in a number of areas, leading to measures including cost reduction programmes and rationalisation of Orbus' product offering. In January 2009, the company announced that it may be up for sale, having previously announced in October 2008 that it was planning to sell its cephalosporin manufacturing facility and product line. An agreement was reached for China's Nanjing Sanhome Pharmaceutical to acquire at least 51% of Orbus' issued and outstanding common shares, and this looked to be progressing. However, in March 2010, Sanhome withdrew from the private placement. Orbus ultimately had nowhere else to turn, announcing in April 2010 that it was discontinuing its pursuit of a private placement after determining that no market was available for its common shares; neither was there any other source of financing available. The firm also decided to discontinue operations at a second site, leaving limited operations at its Markham facility.

Seeking protection under the Bankruptcy and Insolvency Act was by now the most likely way forward for the firm. The move will enable Orbus to continue with efforts to restructure its business whilst being protected from its creditors. Whilst announcing the move, Orbus also announced that it was to close its operations at its Markham facility, and would put the site up for sale. The firm does have assets, in terms of products and intellectual property. Perhaps the firm will be able to trade its way out of its current difficulties; otherwise its best hope will be to be acquired by another firm.

Ian Platts – Editor, World Generic Markets

Watson faces legal battles

2010-05-25T14:40:00.001+01:00

Watson Pharmaceuticals has found itself at the centre of a slew of legal battles which hit the firm over a period towards the end of April 2010 and the beginning of May 2010. The challenges kicked off on 26th April 2010, when the firm confirmed that a subsidiary of Teva Pharmaceutical Industries had launched a lawsuit against Watson Laboratories after it filed an ANDA for synthetic conjugated oestrogens. Watson's ANDA, which contained a Paragraph IV certification, was for a generic version of Cenestin, used in treating postmenopausal women. The product has one patent, which expires in July 2015. The patent is listed to Duramed, Barr Pharmaceuticals' subsidiary.

Two days later, Watson confirmed that it was being sued by Pfizer and its Wyeth subsidiary in connection with Watson Laboratories' ANDA for sirolimus tablets. The product, a generic equivalent of Wyeth's Rapamune, is used in patients with renal organ transplants, and has a number of patents, the last of which expires in September 2018. Once again, Watson's ANDA contained a Paragraph IV certification, although this is only challenging the first of the patents, which expires in early 2014. Whether Watson is planning to challenge the other patents remains to be seen, but the firm noted that it believed it could be entitled to the 180-days marketing exclusivity for being the first to file.

Two days after that, on 30th April 2010, lawsuit numbers three and four were announced, with Watson confirming that its Watson Laboratories subsidiary had been sued by Abbott Laboratories and Fournier Laboratories after filing an ANDA for choline fenofibrate, a generic version of Trilipix, used in the treatment of high cholesterol. In this case, Watson is challenging the one patent listed in the FDA's Orange Book, which expires in January 2025.

On 5th May 2010 came two separate announcements of lawsuits. The first was filed by Eli Lilly, after Watson Laboratories filed an ANDA for raloxifene hydrochloride tablets, a generic version of Evista, an osteoporosis drug used in postmenopausal women. In this case, Watson is challenging three patents, which all expire in March 2017. These are not the only patents protecting the drug according to the Orange Book, but they are the last to expire; the other patents all expire in either July 2012 or March 2014. The second lawsuit to be announced on 5th May was the second in this batch to be filed by Abbott, this time in response to Watson Laboratories filing an ANDA for niacin extended release / simvastatin tablets. As with the other Abbott-related challenge, this is a product used in the treatment of high cholesterol. The product is protected by a number of patents, with expiration dates ranging between September 2013 and March 2018.

However, Watson's litigation news has not been all one way. On 7th May, Watson announced it had reached a settlement with Teva with regard to a second legal battle between the two, this time over an oral contraceptive. As with the other Teva battle, this revolved around a product which had originally been manufactured and marketed by Duramed. In this case, Watson has admitted that the patents being challenged are valid and enforceable, but in return has been granted a licence.

Of course, patent challenges are the bread and butter of generic firms, and whilst a sudden burst of lawsuits may appear to be bad news for Watson, the situation is also a sign that the firm's R&D has progressed well, enabling Watson to develop a number of new potential products for its pipeline. From the figures Watson has given, the products being challenged have a combined market value of nearly US$2.2 billion. As a generic competitor, Watson is only likely to see revenues worth much less than this, if all the challenges are successful, but nonetheless it will provide a good boost to the firm's fortunes. In the meantime unless settlements are reached out of court, the firm's lawyers will be busy in US District Courts in New Jersey, Delaware, Florida and Indiana.

Ian Platts – Editor, World Generic Markets

Strides Arcolab expands US presence

2010-05-10T15:03:00.000+01:00

India's Strides Arcolab has expanded its presence in the United States through its partnership with the Illinois-based Sagent Pharmaceuticals. The partnership was formed in late 2007 with the finalisation of an agreement to jointly develop, supply and market over 25 injectable products for the US. Under the terms of the agreement, Strides is responsible for the development and supply of the products, whilst Sagent is responsible for their marketing in the US. The first product under the agreement, azithromycin, was approved in March 2009; this was followed in September 2009 with the approval of adenosine. Approval number three was in February 2010, for labetalol hydrochloride. The agreement now appears to be gaining momentum: April 2010 saw approvals for granisetron, mesna injection and metoprolol, with a tentative approval for adenosine in new dosage strengths.

Strides' partnership with Sagent is not its only agreement covering the US, nor was it the first. Strides has made partnering a key element of its business strategy. Asides from its agreement with Sagent, Strides also has a joint venture serving the US which it formed with another Illinois-based firm, Akorn. The 50:50 joint venture was created in 2004; similarly to the partnership with Sagent, Strides is responsible for developing, manufacturing and supplying products to the joint venture, whilst Akorn is responsible for sales and marketing on behalf of the joint venture. This agreement saw 20 injectable generic drugs earmarked for development; the ANDA for the first product was filed in April 2006. By October 2006, the joint venture had filed ten ANDAs, and the two firms expanded the agreement to cover 29 products in December 2007. Akorn-Strides' first ANDA approval, for keterolac tromethamine, was approved in 2007. Since then, the joint venture has had eight products approved, with the most recent, vancomycin, gaining approval in December 2008 and being launched in April 2010.

In total, Strides claims to have partnership agreements with more than ten of the world's top 50 pharmaceutical companies in Australia, South Africa, Europe and the US. The firm has certainly been busy so far in 2010. Perhaps the most notable deal has been its collaboration with Pfizer's Established Products Business Unit, which was signed in January. Pfizer will commercialise sterile injectables supplied by two Strides joint ventures, Onco Laboratories and Onco Therapies. The other partner in the Onco joint venture is South Africa's Aspen Pharmacare. In March, Strides and Aspen announced a restructuring of their arrangements related to these two oncology joint ventures, with Aspen selling its 50% ownership to Strides for US$117 million, making Strides the sole owner. At the same time, Strides entered into another understanding with Aspen to acquire the South African firm's facility in Campos, Brazil, for a consideration of around US$75 million. Campos is a speciality injectable business; Strides' agreements with Sagent and Akorn both revolve around injectables, highlighting the importance of this market niche to Strides. Also in March, Strides made a non-binding and conditional proposal for a potential acquisition of all the shares of Ascent Pharmahealth, an Australia and Singapore-based generic, consumer skincare and OTC supplier with a customer base in Australia and Asia. Strides is currently the largest shareholder in Ascent, currently controlling around 57% of Ascent's ordinary share capital. As yet, the proposal has not produced any concrete agreements, and there is no certainty that it will. Ascent had been known as Genepharm Australasia, and in 2008, Genepharm acquired Strides' Australian and Asian businesses, ultimately providing Ascent's initial Singapore link; this deal looks to be coming full circle. Interestingly, in October 2009, Ascent entered into a distribution and services agreement with Pfizer, a deal which mirrored Strides' own agreement with Pfizer this year, and suggests the influence Strides has had over Ascent. Strides certainly seems to be developing a reach that goes beyond the company's appearance on paper.

Ian Platts – Editor, World Generic Markets

Glenmark advances in the US and Europe

2010-04-23T15:37:00.000+01:00

March and April have proved to be busy months for the India-based firm, Glenmark Generics. On 11th April, Glenmark reported that it had settled pending patent litigation with GlaxoSmithKline regarding Glenmark's generic equivalent of the pharmaceutical giant's atovaquone and proguanil hydrochloride product, Malarone. Glenmark believes it is the first company to file an ANDA with a Paragraph IV certification for this product, and so will be entitled to the 180-days marketing exclusivity allowed under the Hatch-Waxman Act, once approval for its version is given. The patent litigation commenced in August 2009 in the US District Court for the District of Delaware; the settlement will enable Glenmark to launch its version in the third quarter of 2011, well before the expiration of the three patents in the FDA's Orange Book covering the product. All three expire on 25th November 2013, but all three have additional paediatric exclusivity periods until 25th May 2014. A paediatric dosage version of the product forms part of GlaxoSmithKline's NDA, but Glenmark is not challenging this version. Following on from its US approval for ropinirole in February 2010, on 7th April 2010, Glenmark announced that it had gained UK approval for the drug. The product, a generic equivalent of GlaxoSmithKline's Requip, is indicated for the treatment of restless legs syndrome.

Asides from its entanglements with GlaxoSmithKline, Glenmark has also had two other ANDAs approved in March and April in the US. On 26th March, its ANDA for 0.005% calcipotriene ointment was approved. The product, a generic equivalent of Leo Pharmaceuticals' Dovonex ointment, is indicated for the treatment of plaque psoriasis in adults. Leo's version is no longer marketed in the US, having been discontinued for reasons of commercial viability in April 2007. Glenmark appears to have the only marketed ointment version of the drug in the US; however, the fact that the branded version was discontinued for commercial reasons raises questions. Leo currently markets topical cream and solution variants of Dovonex; three generic versions of the topical solution variant are also marketed, by Tolmar, Hi-Tech Pharmacal and Nycomed. A few days later, on 1st April, Glenmark announced FDA approval for its 7.5 mg and 15 mg moexipril hydrochloride tablets. The product is a generic version of Schwarz Pharmaceuticals' Univasc, used in the treatment of hypertension. Branded revenues for the drug appear to be relatively small, and Glenmark's version joins long-established versions marketed by Teva Pharmaceutical Industries, Paddock Laboratories and Apotex. Glenmark noted that this approval complemented an approval for moexipril hydrochloride and hydrochlorothiazide, which was gained on 17th March 2010. On 31st March, Glenmark reported that NDAs for oxycodone hydrochloride capsules and liquid solution had been submitted by its partner, Lehigh Valley Technologies, to the FDA. The FDA has now begun reviewing the applications. Plenty of versions, both branded and generic, of oxycodone are currently marketed in the US, but these appear to all be in tablet form, which would perhaps explain why Lehigh has filed an NDA rather than an ANDA. Glenmark's partnership with Lehigh goes back to 2006, with an agreement covering two unnamed liquid generic pharmaceutical products. This was then extended some months later with an agreement covering another seven products for the US market.

However, the period has not been all plain sailing for Glenmark. On 16th March 2010, the FDA announced that it had ordered the firm to stop marketing unapproved nitroglycerin tablets. The FDA sent a warning letter requiring the tablets to be removed as part of the FDA's Unapproved Drugs Initiative, and gave Glenmark 15 days to respond with a discontinuation plan, and 90 days from the date of the letter to cease manufacturing. It is likely that Glenmark's ultimate response will be to file an ANDA for its version, in order to be able to bring it back to the market.

Ian Platts – Editor, World Generic Markets

AstraZeneca enters generics agreement with Torrent Pharmaceuticals

2010-04-09T09:42:00.000+01:00

AstraZeneca has announced that it has entered into a licence and supply agreement with India's Torrent Pharmaceuticals. The firm has been vague on details, but said that the agreement would cover 18 products in nine countries, with the option to expand the agreement to cover more products and more countries. The countries are described as being emerging markets, which AstraZeneca believes will contribute around 70% of pharmaceutical industry growth in the next five years. The firm added that branded generics in these markets account for around 50% by value. The agreement will see Torrent manufacture and supply a portfolio of generics to AstraZeneca for which Torrent already has licences.

Exactly which countries AstraZeneca is referring to as emerging markets is open to debate, but Torrent claims a presence in a number of markets around the world. Included in these are African operations, including Zimbabwe, Kenya, Uganda, Nigeria, Ghana and South Africa. The firm claims it has 355 product registrations covering 14 countries in Africa, where it has seen revenues double since 1999/2000. Torrent also has made inroads into the Middle East, entering an agreement with a local producer in Saudi Arabia, and gaining approvals in Kuwait, Oman and Libya. The firm also has an eye on other markets in the Middle East, including Egypt, Syria and Jordan. Operations in Asia include a presence in Sri Lanka, Vietnam, Burma and the Philippines. Torrent also has a subsidiary in Brazil. Clearly, Torrent has developed a strategy of establishing commercial operations in the parts of the world that can be considered as emerging markets, which AstraZeneca will be well placed to exploit.

In making this agreement with Torrent, AstraZeneca is following in the footsteps of other large multinational innovator companies. Most notable in recent months has been Pfizer, which has entered into a series of agreements with Indian generic firms, similarly to AstraZeneca's tie-up with Torrent. Pfizer's agreements are the result of something of a change of heart for the firm, which until recently has been staunchly anti-generic in its outlook, despite the generally down-played existence of its Greenstone subsidiary, which produces generics. The firm has developed an Established Products Business Unit, specifically set up to exploit the international demand for generics; the shift in Pfizer's thinking perhaps underscoring the financial difficulties being faced by large innovator firms during globally economically constrained times.

Perhaps this is also the basis for AstraZeneca's similar change of heart. AstraZeneca has a stated aim to increase its penetration of emerging markets, although this is not specifically through generics. As with Pfizer, AstraZeneca's relationship with the generic industry has been somewhat fraught up until now. The firm's bitterly-fought battle to keep generic omeprazole off the global markets for as long as possible at the turn of the current century was something of a case study in aggressive legal tactics and market manipulation, and AstraZeneca was able to stave off the inevitable, and prolong its monopoly on the drug for some time past the expiration of the basic patents. The firm has not had a generics subsidiary, but has often reached settlements with generic firms in patent challenges, and in recent years has also fought generic competition by entering into authorised generic agreements, taking advantage of an issue that has split the generics industry in the United States. This latest agreement, linking the firm with a generic manufacturer, coupled with Pfizer's similar recent moves, perhaps reveals a sea-change in outlook for the branded industry.

Ian Platts – Editor, World Generic Markets

Ethex reaches the end of the road

2010-03-24T10:15:00.000Z

KV Pharmaceuticals has announced that it is ceasing the operations of its generics subsidiary, Ethex. The move came as a result of a settlement agreement with the US Department of Justice and the US Attorney for the Eastern District of Missouri, which saw Ethex plead guilty to two felony charges, earning a fine of nearly US$26 million. However, KV noted that Ethex was a distribution operation, whilst KV owns all manufacturing and related intellectual property, meaning that KV will be able to continue to operate in the generics sphere in time.

The legal moves should herald the end of a very difficult period for KV, which has threatened to end the firm's existence. In May 2008, KV received complaints from a pharmacy in California and a distributor in Canada of oversized morphine sulphate products. In response, KV recalled specific lots in June 2008; that month Health Canada also issued a warning to consumers not to use the ratiopharm product, ratio-morphine, which was supplied by KV. KV's production began to unravel; in December 2008, the firm voluntarily suspended all shipments of FDA-approved drug products in tablet form, in order to allow the firm to review its manufacturing and quality systems. As part of this, Ethex recalled a single lot of hydromorphone tablets; as with the May 2008 complaint, the issue was one of oversized tablets. The FDA announced an inspection the same month.

This was followed by an announcement in January 2009 that the firm had voluntarily suspended the manufacturing and shipping of all of its products, with most products being recalled. The recall was initiated because the products may not have been manufactured under cGMP conditions. Adding to the firm's problems, in February 2009 it announced the loss of 700 jobs, as KV's lack of income began to bite. However, the situation began to stabilise in March 2009, when the firm announced it had entered into a consent decree with the FDA, giving KV an avenue to restart production once the conditions of the consent decree had been met.

The charges Ethex faced revealed more to the situation. When the May 2008 complaints arose, Ethex was required to submit Field Alerts to the FDA, which are required whenever a manufacturer receives information concerning a significant chemical change in a distributed product. KV did indeed issue a Field Alert for the morphine product, but the Department of Justice alleged that in the internal investigation sparked by this, the firm discovered incidences of other oversized drugs, including dextroamphetamine sulphate and propafenone. The DoJ alleged that these did not lead to Field Alerts being raised, a charge that Ethex has accepted.

In total, Ethex has been fined US$25.8 million in response to its guilty plea, and KV has announced that Ethex will cease operations. The firm is clearly hoping that ending Ethex will put a line under the issues it has faced, and give the firm a clean break to rebuild its operations and reputation. The manufacturing issues that ultimately led to the felony charges are still in the process of being resolved; but the FDA's consent decree should see the firm emerge from under this cloud in time. The news that Ethex wilfully hid the extent of the problems from the FDA, and thus from the public, was a more difficult stain to remove, and so terminating Ethex was perhaps KV's only real option to restore public confidence in its products once production restarts. The firm has sailed perilously close to disaster, but the settlement now announced should hopefully see it move it towards calmer waters.

Ian Platts – Editor, World Generic Markets

FDA pushes for generic drug user fees

2010-03-09T09:42:00.000Z

FDA Commissioner, Dr Margaret Hamburg, has made an appeal for the introduction of generic drug user fees in order to bring new funding to the FDA's Office of Generic Drugs (OGD). Speaking at the Generic Pharmaceutical Association (GPHA)'s Annual Meeting, Dr Hamburg admitted that the backlog of pending applications was not acceptable, acknowledging that it would soon hit the 2,000 mark, and argued that the situation could only be resolved with the introduction of user fees. In its budget request for FY2011, the FDA proposed that introducing generic drug user fees would add just over US$38 million to its coffers. This, the FDA believes, would go a long way to reducing review times. By the end of the first five years following the introduction of user fees, the additional money would enable a complete review and response for an estimated 80% of applications within 12 months of receipt.

The GPhA responded to the plea for a user fee programme by saying it would welcome re-engaging in negotiations over the issue. The GPhA has generally been cool on the proposal, as its latest response shows. This is not really surprising, as the user fee proposal would of course mean hitting generic firms financially, with firms then having to try to either pass the costs on to consumers by raising prices in an already highly competitive market, or else absorbing the costs themselves, leading to reduced margins and profitability on sales. However, a particular sticking point has always been getting value for money, and ensuring that the increased costs will actually lead to faster approval times and a regulatory process that flows smoothly. The branded industry already has a user fee programme in place; in previous years when the idea of generic drug user fees has been mooted, the GPhA and others have responded by pointing out that unlike the branded industry, the generic industry faces other delays in the form of legal challenges from the branded industry. As a result, introducing user fees may not make a difference to approval times, as generic companies will still have to fight time consuming legal battles. The GPhA has said in the past that it would be willing to go down the user fee route if there was certainty that it would lead to reduced delays. This is a concern that Dr Hamburg has picked up on; in her address, she noted that a fee programme would have to include measurable results, something which has certainly been received positively by the GPhA. Of course, what those measurable results may be, and whether the generic industry agrees with them, remains to be seen.

One criticism that has been raised about a user fee programme in general is that it blurs the line between the industry and its regulators, a criticism that has been levelled at the branded industry's user fee programme. If the industry is paying the regulators, the danger will always be that with the money will lead to undue influence, especially if the regulators need to show they can provide value for money. Whether it is possible to safeguard against this is a particularly tricky issue.

The issue of introducing generic user fees is not new, and has been rattling around the federal government for some years. It is as uncertain now as it has ever been whether or not such a programme will be introduced. Of course, the US is currently in the throes of a bitterly divisive battle over reforming the healthcare system as a whole, which has so far resulted in a stalemate with the legislative bills introduced to Congress thus far unlikely to be passed. Given the political atmosphere in Washington at the moment, any attempt at reform may have to be scaled back and introduced in piecemeal fashion. It is quite possible that a user fee programme may get lost in the process.

Ian Platts – Editor, World Generic Markets

Watson hits 2010 running

2010-02-22T14:55:00.000Z

Watson Pharmaceuticals has had a busy start to 2010, with a number of events underscoring its future plans. On 28th January 2010, Watson announced that it had completed its acquisition of Eden Biopharm, in a deal worth some US$15 million. The acquisition of the Liverpool, UK-based Eden was part of Watson's larger acquisition of the Arrow Group; Arrow had owned a 36% stake in the firm, a biopharmaceutical development and contract manufacturing company. Eden will become part of Watson's Global Brands Division, maintaining its contract services model whilst providing Watson with biopharmaceutical development and manufacturing capabilities; something which must surely have been a bonus to Watson in its plans to acquire Arrow. A week before, Watson held an Investor Day meeting in New York in which the firm provided an overview of its expanded global operations, during which the firm reported that it expected 2010 revenues to be worth around US$3.5 billion, substantially up on the US$2.5 billion it reported for 2008. Much of the boost will come from the acquisition of Arrow, which Watson is to use to reshape its generics business. The acquisition will give Watson a presence in a number of international markets, whereas before the firm has concentrated its business in the United States. Watson believes its generics business will account for sales worth some US$2.3 billion in 2010.

On 1st February 2010, India's Indoco Remedies announced that it had finalised a generic product development alliance with Watson to develop and manufacture a number of sterile products for the US market. Indoco did not comment on what those products were, but noted that they formed a sizeable chunk of revenues. Indoco will develop, manufacture and supply the products, whilst Watson will deal with the regulatory issues to get them approved, and will then market, sell and distribute them across the US. The agreement was a significant deal for Indoco, giving the firm an alliance with a sizeable generic company. However, it was also an interesting move for Watson: forming an alliance with an Indian firm is not a common occurrence for the firm, and is perhaps a taster of the direction Watson will be moving in.

On the same day, Watson announced that it had entered into a licensing agreement with HRA Pharma through which Watson would become the commercial partner for ulipristal acetate in the US. The product is already marketed by HRA in Europe, and has been filed in the US as an NDA. Watson will make payments to HRA, and the firm commented that the move fitted in with its strategy to expand its position in the women's healthcare market. The agreement will no doubt also add to Watson's innovative products division, a much smaller part of the company than its generics division, but nonetheless significant for the firm.

In a related vein, on 8th January 2010, Watson filed an ANDA with the FDA for a generic version of Duramed's oral contraceptive, LoSeasonique. The ANDA was filed towards the end of 2010, and has led to a patent infringement lawsuit being filed against Watson in the US District Court for the District of New Jersey. Duramed was part of Barr Pharmaceuticals, which of course is now part of Teva, leading to the spectacle of one generic company suing another for alleged patent infringement. This is potentially one of two lawsuits Watson will start the New Year with. On 19th January 2010, Endo Pharmaceuticals announced that it was in receipt of notification that Watson had filed an ANDA for a generic version of Lidoderm, a lidocaine topical patch. At the time of writing, Endo had yet to say whether it would file a lawsuit against Watson as a result, but it seems that this will be a likely course of action. Watson has certainly started the year with a sense of determination.

Ian Platts – Editor, World Generic Markets

Pfizer and Strides collaborate on generics; Luitpold acquires PharmaForce

2010-02-05T16:01:00.000Z

On 6th January 2010, Pfizer and Strides Arcolab announced a new collaboration, through which Pfizer will commercialise off-patent sterile injectable and oral products in the US, supplied by Strides and two of Strides' joint ventures with South Africa's Aspen Pharmacare: Onco Laboratories and Onco Therapeutics. The collaboration is expected to deliver 40 off-patent products, many of which will be oncology therapeutics, and will bring the total number of products in-licensed by Pfizer's Established Products Business Unit to more than 200.

Pfizer's Established Products Business Unit was created in 2008, and marks something of a departure in Pfizer's thinking about generics, bringing its own generic operations more out of the shadows. Pfizer has previously been known to take an opposing line to generics, although its acquisition of Pharmacia had given the firm Greenstone, a generics subsidiary which Pfizer re-launched in 2004 to manufacture and market Pfizer brands that had lost patent protection. However, the firm seldom talked about Greenstone, even after the re-launch. The Established Products Business Unit similarly had a muted debut, but its efforts to strike deals with generic companies are a new departure for Pfizer. Interestingly, the unit has focused on dealing with Indian generic companies: before Strides Arcolab, the unit signed deals with Aurobindo Pharma and Claris Lifesciences.

Also on 6th January, Luitpold Pharmaceuticals' acquisition of PharmaForce was announced. Luitpold, these days based in New York and a US company of Daiichi Sankyo, is also the owner of American Regent. Luitpold was founded in 1910 in Bavaria, Germany, but established itself in the United States in 1978. It was sold to what was to become Daiichi Sankyo in 1991. Of course, one of Daiichi Sankyo's more recent acquisitions was that of Ranbaxy in 2008, making the Indian giant a stable-mate of Luitpold. Luitpold develops both branded and generic products, with its most recent generic approval being for caffeine citrate in November 2009. The company also provides contract manufacturing services to other pharmaceutical firms.

PharmaForce was founded in 1999, and is a manufacturer, developer and marketer of sterile products and generic injectable products. The firm is headquartered in Columbus, Ohio, and should prove to be a good fit for Luitpold, which noted that the acquisition would further diversify its product portfolio and generate additional growth. The acquisition will also give Luitpold three large facilities.

Ian Platts – Editor, World Generic Markets

Taro / Sun dispute boils over

2010-01-22T16:47:00.000Z

The long-running bitter spat between Taro Pharmaceutical Industries and Sun Pharmaceutical Industries boiled over during December 2009, as Taro prepared for its Annual General Meeting on 31st December 2009. The two companies have been engaged in a bitter dispute for over 18 months, after Sun entered into negotiations to acquire Taro. The bid began amicably enough, with Sun forwarding a large sum of money to Taro in order for the Israel-based firm to avoid going bankrupt, and Sun's attached bid price for Taro's shares was met with approval from Taro's Board of Directors. However, after that, events became very sour, as Taro's fiscal position improved and the company claimed that Sun's offer was too low. What began as a friendly takeover bid has become increasingly fraught, with the issue being brought to Israel's Supreme Court; the legal issues remain unresolved.

Prior to the AGM, Taro's Chairman, Barrie Levitt, sent a letter to the firm's shareholders, containing the usual encouragement to vote at the AGM. However, the letter, along with a second letter sent out a few days later, took the opportunity to warn shareholders of what Taro believed was Sun's attempts to take over the firm by more stealthy means, through voting down the Taro Board's recommended nominees. Mr Levitt claimed in his first letter that Sun had been trying to take Taro over by every conceivable means bar one: offering a fair price to shareholders for the firm's shares. By way of a warning should Sun succeed, the letters pointed to Caraco Pharmaceutical Laboratories, the US-based company that is majority-owned by Sun. Caraco had a difficult year in 2009, with the FDA shutting the firm's manufacturing plant down and seizing its products; Taro saw this as an example of Sun's management inabilities.

Naturally, Sun refuted Taro's allegations. In a letter sent to Taro's shareholders by Dilip Shanghvi, Sun's Chairman and Managing Director, itself rather an unusual move, Sun claimed that it had been wronged by Barrie Levitt and his family, with complicity from Taro's Board of Directors, in moves which were designed to prevent Taro from carrying out its contractual obligations. Sun's letter countered Taro's allegations about Caraco, and instead turned attention to Taro's financial situation. The letter noted that Taro has been unable to file valid financial data for some time. Sun claimed Taro's share price had decreased by 86% over the past six years, resulting in the loss of US$1.6 billion of shareholder value. In contrast, Sun said that its share price had increased by 406%, adding US$5.1 billion in value for Sun's shareholders. Taro, on the other hand, claimed that its results since 2007 had seen a turnaround and exceptional growth in Taro's sales and profitability.

What were the other shareholders to make of this spat? Predictably for this battle, their response was unclear. Following the AGM, both Taro and Sun claimed that shareholders had more or less voted in their favour. Taro was able to report that shareholders approved the election of all the Directors who had been up for election. However, shareholders had not approved the appointment of nominated external Directors. Sun in turn claimed that the shareholders had sent a decisive message that they would no longer welcome the leadership of Mr Levitt and his Board, seeing the non-vote of the external Directors as evidence. Despite the overall approval, Sun argued that in fact 78% of Taro's minority shareholders had voted against the continued service of current Directors, and claimed that shareholders holding over two-thirds of Taro's equity had voted to remove the Levitt family and their associates. However, this had not been reflected in the overall vote because Taro's capital structure gave the Levitt family extra voting power. In a further move, in January 2010, Sun sent a letter to Taro's Directors threatening legal action if they did not respond to wishes of Taro's minority shareholders and reverse their course of action. Clearly, for these two firms, the bitter claims and counter-claims continue. Perhaps Israel's courts will be the only entity that can resolve their differences.

Ian Platts – Editor, World Generic Markets

Watson completes Arrow acquisition

2009-12-21T14:48:00.000Z

Watson Pharmaceuticals announced on 2nd December 2009 that it had completed its acquisition of Arrow Group. Watson announced that it had entered into a definitive agreement to acquire Arrow on 17th June 2009, in a deal that would cost US$1.75 billion in cash and stocks. Watson commented that it believed the transaction would be accretive to cash earnings per share in 2010, as a result of Watson needing a relatively small amount of additional debt to complete the deal. Watson added that the acquisition would create a company with over US$3 billion in annual revenues. Watson's total revenues in the year ended December 2008 were worth over US$2.5 billion, and the firm commented that Arrow's revenues in 2008 were worth over US$650 million.

Arrow Group was founded in 2000, and Watson has commented that it is one of the fastest growing generic pharmaceutical companies in the world, with a compound annual growth rate of 67%, taking its revenues from US$18 million in 2001 to the US$650 million reported last year. The firm has three factories, in Canada, Malta and Brazil, with the first two being FDA and EU-approved. Over the past seven years, Arrow has invested more than US$320 million in product research and development and markets over 100 molecules including more than 50 internally developed products. Arrow claims 60 products developed in six years, with 55 European submissions and 50 in the US. Watson noted that Arrow's product development activities are supported by state-of-the-art R&D centres in Melbourne, Australia, and Toronto, Canada. Watson added that as a result of the acquisition, it was also acquiring a 36% ownership interest in Eden Biodesign, a company which provides development and manufacturing services for early-stage biotech companies. This will provide Watson with a foundation for generic biologics.

Arrow has a presence in the UK, Ireland, France, Germany, Poland, Scandinavia, Slovenia, Malta, South Africa, India, China, Australia, New Zealand, Brazil, the US and Canada. Its US presence is in the form of Cobalt Laboratories, which has gained a number of ANDA approvals in recent years, including three first-time generics: acarbose tablets in May 2008; and topiramate tablets and capsules in March 2009 and April 2009, respectively. However, it is likely to be Arrow's international operations that will be of most interest to Watson. The firm had previously considered its operations to be based predominantly in the US and India, with its key commercial market being the US, and so the acquisition of a company with a presence in so many other countries will increase Watson's scope considerably. So too will the included 36% stake in Eden Biodesign, through which Watson clearly sees scope for entering the biosimilars market. With the growing likelihood of a regulatory biosimilars pathway emerging in the US, it makes sense for a company the size of Watson to seek ways to gain a toehold in this arena before the competitive floodgates are opened.

Ian Platts - Editor, World Generic Markets

AARP, PhRMA clash over drug pricing

2009-12-08T12:08:00.001Z

On 16th November 2009, AARP issued a report that found that manufacturer prices for brand name drugs had risen over the last year, despite a negative general inflation rate. By contrast, the report also found that generic drug prices had fallen over the same period. The report looked at drugs widely used by Medicare Part D beneficiaries; in the case of brand name drugs, the report looked at 219 products, and found that 96% of these had seen price increases, with the remaining 4% seeing no change. Of the top 25 products, as ranked according to prescriptions processed by the Medicare Part D plan provider during 2006, price rises ranged from between 4.8% and 19.7%. The 4.8% rise was for the fourth-ranked drug, Wyeth's Protonix 40 mg tablets (pantoprazole sodium), whilst the 19.7% rise was for Boehringer Ingelheim's Flomax 0.4 mg capsules (tamsulosin hydrochloride), which was ranked at number 17. The top-ranked drug was AstraZeneca's Nexium 40 mg capsules (esomeprazole), which saw a rise of 7.1%, whilst the second-ranked drug, Bristol-Myers Squibb's Plavix 75 mg tablets (clopidogrel bisulphate) saw an increase of 8.2%.

With regard to generics, although AARP's report saw prices decreasing by an average of 8.7%, the breakdown of the top 25 generics paints a slightly different picture. Only four of the top 25 saw any price changes, but in this case, all four had significant price falls. The four were all from Teva Pharmaceutical Industries, and were: simvastatin 20 mg tablets (ranked at number one), which saw a price drop of 77.7%; simvastatin 40 mg tablets (ranked at number two), which saw a price fall of 79.8%; metformin 500 mg tablets (ranked at number four), which saw a drop of 85.2%; and pravastatin 40 mg tablets (ranked at number 10), which saw a drop of 68.9%. Teva accounted for nine of the top 25 drugs, with Sandoz accounting for another nine, and thus between them accounting for 72% of the top 25.

Unsurprisingly, PhRMA, the Pharmaceutical Research and Manufacturers of America organisation, was unimpressed with AARP's report and challenged its findings. Accusing AARP of having a 'skewed view of the world', PhRMA began by arguing that looking at drug prices overlooked the savings they provide in the form of fewer medical procedures needing to be carried out and increased productivity through better prevention and management of diseases. However, turning to the price statistics themselves, PhRMA argued that AARP had taken a selective view, which did not take into account discounts and rebates for brand name drugs. PhRMA noted that the Medicare Trustees had reported that rebates in the Medicare drug prescription programme had reached 20% to 30% for many brand name drugs, and added that there was a 50% discount companies would provide to most seniors and disabled Americans who had reached the 'donut hole' in the Medicare Part D programme. PhRMA was able to provide data from IMS, the Centers for Medicare and Medicaid Services (CMS) and the Congressional Budget Office (CBO) which countered AARP's claims. IMS data showed that prescription drug spending growth had fallen to 1.3% in 2008, whilst the CBO found that drug expenditures grew by 3.2% between 2004 and 2007.

The charges and counter-charges between AARP and PhRMA shows above all that when it comes to healthcare costs, the old maxim remains the case that there are lies, damn lies and statistics. Both organisations can be accused of being selective in their figures, with AARP taking figures that, in not taking into account deals and rebates, provide arguably misleading results. For its own part, PhRMA can also be accused of the same, using figures spread over longer time frames than the AARP report. As is often the case, the truth of the matter no doubt lies somewhere between the two.

Ian Platts, Editor, World Generic Markets

Oxfam / HAI criticise EU for threatening access to medicines

2009-11-24T14:20:00.001Z

Oxfam and Health Action International issued a report in late October 2009 which alleged that the European Union was contradicting world trade rules by pandering to the interests of Big Pharma ahead of the needs of people in less developed countries to gain access to essential medicines. The report, Trading Away Access to Medicines: How the European Union's trade agenda has taken a wrong turn, argues that the EU has become guilty of double standards. It notes that the EU Member States and the European Commission have taken steps to improve access to health services in developing countries, and has acted to reduce the price of medicines within the borders of the EU, but argues that the EU now has a trade agenda which acts directly against these same objectives in developing countries. The report claims that the EU is pushing for a range of intellectual property measures that would support the commercial interests of the pharmaceutical industry whilst damaging the opportunities for innovation and access to medicines in developing countries. The report goes so far as to say that the EU's demands exceed those pursued by the Bush administration in the United States, whose intellectual property policies were criticised for their detrimental effect on developing countries.

In the report, the two organisations urge that the EU adopt a number of positions, including honouring commitments under the Millennium Development Goals, the Doha Declaration on TRIPS and World Health Assembly resolutions on innovation and access to medicines; and ensuring that its trade policy is in line with its development objectives, particularly with regard to access to healthcare and medicines. With regard to intellectual property, the EU should not misuse free trade agreements in order to implement TRIPS-plus rules which place conditions beyond the scope of the TRIPS agreement and its application to medicines in order to extend monopoly protection and limit access to medicines. The EC should stop exerting pressure on governments that attempt to introduce safeguards to protect and promote public health; and should amend its counterfeiting regulation to ensure that it does not have a detrimental impact on developing countries. The EU should also ensure that the Anti-Counterfeiting Trade Agreement (ACTA) does not set a new global standard for intellectual property rules that will impede access to medicines for developing countries; and should identify and support measures to improve access to generic medicines in developing countries, including the UNITAID patent pool for HIV / AIDS drugs.

The report also urges the EU that with respect to research and development, European donors should scale up financial contributions to R&D to address diseases that disproportionately affect people living in developing countries. The EU should also support Product Development Partnerships designed to deliver affordable and effective new products, and should continue building R&D capacity in developing countries. It should also support the implementation of the WHO's Global Strategy and Plan of Action on Public Health, Innovation and Intellectual Property, and support the Expert Working Group in its efforts to find new models of innovation. Finally, the EC should take measures to ensure that specific initiatives meet real health needs, and that the EU's regulations on children's medicines can also be to the benefit of developing countries.

As can be seen, the report has a long list of recommendations, and many of them are not new for Oxfam. In the past, however, many of these allegations, such as those regarding TRIPS-plus free trade agreements, have been labelled at the US, and it is interesting that this has now changed. Whether the EU will be any more willing to adopt these recommendations than the US is unlikely. However, there is no doubt that groups such as Oxfam will not stop pushing for change.

Ian Platts, Editor, World Generic Markets

Of patent pools and regime change

2009-11-10T11:38:00.000Z

The growing impetus to amend Canada's Access to Medicines Regime (CAMR) has gathered pace, with Canadian Senate committee hearings into Bill S-232, which aims to streamline the regime, now underway. The hearings' opening statements have thrown up an interesting question over whether or not the existing act has actually failed. Critics – of which there are many – of CAMR in its current guise argue that the regime has clearly failed, pointing to the fact that in the five years in which the act has been in law, only one company has been able to use it. That company was Apotex, which used the act to provide a very limited run of antiretrovirals to Rwanda, in two shipments in September 2008 and September 2009. In total, around 14 million doses of a fixed-dose combination product were shipped. However, Apotex has been very vocal about the difficulties the regime produced, and has added that it would not use the process again in its current form, throwing its weight behind efforts to amend CAMR, with the added carrot that it would use an amended regime to produce paediatric antiretrovirals. However, on the other side of the fence, supporters of the current regime point out that it has been used successfully, even if only once. Furthermore, in doing so, this is the only such access to medicines legislation in the world that has worked. The Senate committee asked the question what reasons are behind the regime being so little used. The difficulties in using the regime are certainly one possible answer, and another possibility is that Canadian manufacturers simply cannot compete on price with, for example, Indian or Chinese manufacturers. A further possibility raised in the hearings' opening was that other factors have played a part, particularly the Global Fund to Fight HIV/AIDS, which has provided funds of some US$16 billion. The issue that Canada will need to decide is should CAMR be amended, and if it is, will this make a difference globally?

Another possible route for increasing access to essential medicines is that of developing a patent pool, an idea which also saw a boost recently, with the UK's government indicating support for this measure. The basic aim of a patent pool is that all the patents for essential medicines are made available collectively, enabling generic firms to use them to produce drugs for developing countries, paying the patent owners royalty rates in return. UNITAID has decided in principle to establish a voluntary patent pool for medicines in a decision made in July 2008, but it is a scheme that appears to have gained little traction since. However, in a speech on 12th October 2009, the UK Minister for International Development, Mike Foster, said that the UK government supported UNITAID's efforts, according to Knowledge Ecology International. Mr Foster's comments came a few weeks after Médecins Sans Frontières launched an email campaign targeting nine brand name companies, which between them hold patents for 21 antiretrovirals.

Both of these initiatives are efforts to crack the same problem. However, it is worth bearing in mind that these are not the only options. The branded companies themselves have also made efforts to provide essential medicines to developing countries, providing drugs at cost, or even donating them. Cynics may argue that this is little more than window-dressing, maintaining good public relations, and indeed may well be right, but it does surely reflect an expectation, seen in all these efforts, that developing countries need to be given every option to access essential medicines in order to save the lives of millions.

Ian Platts – Editor, World Generic Markets

PEPFAR reaches 100th approval

2009-10-26T14:11:00.001Z

The US Department of Health and Human Services has marked the recent approval of the 100th antiretroviral drug to be approved through the PEPFAR programme. Ironically, by the time the FDA marked the event, the 101st product had already received approval. PEPFAR, the President's Emergency Plan for AIDS Relief, was introduced by President Bush in 2003 and has a remit to work in partnership with host nations through to fiscal year 2013 to support treatment for at least three million people, prevention of 12 million new infections and care for 12 million people, including five million orphans and vulnerable children. The programme allows the FDA to review antiretroviral drug applications on an expedited basis, with the aim of fast-tracking the approval of drugs in order for them to be used in developing countries, rather than the US. Most applications are generic, and most approvals are tentative, as they are for drugs which are still protected by patents in the US, and thus the generics cannot be marketed in the US.

A look at the drugs approved produces an interesting picture. The first to be approved was Barr Laboratories' didanosine capsules, which gained tentative approval on 3rd December 2004. This proved not only to be Barr's first and last drug approved under the PEPFAR programme, but also stands out as the only drug to enter the programme from an American company. In total, 13 companies have provided the 101 drugs, and of those 13, ten are Indian firms. Asides from Barr, the other two firms which are not based in India are Aspen Pharmacare, based in South Africa, and Huahai US, based in China. One of the Indian firms listed, Matrix Laboratories, is now majority-owned by the US' Mylan, but was an entirely Indian firm at the time many of its products were submitted and approved. Matrix also took the honours for both the 100th and 101st drugs to be approved under the programme. The dominance of Indian firms in the lists underscores the role India has carved out in producing generic antiretrovirals, and included in the list are some of the country's largest generic pharmaceutical manufacturers, including Ranbaxy Laboratories and Cipla, as well as smaller companies, such as Aurobindo Pharma, Emcure Pharmaceuticals and Hetero Drugs. Aurobindo has emerged as the company with the most drugs approved under PEPFAR, with 31 of the 101.

Quite why so few US generic firms have had antiretrovirals approved under the PEPFAR programme is curious. A quick look at the FDA's information for approved or tentatively approved antiretrovirals shows that, as with the PEPFAR programme, generic versions of these drugs are dominated by Indian firms, with only Barr and Roxane Laboratories standing out. The most likely reason is undoubtedly money. US firms will need to spend money to develop generic antiretrovirals, especially as many companies do not have any experience with antiretrovirals, and as most of these are still protected by patents in the US and thus cannot be marketed there, there will be no immediate prospect of returns. Of course, the patents will eventually expire, but at that point, home grown firms will have already lost the chance of marketing exclusivity to the multitude of Indian firms which have tentative approvals already; financial returns will therefore be minimal. However, neither the domestic nor international markets for antiretrovirals are getting any smaller, and whilst such drugs may not see the stellar returns promised by blockbusters such as fluoxetine has in the past, they may well provide a small but steady income, particularly in the US and other developed nations.

Ian Platts - Editor, World Generic Markets

Goldshield bidding war

2009-10-09T14:27:00.001+01:00

A bidding war broke out in September 2009 over Goldshield Group, the UK-based pharmaceutical and consumer health company. The battle is being fought out by two investment vehicles, AIT Investments and Midas Bidco.

Goldshield began life in 1991, gained its first marketing authorisation for a product it had developed itself in 1996, and floated on the London Stock Exchange in 1998. The Group was founded by two brothers, Ajit and Kirti Patel, along with a third partner, Shane Gogerly. In recent years, Goldshield was one of a number of companies to face investigations over alleged price fixing by both the Serious Fraud Office and the NHS. Although the cases ultimately collapsed, the investigations did see both Ajit Patel and Kirti Patel step down from the firm's Board in order to fight allegations levelled at them; Kirti Patel now occupies the position of Group Executive Director in the company. Perhaps ironically, given the legal battles the firm has faced, Goldshield's current Non Executive Chairman is Dr Keith Hellawell, who in previous years was a Chief Constable for two British police forces and in the late 90s was responsible for the UK's anti-drugs policy. For its most recent fiscal year, ended March 2009, Goldshield reported revenues worth £98.4 million (US$156.9 million), with profit after tax of £13.9 million (US$22.1 million). This was a significant improvement on the revenues of £84.9 million and profit after tax of £6.3 million reported for the previous fiscal year.

Ajit Patel is now involved in one of the parties bidding to acquire Goldshield, AIT Investments, which was the first to announce an offer. AIT describes itself as a newly-incorporated company formed by the Fuhrer family for the purpose of implementing the acquisition of Goldshield. The Fuhrers are an Israeli family which own and control the Neopharm group of companies, which market ethical pharmaceuticals and branded consumer healthcare products.

The other bidder for Goldshield is Midas Bidco, an investment vehicle set up by Goldshield's management team; involved in this bid is Goldshield co-founder, Kirti Patel; the two brothers are thus facing off over control of the company they set up and then had to withdraw from in order to fight the price fixing allegations.

AIT commenced bidding for Goldshield with an offer of 440 pence per share, valuing the company at some £162.1 million (US$257.1 million). In response, Midas announced it had put financial backing in place to allow it to make an offer above 440 pence per share. AIT hit back, raising its offer to 450 pence per share, valuing the company at £165.7 million (US$262.8 million). Bidco then upped its offer to 460 pence per share, making the firm worth £169 million (US$268.0 million). In the latest turn, AIT then increased its bid on 2nd October to 480 pence per share, which would value Goldshield at £176.8 million (US$280.4 million). At the time of writing, this is where the bidding rests. However, there is no doubt that the deal, which has pitched two brothers against each other, is not yet done.

Ian Platts - Editor, World Generic Markets

Grindeks looks to expand

2009-09-25T14:10:00.000+01:00

The Latvian firm, Grindeks has made a few announcements recently which reveal the firm is aiming to expand its business. On 19th August, the firm reported that it was considering establishing injections manufacturing in Latvia, and was looking at the territory of Riga Free Port as a possible site to construct a new plant, because of economic incentives and tax allowances offered there. However, the firm added that purchasing an existing plant would also be an option. This was followed on 7th September with an announcement that the firm was considering options to develop its ointment business. Here, Grindeks is looking at two possibilities: either move its existing operations in Tallinn, Estonia, to Latvia, or remain in Tallinn, and presumably develop the plant there. As yet, no decision has been made.

Grindeks has, in recent years, been undertaking an investment programme, and these recent announcements are in line with that. In January 2009, the firm opened a new final dosage forms plant; the firm commented that this had been the largest investment project in the company's history, with LVL9.1 million (US$16.8 million) invested over two years. It is anticipated that the new plant will increase manufacturing productivity and capacity substantially, to 1.5 billion tablets and 500 million capsules per year.

Additionally, in August this year, Grindeks also announced that it had introduced a new active pharmaceutical ingredient, ursodeoxycholic acid, used in the treatment of hepatic and gallstone diseases. The new API represents a new medical therapeutic group for the firm, and has been developed as part of a co-operation agreement with the German firm, Marenis Pharma; once again evidence of Grindeks' plans to expand. The firm also announced it had started construction on a new manufacturing unit with an investment of nearly LVL6 million (US$12.5 million), connected with the development of this API. This again is an important move for the company; Germany is a relatively unexplored territory for Grindeks, whose traditional markets have been those of Central and Eastern Europe, the Baltic States and the CIS. Although Grindeks has co-operated with Merck in Germany, its presence there has been limited. The development of new APIs is of course also significant. Despite the economic turmoil of recent months, Grindeks appears to still be on course to expand its horizons.

Ian Platts – Editor, World Generic Markets

Canadian manufacturers squabble over statistics

2009-09-08T10:36:00.001+01:00

Canada’s Patented Medicine Prices Review Board (PMPRB) has issued its Annual Report for 2008, leading to claims and counter-claims by the country’s generic and branded industry organisations. The Canadian Generic Pharmaceutical Association (CGPA) used the report to criticise the branded industry, noting that for the eighth year in a row, the branded industry had failed to reach its threshold of 10% of their Canadian revenues being ploughed into Domestic R&D spending; this having been a commitment made by the branded industry in 1987, with the adoption of amendments to the Patent Act. In response, Canada’s Research-Based Pharmaceutical Companies (Rx&D) has sought to play down the last eight years of failing to reach the target, arguing instead that its member companies’ total investments in R&D in Canada over the last 20 years has averaged more than 10% of sales. Of course, both sides are correct in their assertions, depending on how the data is analysed. It is worth noting also that the PMPRB’s report states that Rx&D members accounted for 89.4% of all reported R&D expenditures in 2008, with patentees reporting a total of C$1.3 billion (US$1.2 billion) of R&D expenditures.

However, whilst the overall average for the last 20 years is for over 10% of sales put into domestic R&D, the figures presented by the PMPRB’s report show that the branded industry only met and / or exceeded the 10% figure in eight years, between 1993 and 2000, whilst Rx&D member companies managed to meet and / or exceed the figure in ten years, between 1993 and 2002. Despite the occasional blip, the ratio figure has been falling since those years, having reached 8.1% for all patentees in 2008, and 8.9% for Rx&D members.

Rx&D brought attention to wider issues, noting that the PMPRB’s report also showed that whilst the Consumer Price Index climbed by 2.3% in Canada in 2008, prices for patented medicines rose by only 0.1% during the same period. The organisation added that over the past decade, prices for innovative medicines were around 7% below the international median. However, against that, the report also shows that Canadian prices were the third highest of seven comparator countries, behind only the US and Germany. However, the US was highest by some margin, skewing the figures somewhat.

The PMPRB’s report gives a detailed look at the state of the Canadian branded industry’s finances, but as always, its findings are open to interpretation of the statistics. The claims and counterclaims of both the branded and generic industries hold up when viewed in the right context, despite apparently being at odds with each other. Perhaps then, the value of the report is that it shows that both sides could do better.

Ian Platts - Editor, World Generic Markets

Oxfam's fears over ACTA and generics

2009-08-21T16:27:00.000+01:00

In a press release issued just before the fifth round of negotiations for the Anti-Counterfeiting Trade Agreement (ACTA) got under way in Morocco, Oxfam warned of its fears that the final agreement could lead to generic firms being subject to criminal prosecutions for sending generics to countries in need (see p. 4). However, the likelihood of such an outcome from ACTA is open to question. Of course, on the face of it, ACTA is not concerned with generic drug markets, or indeed the provision of legitimate drugs, whether branded or generic, to developing countries. According to the Office of the US Trade Representative, its roots lie in a desire to tackle the proliferation of counterfeit and pirated goods around the world. It sprung from preliminary talks in 2006 and 2007, with negotiations beginning in June 2008 involving Australia, Canada, the EU and its 27 member states, Japan, Mexico, Morocco, New Zealand, South Korea, Singapore, Switzerland and the US. The round of discussions in Morocco was the fifth round, with the next round to be held in Korea in November 2009. Negotiations are expected to be completed in 2010.

With regard to Oxfam’s fears, the organisation comments that the secrecy surrounding the talks raises fears that the interests of poorer nations will be ignored, and cites the EU’s recent seizures of generic medicines as evidence. Oxfam argues that the EU is taking the lead in pushing for a deal that would require all participating countries to increase seizures and prosecute companies which produce generics legally for sale in other countries. The organisation claims that this will include countries not directly involved in the negotiations, and notes that only two of the countries involved in negotiations are developing countries. Oxfam argues that this could encourage Big Pharma to file frivolous patents to maintain their monopolies.

The official line on the secrecy surrounding the talks is that this is an accepted practice during trade negotiations which allows views to be exchanged in confidence in order to arrive at a final consensus. The argument that multinational pharmaceutical companies would use the agreements to file ‘frivolous’ patents to prevent generics is questionable. Such a blatant attempt would be a public relations disaster, akin to the backlash seen with the South African patent laws debacle in 2001. It would also fly in the face of patent legislation seen in countries such as Canada, the EU and the US, which has sought to tackle such issues of evergreening. To be successful, ACTA will need to fit in with the existing TRIPS framework; the WTO has consistently been at pains to insist that TRIPS would not get in the way of sending generics to countries in need. However, it is fair to note, as Oxfam does, that EU member states have recently been seizing shipments of generics passing within its borders and headed to developing nations, often under suspicions of patent or trademark infringement, although the shipments have ultimately been allowed to continue their journeys. In addition, US free trade agreements passed in recent years have often been accused of being ‘TRIPS-plus’ in making extra demands regarding intellectual property rights that are not necessarily in line with TRIPS requirements. However, it seems unlikely that preventing shipments of generics would either be the intent or the outcome of the negotiations.

Battle lines drawn over biologic data exclusivity

2009-08-14T11:22:00.001+01:00

The debate in the US Congress regarding the shape and form of a regulatory pathway for follow-on biologics has taken another step forward in recent months, with battle lines being drawn over the issue of how much of a data exclusivity period innovator biologics should be given. So far, the branded industry’s view is winning over the generic industry’s preference, although the latter is more in line with the White House’s thinking on the matter.

In March 2009, two competing bills were introduced to the House of Representatives concerning the establishment of a follow-on biologic pathway. Chronologically, the first was H.R. 1427, the Promoting Innovation and Access to Life-Saving Medicine Act, introduced by Representatives Henry Waxman, Frank Pallone, Nathan Deal and Jo Ann Emerson; this bill would give original biologics five years of exclusivity, whilst some modifications of existing drugs would get three years, with both periods having the potential to be extended by a year. Just a few days later, a second bill, H.R. 1548, the Pathway for Biosimilars Act, was introduced by Representatives Anna Eshoo, Jay Inslee and Joe Barton. Though the two bills were broadly similar, H.R. 1548 proposed providing up to 14 and a half years of data exclusivity for original biologics. Needless to say, the generic industry supports a shorter period of data exclusivity, whilst the branded industry as represented by BIO, the Biotechnology Industry Organisation, supports a longer period.

At first glance it would seem that H.R. 1427 would be more likely to succeed. Henry Waxman’s name carries weight in the field of generics, as one of the architects of the Hatch-Waxman Act which regulates conventional generics. In addition, Mr Waxman is now chairman of the House Energy and Commerce Committee, through which both bills must pass. Mr Waxman also wrote in June 2009 to the White House regarding a regulatory pathway, and the White House reply indicated a preference for seven years of data exclusivity following a report from the Federal Trade Commission which argued that the 12 to 14 years favoured by the branded industry would diminish innovation and unnecessarily delay generic alternatives.

However, it is becoming clear that a longer exclusivity period, such as that introduced by H.R. 1548, is more likely to become law. Crucially, the Senate HELP Committee voted on 13th July 2009 in favour of a 12-year period of exclusivity, with a vote 16-7 in favour. It also voted down an amendment which would have provided seven years, in line with the opinion of the White House. Welcoming the vote, BIO also noted that support for H.R. 1548 was growing in Congress. The organisation commented that H.R. 1548 had attracted 129 cosponsors, whilst H.R. 1427 had attracted only 13. At last count, H.R. 1548 had 142 cosponsors, whilst H.R. 1427 had 14, but the point is clear: supporters of a longer data exclusivity period outnumber by ten to one supporters of a shorter period. Interestingly, only one Representative, John Conyers, is listed as a cosponsor for both bills.

Organisations in support of a shorter period have dug in, and are already battling both to save H.R. 1427 and to scrap the 12-year period approved by the HELP Committee. Given the position of the White House, that battle is not yet lost, but the clear preference that is emerging from Congress must make the originator industry favourites in the fight.

EC reports antitrust findings

2009-07-21T12:25:00.001+01:00

In July 2009, the European Commission announced the findings of its report looking at the pharmaceutical sector. The report was initiated in January 2008, with its preliminary conclusions being announced the following November. The final report has concluded that generic entry in the European Union is being delayed and that there has been a decline in the number of new medicines reaching the market. The report suggested that company practices were amongst the causes, but accepted that other factors were also at play.

The Commission intends to follow the report up with intensified scrutiny of the pharmaceutical sector under EC antitrust laws. It added that certain acts initiated by originator companies would remain subject to competition scrutiny if they were being employed in an anti-competitive way in order to delay generic entry. In addition, defensive patenting strategies that focused on excluding competition without pursuing innovative efforts would also remain under scrutiny. The EC would also monitor agreements between originator and generic companies, in order that such agreements did not limit or delay market entry of generics.

The European Generic medicines Association (EGA) announced that it was welcoming the report, commenting that the final report took the initial findings from November 2008 to the next level. The organisation added that it and its members had worked closely with the EC, seeing the report as an opportunity to address what it considered to be loopholes in the legislative framework. The EGA added that it was urging EU member states to implement the recommendations of the report quickly. Perhaps unsurprisingly, the European Federation of Pharmaceutical Industries and Associations (EFPIA) was less welcoming. However, looking for positives in the report for the branded industry, the EFPIA commented that the final report had represented a welcome shift away from what it had considered to be emotive language used in the preliminary findings. The EFPIA made the argument that it had consistently found that regulatory barriers were causing problems for both the generic and branded industries alike in Europe, adding that it was pleased that the report had backed this up. The organisation added that it welcomed many of the report’s recommendations, including creating a streamlined patent system, which would obviously be of benefit to the branded industry. However, the EFPIA commented that the Commission should use the report to address the issue of competition in the off-patent market, arguing that this was an area which could be reformed to produce savings. These savings could then be reinvested to fund innovative medicines, an idea which would probably not go down well with the EGA.

The EC has been able to produce a report that has something for both the generic and branded industries to take comfort from. The question now will be whether or not the EC will be able to turn the report’s recommendations into actions.

Ian Platts - Editor, World Generic Markets

FTC releases follow-on biologic competition report

2009-06-19T11:02:00.002+01:00

The Federal Trade Commission released a report on 10th June 2009 investigating the potential effects of follow-on biologic drug competition. The report concluded that developing a regulatory pathway to allow follow-on biologics would be an efficient way to bring lower-priced drugs to the market; this is not the most surprising conclusion that could be reached. However, the report did find that even with such a pathway, the competitive market between pioneer biologics and follow-on biologics would not be likely to follow the same course as the competitive market between branded and generic small molecule drugs, as fostered by the Hatch-Waxman Act. Follow-on biologics would be unlikely to enter the market for products with annual revenues less than US$250 million, and it would be likely that only two or three generic manufacturers would attempt entry for a given pioneer drug. Furthermore, given the costs involved in producing a follow-on product, drugs would be introduced with discounts no larger than between 10% and 30% of the pioneer’s product price. As a result, the pioneer could still expect to retain between 70% and 90% of market share, a far cry from the situation with traditional drugs, when generic entry can reduce market share by similar percentages as the FTC is estimating will be retained.

In that respect, the report does not seem to contain much bad news for the biologic drug industry. However, the industry’s association, BIO, responded to the report by saying that at first glance it was fundamentally flawed, and demonstrating a lack of understanding of the conditions necessary to drive biomedical innovation. This seems a somewhat surprising response to a report that suggests generic competition would not be as damaging to profits for the biologic industry as it has been for traditional medicines, with few competitors and relatively small price discounts. However, the cause of most concern may well reside in the report’s argument that a 12 to 14 year regulatory exclusivity period, as recommended in one of two bills in Congress attempting to create a regulatory pathway for follow-on biologics, would be too long to promote innovation. This appears to be a sticking point for BIO, which argues that even with the limited generic competition suggested by the report, other studies show that pioneer companies would be unable to recoup their costs without a 12 to 14 year exclusivity period. BIO claims to support the development of a regulatory pathway for follow-on biologics, and with two competing bills currently going through Congress to create a pathway, the question is more and more ‘when’ rather than ‘if’. However, as BIO’s response to this report shows, the biologic industry is determined over what form of pathway it will tolerate. The question will be how well the industry will fare in convincing Congress to agree with it.

Ian Platts - Editor, World Generic Markets

Sandoz acquires Ebewe; Pfizer expands generics agreements

2009-06-12T13:28:00.001+01:00

Sandoz’ parent company, Novartis, announced on 20th May 2009 that it was to acquire the specialty generic injectables business of Ebewe Pharma, which would provide Sandoz an opportunity to create a global platform for future growth whilst improving access for patients worldwide to many generic oncology medicines. Under the terms of the deal, Novartis will acquire the business for 925 million euros (US$1.3 billion) in cash; the deal will exclude Ebewe’s separate injectable neurological products business. Sandoz is currently the second largest generic firm in the world, but still some way behind Teva Pharmaceutical Industries in terms of sales. According to Novartis, Ebewe Pharma’s net sales in 2008 were worth 188 million euros (US$267 million), so this acquisition is unlikely to see Sandoz push ahead past Teva. However, this is the firm’s first acquisition in a number of years, which must underline the firm’s belief that Ebewe represents a significant strategic fit.
Ebewe Pharma was founded in Vienna, Austria, in 1934, but relocated its headquarters to Unterach, Austria, in 1945. Between 1956 and 2001, it acted as an affiliate of the BASF Group, and also briefly for Abbott. However, in 2001, the company again became independent. The company specialises in technologies and applications in the fields of specialty pharmaceuticals, neurological products and contract manufacturing. With regard to its specialty products, the firm has focused on the categories of oncology and immunology, and claims to be one of the leading suppliers of parenteral specialty pharmaceuticals. Ebewe has research centres in Austria and the US, and the firm claims that in the area of oncology it offers one of the widest product lines in the industry. Ebewe sells its specialty pharmaceuticals through a network of 20 Ebewe country organisations as well as business partners in over 80 countries. The firm has had nine ANDAs approved in the US recently, between December 2007 and April 2009, with most of them being either CNS drugs or oncology drugs, including paclitaxel and methotrexate sodium.
Separately, but on the same day, Pfizer announced plans to expand its generics portfolio through two agreements with the Indian firm, Aurobindo Pharma and Claris Lifesciences. Pfizer previously entered into agreements with Aurobindo in July 2008 and March 2009, and this latest announcement effectively extends those into new areas. However, the agreement with Claris is new. Under the terms of the agreement, Pfizer has acquired the rights to 15 injectable products covering a number of therapeutic categories, including pain management and anti-infectives. Claris focuses on the production of injectables and claims a presence in over 76 countries. As with Ebewe, Claris has been active in the US generics market in recent years, gaining four ANDA approvals in March and April 2008 for ondansetron, ciprofloxacin and metronidazole. These agreements are an interesting move for Pfizer, which, although has a generics subsidiary in the form of Greenstone, has tended to be more averse to the generics industry than other branded pharmaceutical firms. Pfizer’s keenness to develop its presence in the generics market perhaps reflects difficulties the firm has seen with the branded industry in recent years. Although it has retained its position as the leading branded firm, Pfizer’s sales have been flat for the last few years, with increased generic competition for some of its key products sapping sales.
Ian Platts - Editor, World Generic Markets

FDA releases budget request as GPhA shows generic savings

2009-05-29T10:38:00.001+01:00

On 7th May 2009, the FDA announced its budget request for fiscal year 2010. The agency has requested a budget of US$3.2 billion overall, representing an increase of 19% over the current FDA fiscal year budget. Much of the request focuses on two major initiatives for FY2010: Protecting America’s Food Supply and Safer Medical Products. However, the request also includes proposals for four new user fees; one of these relates to generic drugs. The issue of introducing generic drug user fees has been around for a while, and the Generic Pharmaceutical Association (GPhA) responded to the proposal with the same views it has expressed when the issue has come round before. The organisation commented that the generic industry is open to user fees, but with the caveat that there would need to be guarantees that the fees would aid in the timely review and approval of generic applications.

Specifically, the GPhA has identified what it considers to be core issues, which it claims have been around for over a decade. These include the citizen petition process, scientific, regulatory and legal consultations, enhanced communication, more inspection resources and the accountability and structure of the Office of Generic Drugs (OGD). The organisation cites as an example that in 2007, the brand industry held 2,200 meetings with the FDA, yet the generic industry had only seven meetings, making the argument that unless the FDA and the industry communicate more effectively, generics will not get to consumers faster. The organisation added that generic applications that are subject to scientific, regulatory or legal consults can remain stuck in limbo for months, if not years, which again results in products being delayed entry to the market. The GPhA has acknowledged that the FDA needs more resources to review and approve generics, but argues that increasing resources alone will not help; instead, the agency also needs to tackle the underlying problem of timely consumer access. For its part, the FDA has released figures which show that the Center for Drug Evaluation and Research (CDER) has seen a dramatic increase in its workload, with the number of ANDAs almost doubling over the past five years, whilst its staffing levels have increased at a much slower rate. In FY2008, CDER approved or tentatively approved 598 applications, and received 830 ANDAs. This compared to 310 approvals or tentative approvals and 307 receipts in FY2001. Interestingly, the number of receipts in FY2008 was down slightly, compared to the 880 received in FY2007, marking the first dip since before FY2001.

It can surely be no coincidence that on the same day that the FDA released its budget request, the GPhA also released details of a report it commissioned from IMS Health showing that generics had saved the American healthcare system more than US$734 billion in the last decade. The report also showed around US$121 billion was saved in 2008 alone. The report was commissioned as part of efforts to mark the 25th anniversary of the passing of the Hatch-Waxman Act, but the timing and its message that generics save money, seems to be more aimed at pushing for an increase of funding for the FDA’s generic drugs function. Preferably, it seems, through tax money rather than user fees from the industry.

Ian Platts - Editor, World Generic Markets

Ontario government takes action against generic firms

2009-05-14T12:12:00.002+01:00

In late April, the Ontario government’s Ministry of Health and Long-Term Care announced it was taking legal action against seven generic firms, along with a number of pharmacies and wholesalers, for allegedly massaging professional allowances by re-selling drugs. Professional allowances are monies that generic drug manufacturers pay pharmacies for buying their prescription drug products, and the Ontario government has alleged that a number of firms were involved in a scheme whereby pharmacies bought greater stocks than they needed, claiming the monies against the stock, then returning what was not needed to wholesalers, which then also claimed monies for the returned stock. The seven companies involved included Taro Pharmaceuticals, Cobalt Pharmaceuticals, Genpharm, Teva’s subsidiary, Novopharm, Pharmascience, Sandoz Canada and ratiopharm. In total, the seven received Rebate Penalty Orders worth C$3.5 million (US$3.0 million), with Taro penalised the least, at C$22,512.68, and Genpharm and Novopharm the most, at C$1,791,957.71 and C$1,202,958.88, respectively.

The Ontario government explained that the professional allowances system had been shaken up as part of changes made by Bill 102 to the legislation that governs Ontario’s publicly funded drug programmes. For the Ontario Drug Benefit market, manufacturers could provide and pharmacies receive up to 20% of generic drug product sales per pharmacy in professional allowances. The allowances must then be used for activities outlined in the regulations, such as patient care that benefits customers. There was no limit on the amount of professional allowances relating to the private market. Drug manufacturers are required to report to the Ministry of Health and Long-Term Care the amount of professional allowances paid, and pharmacies the amount received. Pharmacies are also required to report on how the allowances are spent. Any professional allowance payment not meeting the regulated requirements would be regarded as a rebate, and prohibited. The Ministry reviewed these reports and found discrepancies between the figures being given by generic firms and those being given by pharmacies, and this led to a series of audits being carried out at 14 locations, including three generic drug firms, five wholesalers and six pharmacies.

According to local reports, manufacturers claimed to have paid C$332 million (US$284 million) in rebates, whilst pharmacies claimed to have received only C$145 million (US$124 million). In view of this, the decision to fine the seven generic firms just C$3.5 million in total and all parties involved C$33.8 million (US$28.9 million) surely does not serve as much of a disincentive.

Ian Platts - Editor, World Generic Markets

Congress pushes for biosimilars pathway

2009-04-14T12:53:00.001+01:00

March 2009 saw the US Congress turn its attention to the issue of creating a regulatory pathway for biosimilars (see p. 11). However, two competing visions have emerged, both originating in the House of Representatives, and predictably, one is favoured by the generics industry whilst the other is favoured by the biotech industry. First out of the blocks was a bipartisan bill, H.R. 1427, Promoting Innovation and Access to Life-Saving Medicine Act, introduced by Henry Waxman, Nathan Deal, Frank Pallone and Jo Ann Emerson. With Mr Waxman‟s name on the bill, it is no surprise that the generic industry favour this bill. However, within days, a second bill, H.R. 1548, the Pathway for Biosimilars Act, was introduced, again by a bipartisan group of representatives, including Anna Eshoo, Jay Inslee and Joe Barton. This bill has won the approval of BIO.

Both bills are broadly similar, basically attempting to set out a regulatory pathway on the same lines as the Hatch-Waxman Act. However, there is one essential difference between the two: H.R. 1427 gives original biologics five years of exclusivity, with certain modifications of existing drugs getting three years. These periods can be extended for up to a year. Meanwhile, H.R. 1548 provides up to 14 ½ years of data exclusivity for new biologics. It is clear why the generics industry would favour one bill whilst the biologic industry would favour the other. This also suggests the two competing bills are the result of lobbying by the various industry interests. This is backed up by the fact that Representative Inslee represents a Seattle-area district with a strong biotech sector. In addition, Mr Inslee also serves on the House Energy and Commerce Committee, as does Ms Eshoo and Mr Barton, who is the ranking member of the committee. However, the committee is chaired by Mr Waxman, who can also call on support from his cosponsors, Mr Pallone and Mr Deal, so clearly the two bills will be the subject of considerable debate. How the two bills fare in the committee stage will be an interesting battle of wills.

Outside of Congress, the various proponents and opponents of the two bills have shown differing approaches in how they are trying to sell their arguments. BIO has said that it has safety concerns over H.R. 1427, whilst applauds the alternative bill, H.R. 1548, for being safer. However, it seems likely that BIO‟s more immediate concern is over the length of data protection, which is a legitimate concern for the industry, but not necessarily one that will fly with the general public. BIO also expresses concern that H.R. 1427 would jeopardise biotech jobs, noting that the industry supports 7.5 million jobs in America, with these jobs generally being highly paid, and therefore good contributors to the economy. Conversely, the GPhA also uses the economy angle in its support of H.R. 1427, arguing that the bill would help the economy by strengthening healthcare whilst reducing costs to the public. The GPhA adds that the bill is supported by consumer, business and labour organisations. Both sides recognise that a regulatory pathway for biosimilars is inevitable. However, what shape that legislation will ultimately take is less clear, and will seemingly depend on political skills and an ability to convince public opinion.

Ian Platts - Editor, World Generic Markets

Despite speculation, Actavis branches out

2009-03-26T15:05:00.001Z

Despite the ongoing speculation over the firm’s future, Actavis was busy in March branching out into new geographies. On 9th March 2009, the firm announced that it had entered the Irish market, with plans that will see the creation of up to 25 new jobs, and on 12th March, the firm and Japan’s ASKA Pharmaceutical signed a legal agreement to establish a joint company in Japan. Despite the headline, Actavis’ arrival in Ireland is not entirely new; a unit was set up there in 2008, and currently employs 11 people. However, Actavis’ presence in Ireland was relatively limited, and the new push will boost Actavis’ operations in the country. The firm aims to quickly ramp up its offering in Ireland in all channels, including hospital-specific, prescription and OTC drugs, and Actavis has stated that it has set double-digit growth targets for its first post-announcement year in the country, with an aim to rapidly expand its sales and marketing team in the coming months. Actavis is keen to play up its economic plus-points, noting in its announcement that its generics offer a reduction of up to 60% on the cost of drugs, ramming home the point by adding that there is a potential to save over 22 million euros (US$28.4 million) on six of the 20 new products it plans to launch in Ireland this year. Adding to the argument, Actavis was able to announce on the same day that it was launching gemcitabine in Ireland, along with other parts of Europe, on the day of patent expiry. This, the firm claims, could create savings in Ireland of 1.8 million euros (US$2.3 million), if all currently gemcitabine sales were switched to Actavis’ generic. However, whether such potential savings could be achieved is debateable; Ireland has low generic drug usage rates, and a government that has not shown much interest in changing this.

The move into Japan is entirely new for Actavis, however, and will see the firm set up business in a country it has had no previous business interests in. The agreement between Actavis and ASKA was first announced in November 2008, when the two firms concluded a preliminary agreement to establish a joint venture, to be called Actavis ASKA. Actavis will be the minority partner in the venture, holding 45% of its stocks, with ASKA holding the 55% stake. Japan has tended to be a somewhat difficult market for generic firms; it is second only to the United States in terms of healthcare spending, but the nation as a whole has always favoured the use of branded pharmaceuticals, with the result that generics have only managed to gain a toehold in the country. However, the situation has potential to change through the Japanese government, which, keen to reduce healthcare costs, introduced a generic substitution measure in April 2008, as part of an ongoing effort to increase generic market share in terms of volume. Although Actavis and ASKA have remained tight-lipped over what products will be marketed, the aim of the joint venture is for ASKA to enter the generics market using Actavis’ portfolio.

Ian Platts - Editor, World Generic Markets

Biosimilars in the US a step closer?

2009-03-13T17:07:00.001Z

President Obama has released his budget proposals, including those for the Department of Health and Human Services. The proposal would provide US$76.8 billion to the HHS, whilst the FDA is requesting nearly US$2.4 billion, an increase of 5.7% over the budget that the agency received for the current fiscal year. Not surprisingly, much of the focus on the healthcare aspects of the budget have been on the headline-grabbing issues, such as healthcare reform and the doubling of funding for cancer research. However, another aspect of the budget which deserves attention is its proposal to establish a regulatory pathway to approve generic biologics.

This has long been a thorny issue for the United States with the result that the country has lagged behind the European Union, where a basic approval pathway for biosimilars has been hammered out. Progress on the issue in the US has never been forthcoming, with the opposing sides of the argument clashing on all issues surrounding biosimilars, from their safety and efficacy to the length of data exclusivity periods for biologic products. Whilst none of the parties may have actually said that they do not want biosimilars allowed, the efforts to torpedo any attempt to create a pathway have spoken volumes.

With the new budget proposal specifically seeking to create a regulatory pathway, the question of whether this logjam can be broken has to be asked. President Obama has a focus on healthcare issues in general, with an intention to make the system more cost-effective and widen coverage for more Americans. Mr Obama’s nomination, albeit a second attempt after Tom Daschle, of Kathleen Sebelius, currently the Governor of Kansas, to the post of Secretary of Health and Human Services can be seen to underscore a determination to make changes. Ms Sebelius is a popular Democratic governor in a Republican-dominated state, a position which suggests that bipartisan working has been an essential element of Ms Sebelius’ job, and in turn suggests the same approach will be used should she become the head of the HHS. Thus the job would be taken by somebody with experience in successfully negotiating between staunchly opposed interests, which would surely be essential in any effort to produce a working regulatory pathway for biosimilars. Prior to this nomination, Henry Waxman was voted by the Democratic Caucus to become Chairman of the Committee on Energy and Commerce, which will have oversight on healthcare issues. Mr Waxman has long been known to support establishing a regulatory pathway for biosimilars, and his appointment must surely up the ante.

However, this is an issue which has long confounded its advocates, and whilst the political landscape may have moved to more fertile grounds for creating a pathway, the arguments against it have not been diminished. The issue of biosimilar safety will continue to be a problem, particularly for a litigious nation; entrenched arguments over data exclusivity will not now go away, and the savings through generic biologics will still be pitted against costs to American innovative companies and their employees. The push to create a pathway may have taken one step forward, but there still remains plenty of opportunity for its opponents to claw two steps back.

Ian Platts - Editor, World Generic Markets

FTC files testosterone gel complaint

2009-02-18T10:40:00.002Z

On 2nd February 2009, the Federal Trade Commission announced that it had filed a complaint against brand firm Solvay Pharmaceuticals and generic firms Watson Pharmaceuticals, Par Pharmaceutical Companies and Par’s partner, Paddock Laboratories regarding Solvay’s AndroGel testosterone gel product. The FTC has alleged that the companies violated section 5(a) of the FTC Act, arguing that Solvay entered into agreements with the firms which led to Solvay paying them in return for their not launching generic versions of AndroGel. The FTC’s actions see it return to a familiar and frustrating battle in which it argues that such payment arrangements are anti-competitive, whilst the companies involved argue the exact opposite.

The FTC’s position has for a long time been that agreements in which a branded company essentially pays a generic competitor not to launch a competing product hampers competition and is thus illegal. As an example, in 2001, the FTC brought a lawsuit against Schering-Plough, Upsher-Smith Laboratories and American Home Products alleging such payments regarding Schering’s potassium chloride product, K-Dur 20. Despite settling with AHP, the FTC found little success in the case, with an FTC Administrative Law Judge finding the agreement had been lawful. This led to the FTC overturning the decision, despite it having been made by an FTC judge. However, in 2005, a federal appellate court again found in favour of the companies, and the decision has so far stuck. This, along with another similar decision in 2005 has led to a raft of payment agreements in the years since, which the FTC still contends harms competition by prolonging monopolies.

Given its entrenched view on the matter, it is no surprise that the FTC has again made a complaint. However, the current argument concerning AndroGel does not appear to shed any new light on the issue, and as a result, it seems unlikely that the FTC will succeed this time, either. On the face of it, the FTC’s case is quite sound – Watson gained FDA approval for a generic version of AndroGel in 2006 following the end of the Hatch-Waxman 30-month stay of approval, and Par after that, but did not launch, instead coming to an agreement with Solvay to postpone. However, as always, the devil is in the detail. The patent at the heart of the dispute expires in 2020, with paediatric exclusivity until 2021. Yet, the agreements see generic versions being launched from 2015; the FTC rightfully points out that this is nine years after Watson gained approval, but the firms also rightfully point out that it is five years before the patent expires. The key problem is that although ANDAs were filed with Paragraph IV certifications against the patent, the issue was settled out of court and so the validity of the patent was never tested. As a result, the patent remains in force, which backs up the companies’ argument that the settlement has enabled generic competition ahead of schedule and is therefore pro-competitive. It is hard to see how the FTC can manoeuvre around this problem, and whilst it argues, and probably correctly, that the generic firms entered the agreement not out of respect for Solvay’s patent, but because of the payments Solvay offered, with the patent untested in court, the facts as they stand do not back this up. Unless the FTC can produce compelling evidence, its suspicions will remain nothing more than a hunch.

Ian Platts - Editor, World Generic Markets

Warner Chilcott end Femcon and Loestrin generic challenges

2009-01-30T15:27:00.001Z

Warner Chilcott has been able to resovle a number of litigation cases against its proprietary oral contraceptives, Femcon Fe and Loestrin 24 Fe. Femcon was a chewable version of Ovcon 35, an oral contraceptive that has been on the market since before 1982. The chewable version was approved by the FDA in November 2003, and was the first chewable oral contraceptive, manufactured by Bristol-Myers Squibb and marketed by Warner Chilcott. The chewable version of Ovcon 35 was granted three years exclusivity in late 2003, to expire in November 2006, and a patent was granted for the drug which does not expire until 6th April 2019. In the case of Lostrin 24, Galen originally acquired the Loestrin brand from Pfizer, and in early 2006 was granted approval for Loestrin 24 Fe; that product is protected by a patent listed in the FDA’s Orange Book which is set to expire in July 2014.

Despite the long lead times left on the two patents protecting the two oral contraceptives, Warner Chilcott has faced generic challengers for both. Barr Laboratories filed an ANDA for a generic version of Femcon Fe in April 2007, leading to a patent challenge initiated that summer. Watson Pharmaceuticals also filed an ANDA for a generic version in 2007, leading to a lawsuit filed against it in October 2007. In the case of Loestrin 24 Fe, Warner Chilcott filed a lawsuit in the US District Court of New Jersey alleging patent infringement almost as son as the drug had entered the market, with a case against Berlex and Schering AG. Warner Chilcott alleged the firms were infringing Loestrin’s patent by marketing their YAZ oral contraceptive. A few months later, in June 2006, Warner Chilcott received an ANDA notice from Watson Laboratories notifying of an application to market a generic version of the oral contraceptive, leading to another lawsuit in the New Jersey court alleging patent infringement. The YAZ litigation was settled early, in November 2006, with Schering making payments to Warner Chilcott.

Now, in a series of agreements over December 2008 and January 2009, Warner Chilcott has settled the litigation with Barr and Watson (see p. 8). The settlement with Barr concerns Femcon Fe, and gives Barr the option to launch its generic version in 2012, seven years ahead of the 2019 patent expiration. Warner Chilcott also entered into a patent settlement agreement with Watson regarding Femcon Fe. Under the terms of this, Watson will have to wait until 180 days after Barr launches its version, or January 2013, whichever comes earlier. With regard to Loestrin 24 Fe, an agreement has been made with Watson whereby Watson will be able to commence marketing its version in January 2014, or earlier if another generic enters the market. It is interesting to note that once again, a settlement has been made which effectively allows a generic firm to launch its version as an authorised generic in order to sabotage sales from a third party.

Ian Platts - Editor, World Generic Markets

UK government announces new pricing plans

2009-01-02T12:58:00.002Z

The UK government has announced a new deal with the pharmaceutical industry which will bring in a flexible pricing scheme. Although the announcement relates to the Pharmaceutical Price Regulation Scheme (PPRS), which in turn deals with the branded industry rather than generics, the news is of interest because the agreement further enshrines the place of generics in the NHS' spending plans. Of particular interest is the agreement covering pricing. In the original deal between government and industry announced in June 2008, a saving of 5% in the cost of drugs sold to the NHS was included, which was to be made up of a base price cut for all branded drugs of 2%, combined with measures to reduce the price of out of patent drugs where a generic exists and a further variable price cut. This has now been changed to include a 3.9% price cut and a plan for the Department of Health to introduce generic substitution, whereby pharmacists will be able to dispense a generic against a prescription for a branded drug unless the physician has specified the branded drug to be used. However, the measure will not be introduced before January 2010, a year after the rest of the agreement comes into force, because of the discussions and system changes that would be required. Further price adjustments will then come in each year with the aim of reaching the original 5% cut envisaged. However, the precise effect of generic substitution is unknown, and expected savings have been based on models, and so it is expected that a cut of exactly 5% is unlikely to be achieved; further discussions will therefore be undertaken to keep the scheme on track.

The agreement has been reached with the Association of the British Pharmaceutical Industry (ABPI), and on the face of it represents something of a change of heart for the organisation. Generic substitution - prescribing a generic without the specific consent of a doctor - has been illegal in the UK, and if a doctor has prescribed by a brand name, then the brand version must be dispensed. Not surprisingly, this is a stance that has been defended by the ABPI, which has previously argued that generic substitution would undermine doctors‟ relationships with their patients and could compromise patient health by disrupting the choice of medication selected by the doctor. Whilst the validity of such claims are clearly part of a much wider debate between generics and branded drugs, the stance will nonetheless have been very handy for the ABPI, given that prescribing of generics in Britain has been far higher than in other EU countries, and amongst the highest in the world, and is a trend that has continued to rise. As a result, the ABPI agreeing to at least discuss generic substitution would seem to be a significant change. However, on the other side of the coin, because over 80% of prescriptions are already written generically, it is questionable how much the branded industry would really stand to lose, as the rate suggests doctors already write generic prescriptions unless they specifically want a branded drug used.

Ian Platts - Editor, World Generic Markets

President-elect Obama begins to select administration members

2008-12-09T12:35:00.002Z

The election of Barack Obama to become the next President of the United States at the start of November will potentially result in changes for the healthcare industry. Mr Obama had previously indicated his support for increasing access to generics as a means to reduce healthcare costs in the run up to the election, and on his www.change.gov website, the Obama-Biden Plan on healthcare reform includes plans to reduce costs for American families by, "Lower(ing) drug costs by allowing the importation of safe medicines from other developed countries, increasing the use of generic drugs in public programs, and taking on drug companies that block cheaper generic medicines from the market."

Not surprisingly, both the Generic Pharmaceutical Association (GPhA) and Pharmaceutical Research and Manufacturers of America (PhRMA) have congratulated Mr Obama on his election victory. Equally unsurprisingly, the GPhA has taken the opportunity to remind Mr Obama of his commitment towards increasing access to generics, adding that at the GPhA’s Annual Policy Conference in September, Mr Obama’s health policy advisor added that Mr Obama would also address issues including citizen petitions, free trade agreements and authorised generics as part of his healthcare agenda. The GPhA also added that the President-elect had also expressed support for biosimilars, noting that his campaign had stated that, as President, Mr Obama would support legislation to create a biosimilar approval pathway with as short an exclusivity period as possible to ensure timely consumer access. PhRMA had perhaps less to remind the President-elect of, but commented that the organisation would continue to work with lawmakers on both sides of the aisle and would continue to support policies that encourage and strengthen innovation, improve patient access to medicines and expand healthcare coverage.

Of course, Mr Obama’s administration is still taking shape, and the President-elect will not formally announce the administration until closer to his inauguration in January 2009. However, he has already apparently made a couple of appointments that will be of interest to the healthcare industry in general. Mr Obama has appointed Tom Daschle to be the new HHS Secretary. Mr Daschle, formerly a lawmaker for South Dakota, had been Democratic leader before losing his seat in the Senate in 2004. Mr Daschle had been an early supporter of Mr Obama.

Perhaps more interesting is news that Henry Waxman is to be appointed Chairman of the House Energy and Commerce Committee. PhRMA issued a statement on 20th November 2008 welcoming the chance to work with Mr Waxman, as it had also done for Mr Daschle the day before. However, it would be hard to imagine that PhRMA would have received this news with much enthusiasm. Mr Waxman, co-author of the Hatch-Waxman Act, has long been a supporter of the generic industry, although as the Hatch-Waxman Act has shown, he has been careful to balance this with considerations for the needs of the innovator industry. Mr Waxman has made no secret of his support for improving access to both generic and biosimilar medicines, and will now be chairing a committee that has oversight on healthcare issues. It will be interesting to see what the coming four or eight years will bring.

Ian Platts - Editor, World Generic Markets

Busy time for Actavis

2008-12-01T10:09:00.001Z

The last month has been a busy time for Iceland’s Actavis, a firm which only a few weeks ago had to reassure the industry that it was protected from the crisis enveloping the Icelandic financial system. Towards the end of October, the firm announced that it was formally launching its presence in the French generics market, having been preparing the ground since 2007. Just a few days later the firm announced that it was expanding its presence in India by constructing new solid oral dosage facilities at its existing site in Alathur. The firm added that three construction projects were underway in India, and reported at the same time that it had inaugurated new laboratories at Ticel Bio Park in Chennai, India. Actavis’ physical presence was also boosted on 3rd November, with the news that the firm had opened new expansions to analytical and development laboratories to expand its R&D efforts in Florida.

Actavis has also announced plans to expand through alliances. On 30th October, the firm reported that it had entered into an exclusive distribution agreement for a number of generic products with J&M Pharma, a South Korean-owned and operated pharmaceutical firm. Actavis commented that this would be an important step in its plans to build its presence in the Korean market. A few weeks later, Actavis announced that it had concluded a preliminary agreement with ASKA Pharmaceutical, through which the two firms would establish a joint company through which Actavis could enter the Japanese generic market. Clearly, with the building work in India and the agreements in Korea and Japan, Actavis is looking to the Asia Pacific region to provide new sources of revenue.

Actavis has also been busy with product launches, announcing on 28th October that it had launched its atorvastatin product, Atacor, in Serbia. A few weeks later, on 13th November, the firm announced that it had launched its azithromycin product and Chlamydia testing kit in the United Kingdom.

However, for all these steps forward, Actavis has also found itself taking a step back. On 14th November, the US Department of Justice announced that the US was seeking a permanent injunction to bar Actavis Totowa and Actavis, as well as two of their leading officers, from the manufacture and distribution of generics until Actavis Totowa, the firm’s plant in New Jersey, was in compliance with Good Manufacturing Practices. Actavis Totowa, which had previously been the plant for Amide Pharmaceuticals before Actavis acquired the firm, has not had a good year, finding itself on the wrong side of a number of FDA inspections. The plant and Actavis has also found itself involved in congressional efforts to carry out an investigation into the plant, as part of oversight efforts regarding the FDA. Events came to a head after a batch of Actavis’ digoxin tablets from the plant were found to have double the stated dosage. Although Actavis has put the best spin it can on events, underlining its commitment to work with the FDA to resolve the issues and get the plant back on line, this must nonetheless be a disappointing end to an exciting few weeks for the firm.

Ian Platts - Editor, World Generic Markets

Mixed fortunes for Caraco

2008-11-20T10:18:00.001Z

Caraco Pharmaceutical Laboratories has found itself with mixed fortunes in recent weeks. According to an article in the Detroit News (see page 4), the firm has plans to boost production at its New Centre manufacturing plant next year with a US$22 million expansion that will see it take on another 600 members of staff, doubling the size of the firm. This is undoubtedly good news both for Caraco and for the Detroit area, and appears to show that this firm at least is confident that it can buck the trend of the looming recession currently threatening the United States and much of the world. The Detroit News’ article came just over a year after Michigan’s governor announced that Caraco was to invest some US$14.5 million in a 140,000 square foot expansion of its manufacturing facilities in Detroit, and these two events show Caraco to be in good health.

That impression was backed up in late October 2008, when Caraco reported its second quarter and six month results for its fiscal 2009 (see page 5). Caraco’s net sales jumped by nearly 200% for the latest second quarter compared to the previous one, and net sale jumped by just over 200% for the first half of the current fiscal year compared to fiscal 2008. Caraco’s second quarter fiscal 2009 results were nearly 18% higher than its first quarter results, which in turn were over 200% higher than the first quarter fiscal 2008 sales. For both its first and second quarter results, Caraco has said that its sales results have been largely down to sales of distributed products under its distribution and sales agreement with Sun Pharma. Clearly, Caraco is enjoying a period of excellent growth.

However, on 3rd November 2008, the company reported a potential spanner in the works. The FDA issued Caraco with a warning letter issued as a follow-up to the last FDA inspection of the Detroit facility in May 2008. At the time, Caraco responded to all of the observations made within 30 days and took corrective action. However, the new warning letter suggests that there were inadequate and untimely investigations by Caraco’s quality control unit; Caraco noted that the FDA considered some of its observations to be repeat observations. Caraco has naturally stressed that it will work to resolve the issues, but at the same time the firm has noted that the FDA could act by withholding approval of pending new drug applications listing the facility as the manufacturer. Were this to happen, it could upset Caraco’s future plans for the Detroit plant.

Ian Platts - Editor, World Generic Markets

Apotex ships first CAMR drugs to Rwanda

2008-10-20T09:43:00.002+01:00

Apotex has announced that its first shipment of its triple combination HIV/AIDS drug, Apo-TriAvir, is to be shipped to Rwanda. The news marks the culmination of a long process to enable the Canadian firm to produce a generic cocktail comprising drugs still under patent protection in Canada for sale solely to Rwanda utilising Canada’s Access to Medicines Regime (CAMR), formerly known as the Jean Chrétien Pledge to Africa Act. So far, Rwanda has been the only country to take advantage of the regime, which Canada brought in to align its patent laws with the World Trade Organisation’s framework to enable generic copies of patented drugs to be shipped to countries in need.

Whilst Apotex has been understandably pleased with itself for seeing the process through, it has nonetheless been critical of the Access to Medicines Regime, noting that the regime is too complex and problematic. Apotex is clear that the regime needs to be changed in order for it to be workable, and has previously suggested that it would not be willing to utilise it again in the future. Indeed, the regime has come in for criticism since its conception for being too bureaucratic and long-winded by a number of organisations; the difficulties involved in using it can be seen by the fact that the law has been in place since 2004 and in force since 2005, yet this is the first time it has been used.

Clearly, the experiences of the one company that has used the regime would show that changes need to be made to it, and the Canadian Parliament would do well to take another look at the legislation, using Apotex’ experience to see what changes could be made. However, before being quick to condemn, it is worth noting that the regime was introduced after a great deal of consultation from organisations with interests across the spectrum of pharmaceutical manufacturing and distribution. It was created to try to balance the needs of access to affordable drugs against the necessity of protecting patent law, and so it is somewhat inevitable that a law that tries to keep contradictory forces balanced will be difficult to use. Whilst that does not mean that changes cannot be investigated, it does mean that the resulting process will never be likely to please all interested parties. It is also worth noting that however difficult Apotex has found the process, this is still the first time any such law has been used in the world, and Canada still deserves credit for being the first country to try to amend its laws to enable its pharmaceutical manufacturing skills to be used to help developing countries in need. Canada should move to cap this achievement by making the law more workable.i to represent it in Court in an attention-grabbing move. Nevertheless, the firm may need more than PR to help it out of its current predicament.

Ian Platts - Editor, World Generic Markets

US FDA issues import alert for key Ranbaxy products

2008-09-25T10:59:00.002+01:00

The US FDA has issued two warning letters to Ranbaxy Laboratories and an import alert for generic drugs produced by the company's Dewas and Paonta Sahib plants in India. The warning letters identify the Agency's concerns about deviations from US cGMP requirements, while the import alert covers more than 30 different generic drug products produced in multiple dosage forms at these two locations.

While the FDA noted that it was confident that other manufacturers could meet market demands, and no product recall had been issued, the Wall Street Journal has reported that some drug stores are looking for alternative suppliers and were nervous that if they did switch they would be liable for cost increases due to contract provisions. Meanwhile, other countries have started to look at bans. In New Zealand, for example, the Health Ministry's drug regulatory arm has said that it was checking with regulators abroad to see if audits since then had given it a clean bill of health, though like the FDA it noted that there were no concerns about the medicines themselves and that users should continue taking the drugs.

This is not the first time that Ranbaxy has been in hot water with US regulators, and represents the second time in less than three years FDA has issued a Warning Letter to Ranbaxy. In 2006, FDA cited the Indian firm for violations of US cGMP at its Paonta Sahib facility. Since then, Ranbaxy has been attempting to resolve the issue with US regulators. However, in 2007, US officials seized documents from Ranbaxy's US headquarters in New Jersey. Furthermore, in July 2008, the US Department of Justice claimed that the company submitted false information about stability and bioequivalence to support ANDAs for antiretrovirals distributed by the President’s Emergency Plan for AIDS Relief (PEPFAR) programme. Prominent Congressmen on the US House Committee on Energy and Commerce indicated at the time that they would commence a formal investigation into the Ranbaxy drug approvals and potential violations of GMP regulations.

Daiichi Sankyo, which agreed to acquire the majority of the voting capital of Ranbaxy in June, has yet to comment on the latest events, though both firms have previously stressed that the share purchase agreement is binding and final. North America is a significant market for Ranbaxy, however; the region constituted around 26% of the firm’s revenues in 2007. Ranbaxy is already looking aggressive in its attempts to overturn the FDA’s ruling, enlisting former New York mayor Rudy Giuliani to represent it in Court in an attention-grabbing move. Nevertheless, the firm may need more than PR to help it out of its current predicament.

Jonathan Way - Editor, World Generic Markets

Counterfeit definition debate causes concern in India

2008-09-03T09:03:00.002+01:00

World Health Organization attempts to introduce a broader new definition of counterfeit medicines have come under fire from the Indian government. A draft resolution on the new definition was presented at the 61st World Health Assembly in May 2008; this has been the subject of intense discussion, as was a WHO Secretariat report on the matter. The change from the current terminology has been promoted by the International Medical Products Anti-Counterfeiting Taskforce, a WHO unit set up in 2006.

The new definition could cause the registration of drugs in various territories to be an issue, as countries could link the issue of substandard drugs with intellectual property infringement. A major concern of the countries such as India is that legitimate generic medicines may become targets in the enforcement of counterfeit goods. According to a Business Standard report, the Indian Pharmaceutical Association has expressed concern that generic medicines that are legal in some countries could be classified erroneously as fake. This, combined with tougher enforcement of intellectual property rights elsewhere in the world, could mean that goods passing in transit may be seized for being fake, on the grounds that they are not registered.

A decision on the matter is unlikely before May 2009. Before then however, the office of the Drug Controller General of India is likely to come up with its own definition to promote to the WHO; this would incorporate recommendations from domestic manufacturers and is therefore unlikely to be a radical departure from the existing definition.

Perhaps of even more concern to India and other countries in the South Asia region is the new Anti-Counterfeiting Trade Agreement (ACTA) being negotiated between the United States, the European Union, Japan, South Korea, Canada, Mexico, Australia and New Zealand. By negotiating between themselves, these countries could undermine the WHO discussions and could simply ignore India’s objections. Treaty negotiations are still at a preliminary stage however, and no draft has been released to date; while this is a good sign for India that agreement is still not close, the secrecy will not help to allay its fears.

Jonathan Way - Editor, World Generic Markets

Teva eyes new markets following Barr purchase; DOJ targets Ranbaxy

2008-08-12T15:36:00.001+01:00

Teva Pharmaceutical Industries has elaborated on its recent purchase of Barr Pharmaceuticals. The deal, valued at US$7.5 billion, raises interesting questions about Teva’s new scope. The two firms held an acquisition luncheon a few days after the announcement, in which they emphasised the strong strategic fit between the two companies, its expanded product portfolio and pipeline and its increased presence in first-to-file/paragraph IV applications.

Most significantly, Teva discussed its strengthened presence in key global markets; post-takeover, Teva will be able to offer direct sales in more than 60 countries. Eastern and Central Europe were highlighted as areas of strength for the combined firm. Barr and Teva combined would have been ranked fifth in Germany, third in Poland, ninth in Russia and first in Croatia in 2007. The new presence in Europe will be complemented by Teva’s new Spanish capabilities, following the successful completion of Teva’s Bentley Pharmaceutical purchase.

As for future growth opportunities, Teva CEO Shlomo Yanai noted in an interview with the Financial Times that he is now keen to forge a joint venture in Japan to capitalise on the country’s fast-growing generics market. "Right now Japan is more ripe for generics, (but still) difficult to break into," Yanai commented. Japan has traditionally been reluctant to accept generic medicines; the government has been keen to change habits, however, in an attempt to reduce medical costs. Recent rule changes compel generic substitution unless a doctor specifically requests a patented drug on the prescription form.

Any attempt by Yanai and Teva to get into the Japanese generics market is likely to come after Ranbaxy’s entrance via Daiichi Sankyo, which is in the process of buying the Indian firm. The deal between the two is still on track, in spite of recent allegations from the US Department of Justice against Ranbaxy. The DOJ claims that the company submitted false information about stability and bioequivalence to support ANDAs for antiretrovirals distributed by the President’s Emergency Plan for AIDS Relief (PEPFAR) programme. Prominent Congressmen in the US House Committee on Energy and Commerce have now indicated that it will soon commence a formal investigation into the Ranbaxy drug approvals and potential violations of GMP regulations. The moves have seemingly not deterred Daiichi however, which has been keen to stress that its share purchase agreement with Ranbaxy is binding and final.

Jonathan Way - Editor, World Generic Markets

Authorised generic deals come to the fore

2008-08-05T15:21:00.001+01:00

The end of June saw a spate of authorised generic deals in the United States. On 24th June, Barr Laboratories entered into supply and licensing agreements for authorised generic versions of Bayer's Yasmin and YAZ (both drospirenone + ethinyloestradiol) oral contraceptive (OC) products. Under the Yasmin agreement, Bayer will supply Barr with an authorised generic version for launch on 1st July 2008; several years earlier than the last-to-expire Bayer patent listed in the FDA's Orange Book. In March, the US District Court for the District of New Jersey ruled in favour of Barr, in the challenge of the patent listed by Bayer's Yasmin product.

On 30th June 2008, under a supply agreement with Solvay Pharmaceuticals, Watson Pharmaceuticals launched an authorised generic dronabinol. Dronabinol is a generic version of Unimed Pharmaceuticals' (Solvay) Marinol capsules. Under the terms agreed, Solvay will supply the dronabinol capsules to the company's subsidiary, Watson Pharma, which will market, sell and distribute the product in the United States. Solvay will receive a share of the profits from Watson's sales of the generic product in the US market. Further details have not been disclosed.
On the same day, Janssen, a division of Ortho-McNeil-Janssen Pharmaceuticals (Johnson & Johnson), launched an authorised generic version of its antipsychotic agent, Risperdal (risperidone), through Patriot Pharmaceuticals (McNeil-PPC [J&J]). This development is a reaction to the FDA granting final approval for Teva Pharmaceutical Industries' ANDA to market a generic version of the drug. As the first company to file an ANDA containing a Paragraph IV certification for this product, Teva has been awarded a 180-day period of marketing exclusivity and shipment has commenced. Generic risperidone could hurt J&J badly, as sales of the Risperdal franchise totalled US$4,549 million in 2007, accounting for 18.3% of pharmaceutical revenue.

The past three years have seen a growing number of authorised generic agreements in the USA; this recent sudden flurry may create more interest in Congress. The last two sessions of Congress have seen attempts at legislation to ban the practice; S. 438 currently languishes at committee stage in the Senate. The long-anticipated publication of an FTC report on the matter may provide a tipping point in support for the legislation; this was anticipated in 2007, yet has still not materialised. Meanwhile, most branded companies now have a policy of issuing authorised generic licences; in the current economic climate, and with significant patent expiries on the horizon, the practice is unlikely to be halted any time soon.

Jonathan Way - Editor, World Generic Market

Daiichi shocks industry with Ranbaxy share deal

2008-07-01T22:15:00.001+01:00

Daiichi Sankyo and Ranbaxy Laboratories have surprised the pharmaceutical industry by entering into a binding share purchase and share subscription agreement, which will eventually leave Daiichi with a controlling interest in the Indian firm. The deal values Ranbaxy at US$8.5 billion and the total transaction value is expected to be between US$3.4 billion to US$4.6 billion. Daiichi Sankyo and Ranbaxy highlighted the complementary business combination that the link-up would create, noting that it would leave Daiichi with an expanded global reach and strong growth potential by complementing proprietary drugs with generics. Daiichi also hinted that it may shift part of its production to India, commenting that it could achieve further cost competitiveness by optimising its new R&D and manufacturing facilities.

The move represents Daiichi Sankyo's first foray into generic drugs, and contrasts with the strategy adopted by its Japanese rivals: Takeda Pharmaceutical, for example, bought biotech firm Millennium Pharmaceuticals in April, while Eisai bought speciality manufacturer MGI Pharma in December 2007. The Ranbaxy deal should bolster Daiichi’s revenues more quickly however, with income from the acquisition expected from the fiscal year after next.

Interestingly, Daiichi is following the model of Novartis by incorporating generic sales into its structure; this strategy has the obvious benefit of maximising the full pharmaceutical life-cycle of products, and also hedges the inherent riskiness of new molecules with a more steady supply of generics. The model follows long-term assumptions over the future of the industry, where a handful of global players will dominate, crowding out all competitors bar the smaller niche-orientated firms.

This major deal in many ways mirrors the divestiture of Merck Generics last spring. That deal saw a brandname manufacturer look to sell its generics division; the race to buy the firm was eventually won by Mylan Laboratories, which had to fight off competition from a number of other major generic firms. These included Ranbaxy, which was an early contender, along with Teva Pharmaceutical Industries and Actavis. At the time, it seemed these three companies would be in the forefront of bidding for the next big generics target; ironically, Ranbaxy itself has now become a target. That flurry of activity after the initial Merck Generics bid could indicate a similar bidding process for Ranbaxy; indeed rumours have since circulated that Pfizer may bid for the remaining shares. However, without the support of the Singh family, Ranbaxy’s largest and controlling shareholders, a counterbid may prove difficult. For now, Daiichi remains in the vanguard.

Jonathan Way - Editor, World Generic Markets

Sun and Taro squabble over merger agreement

2008-06-19T11:02:00.001+01:00

Taro Pharmaceutical Industries and Sun Pharmaceutical Industries have become embroiled in an increasingly bitter row over a merger agreement between the two companies (see p. 19). Taro’s Board of Directors was first to act, announcing that it had unanimously voted to terminate the 18th May 2007 merger agreement with Sun, as the agreement provided for a termination from either party after 31st December 2007. Sun responded by refuting this claim, and noting its scepticism of Taro’s ability to turn itself around after its financial crisis early in 2007; Sun has also reacted angrily to suggestions that Taro may sell its Irish operations, as these were to play a key part in its post-merger operations.

Taro noted on 29th May that the merger is no longer in the best interests of the company. Its management board felt that the deal did not reflect the ‘dramatic operational and financial turnaround’ that the company has achieved since last year. The firm also felt that the operational constraints in the agreement were interfering with the company's ability to manage its business for the benefit of all of its stakeholders, and that, but for some of these constraints, Taro's profitability and cash resources could have been higher at present.

Sensing Taro’s reluctance to go ahead with the merger deal, Sun upped its offer per share from US$7.75 to US$10.25. After Taro went public over the matter, Sun questioned how the Israeli firm could afford not to make the deal, noting that if Sun had not injected US$60 million into the company in the last year, Taro would have virtually negative cash. The Indian firm also commented that it made every effort to fulfil its obligations under the agreement, and that Taro had ignored its attempts to discuss an increase in the merger consideration.

Taro’s termination of the deal is surprising, given the financial struggles that beset it before Sun agreed to refinance US$224 million of its net debt last year. It had suffered a turbulent time prior to the Sun deal: finance reporting problems led to the firm having to restate its financial results for 2003 and 2004, a move which eventually contributed to the resignation of its Senior Vice President and Chief Financial Officer and its delisting from the NASDAQ Global Select Market. The financial reporting problems and lower than expected results for 2006 led to concerns over Taro’s loans, leaving it with little other choice than to accept Sun’s offer. Whether Taro has accomplished enough in the last year to gain the upper hand in its dealings against Sun it remains to be seen. Either way, the fallout could hit both companies hard when the full financial ramifications are understood.

Jonathan Way - Editor, World Generic Markets

Intellectual protection issues come to the fore

2008-05-16T09:39:00.002+01:00

Intellectual property issues have been a hot topic for various governments over the last few weeks, with significant developments occurring in Brazil, the Philippines and India. Earlier in April, the Brazil Health Ministry declared the antirretroviral drug tenofovir to be in the ‘public interest’, signalling its willingness to import a generic version of the medicine. The Health Ministry’s declaration indicates that the patent for the drug could be rejected due to its high price; this could then lead to negotiations over the import of a generic version.

At the end of last month, the Philippines also turned against branded manufacturers, with its Congress approving a bill that strongly promotes generic medicines. The new law, which still requires approval from the President, will allow limited parallel importation, should help to prevent incremental innovation, will allow local generic firms to register their versions before patent expiry, and could permit the use of compulsory licences for the public good.

Conversely, one region which has traditionally been without strong intellectual protection laws for years, India, is now looking to clamp down on marketing approvals of drugs already patented. The Drug Controller General of India has published a reference guide and hopes to co-ordinate with the Ministry of Health to create an integrated approach which will link patents together. Following this, the DCGI will then prevent any approvals for generic versions of patented drugs. To date, patent linkage in India has proven difficult, as it has been impeded by a decentralised and inefficient drug approval structure. Unsurprisingly, domestic firms in the country are against such moves, arguing that they will be unworkable in practice.

The motivation behind moves to promote generics through intellectual property reforms are clearly motivated by the high costs of patented drugs. Interestingly, think-tank African Liberty has recently questioned the link, noting that low uptake of drugs was more likely caused by poor infrastructure. Either way, governments in developing countries are likely to continue putting pressure on IP rules, as weakening them in favour of generics appears to provide them with a quicker fix to long term drug expenditure problems.

Jonathan Way - Editor, World Generic Markets

Biosimilars Business Review, April 2008

2008-05-02T11:38:00.001+01:00

Europe saw another positive move in February 2008, when the EMEA recommended approval for three GCSF biosimilars. Marketing can begin once the European Commission issues final approval in April 2008. This will mark Teva’s first biosimilar approval in the EU; the company is developing its biosimilar activities apace, as demonstrated by the recently-announced purchase of CoGenesys.

An indication of attitudes to biosimilars in the European marketplace was given by the publication of a report by a UK parliamentary panel into the subject in January. It indicated a general lack of awareness of biosimilars within the Department of Health and the wider health service, and came down strongly against the allowance of substitution. Shortly afterwards, the MHRA issued a brief guidance stating that it is ‘good practice’ to prescribe by brand name only. The parliamentary panel issued a number of other recommendations, none of which will be particularly welcome to the biosimilar industry.

In the USA, the wind has changed, for the time being at least. The running is now being made by the originator industry, which has decided its best interests are served by passing legislation this year rather than delaying; the political environment may be less favourable in 2009. Hence the specific mention of biosimilar regulations in President Bush’s budget request, and the public support given by BIO to the new Barton-Eshoo bill in the House. In contrast, the biosimilar industry has become more cautious, calculating that it can get a better bill after the November 2008 elections. With Congress finely balanced and a real lack of consensus over the issue of market exclusivity, it would be brave indeed to predict the creation of a pathway this year.

Andrew Crofts – Editor, Biosimilars Business Review

Europe gets nervous over biosimilar rules

2008-05-02T11:00:00.002+01:00

The United Kingdom is currently debating new biosimilar rules, as part of a movement amongst European countries to limit how centralised biosimilar approvals are prescribed. Recommendations put forward include prescription of biosimilars by brand names only, an urgent ban on substitution "until effective safeguards can be relied on", and applying the Medicine and Healthcare Regulatory Authority’s black triangle symbol "be applied to all biosimilar drugs and that, at two-year or other periodic review, that symbol should remain unless the safety evidence is clear that it can be removed".

Changes to prescription rules follow advice from the EMEA in June 2007 that biosimilars cannot be considered identical to their biological reference products. However, while the agency can issue advice, prescription policies are set at a national level; this has led to European countries diluting the strength of the original centralised rules, mainly due to safety fears caused by biosimilar complexity and subtle differences from originator products. According to the European Generic medicines Association (EGA), fifteen countries across Europe have brought in new rules to prevent the automatic substitution of biological medicines by biosimilars, including France, Spain, the Netherlands and Norway.

This contrasts with the approach in the United States, which has not even got so far as creating a biosimilar pathway. However, events in Europe are an indication that the US may also run into difficulties with biosimilar prescription rules following the approval of its own biosimilar legislation. This itself is currently on hold, as a suitable compromise between originator and biosimilar firms has not yet been reached. Interestingly, the forces pushing for legislation sooner have recently been reversed, with the branded industry keen to get a bill through Congress before President Bush leaves office.

The US and European biosimilar agendas are notably different at present, united only by lingering uncertainties remaining in both. This is likely to remain the case in the short term, due to a number of factors such as safety fears and the high costs of producing biological drugs in any form. The boom year for the biosimilar industry will not arrive until 2012 at the earliest, when a much higher proportion of biological drugs start to come off patent. At that time, the financial incentives of promoting biosimilars will be hard for governments to ignore, while experience of biosimilars should lead to more uniformity in safety rules.

Jonathan Way - Editor, World Generic Markets

Teva buys Bentley

2008-05-02T10:51:00.003+01:00

Teva Pharmaceutical Industries has agreed to acquire Bentley Pharmaceuticals for US$360 million. US-based Bentley manufactures both branded generic and generic products; its principal market is Spain, though it also sells generic pharmaceuticals in other parts of the EU. These efforts are supported by finished dosage and API manufacturing facilities. Teva noted that it intends to make Bentley's generic pharmaceutical operations serve as the platform on which Teva hopes to build a leading position in Spain.

The Bentley purchase follows a string of investments from Teva in the region. In January, the Israeli manufacturer announced its plans to expand its operations in Hungary, with an investment of US$100 million at its Debrecen site. It then announced in March that it is expanding its operations in Ireland, with a €65 million (US$99.6 million) investment in its existing Waterford facilities in the southeast of the country. Later in the month, meanwhile, Teva’s IVAX unit revealed that it is to spend CZK1 billion (US$60.7 million) to expand its Opava plant in north Moravia, Czech Republic. This aggressive European expansion follows Teva CEO Shlomo Yanai’s recent comments that Teva should double its revenues by 2012; clearly, the new CEO feels that Europe is where the firm’s immediate priorities lie.

Teva’s European expansion is being mirrored by Aurobindo Pharma, which has just announced that it is to purchase the Italian operations of German pharmaceutical company TAD Pharmaceuticals. The TAD Italy purchase is Aurobindo’s third in Europe, following the purchase of Milpharm, and Pharmacin International in 2006 and 2007.

The latest acquisitions correlate with industry insiders’ predictions that a handful of generic manufacturers will lead the drive towards consolidation; Aurobindo will be hoping to be amongst this group, while Teva will certainly feature. Both have adopted a similar strategy of targeting markets where generics are less well established, i.e. Italy and Spain. It will be interesting to see if this tactic is more fruitful than a focus on established markets, where firms have recently been struggling to digest acquisitions.

Jonathan Way - Editor, World Generic Markets