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Follow-on Biologics Grow in India
In a bid to control the $16-billion market for insulin before 2015, when a number of antidiabetic drugs will lose their patent protection, Pfizer entered into a $350-million deal with Bangalore-based Biocon for the commercialization of four insulin products. Biocon's follow-on biologic versions of insulin and insulin-analog products (recombinant human insulin, glargine, aspart, and lispro) are already available in India.
"Our decision was timely," said Biocon Chairperson KiranMazumdar Shaw. "Biosimilars are gaining a lot of traction in the United States. The deal will help us emerge stronger in follow-on biologics as well as in the diabetes segment," she said.
Jumping on the follow-on biologics bandwagon
Biocon's deal with Pfizer, which closed in October 2010, was just one of the many biotech-based deals that Indian drug manufacturers have been making with Big Pharma companies around the world. Dr. Reddy's Laboratories (Hyderabad), Ranbaxy (Gurgaon), Shantha Biotech (Hyderabad), and Serum Institute (Pune) are actively involved in the follow-on biologic space, and analysts and investment bankers maintain that additional Indian drug companies such as Panacea Biotech (New Delhi), Intas Biopharmaceuticals (Ahmedabad), Reliance Life Sciences (Navi Mumbai), Bharat Biotech (Hyderabad), and Lupin (Mumbai) stand to benefit significantly given their portfolio of biotech drugs.
Tarun Shah, Asia head of Mehta Partners, the strategic business advisor to Japan's Daiichi Sankyo in its 2008 majority stake in Ranbaxy Laboratories, said, "Bringing a biosimilar drug to market is no easy task. It costs 20 times more than [small-molecule] generics." (Of note, Mehta Partners has raised equity for Intas Biopharmaceuticals.)
DhananjayPatankar, COO of Intas Biopharmaceuticals, however, believes that the entry of Indian follow-on biologics manufacturers into the global market could help to decrease exorbitant healthcare costs, especially in the United States. Given the mounting pressure from governments and patients' groups to reduce the cost of medicine, biopharmaceutical companies that develop biologic drugs have a lot to offer. Herceptin (trastuzumab), for instance, which is a treatment for some forms of breast cancer, can cost as much as $48,000 for one year's worth of treatment, according to industry sources. Shah points out that the US patent for rituximab (a monoclonal antibody against the protein CD20, for the treatment of rheumatoid arthritis and non-Hodgkins lymphoma) is due to expire in between 2015 and 2018. The product is marketed as Rituxan/Mabthera by Biogen Idec and Roche, respectively. The patent expiry creates opportunities for follow-on biologics manufacturers such as Intas. California-based Spectrum Pharmaceuticals and Viropro, a biopharmaceutical manufacturer, also teamed up on Jan. 5, 2011, to develop a follow-on version of Roche and Biogen Idec's rituximab. "The deal follows a 2007 agreement with Intas Biopharmaceuticals to become Viropro's second monoclonal antibody contract," explained Shah. Speaking about a recent survey on Type 2 diabetes patients in the US, he noted that 60% of insulin users surveyed were eager to switch to a less expensive [follow-on] form of insulin as soon as the agent became available. Dr. Reddy's Laboratories launched at a steep discount its first follow-on biologic product, Grafeel (filgrastim), which is used to treat cancer patients suffering from chemotherapy-induced neutropenia, in 2001, in India and its second, Reditux (rituximab) in April 2007. The latter was similar to Amgen's Neupogen to treat neutropenia, a lack of certain white blood cells caused by cancer or bone marrow transplant. This was followed by a third follow-on product, Cresp (darbepoetinalfa, a modified version of epoetinalfa), which the company touts as the first generic darbepoetinalfa drug in the world, used in the treatment of anemia due to chronic kidney disease. The company intends to market Reditux in other regions, including the US, upon patent expiry of Amgen's Neupogen, according to a company presentation. Managing Director Satish Reddy said the Cresp launch effectively afforded the firm a sharper edge in marketing to the developed world. Mumbai-based Cipla is also looking to launch follow-on biologics in the US market. Cipla Chairman YusufHamied says the firm is developing a range of discounted biosimilars. First off the block will be copycat versions of two of Roche's biologics: Avastin (bevacizumab) and Herceptin (trastuzumab), which target the treatment of breast cancer. Third will be a follow-on version of Enbrel (etanercept), a Pfizer/Amgen product that treats rheumatoid arthritis. "These [drugs] are very expensive today. When Cipla launches its biosimilars, these big companies (multinationals) will be forced to pull down their price," says Hamied. Together, the three drugs account for $19 billion in annual revenue.
Accounting for regulatory delays
Kamal K. Sharma, managing director of Mumbai-based Lupin, says "Once clarity emerges on the regulatory front, especially in the US, biosimilar drugs could provide a huge potential. However, data exclusivity in the US market [remains] a severe challenge," said. The company expects to launch its first follow-on biologic product in India this year. According to the research firm Nomura Equity Research, between 2008 and 2015, biopharmaceuticals worth $59 billion are set to lose patent protection globally. From 2012, the follow-on biologics market is expected to add an estimated $10 billion in incremental revenues each year until 2020. In the US, the Congressional Budget Office recently estimated that potential savings on biologic drug products in the US between 2009 and 2014 could be as high as $25 billion, once a pathway for approval and marketing follow-ons is implemented. The fact is, although some of the drugs targeted for follow-on versions have garnered billions of dollars in sales for the original manufacturers, cashing in for Indian companies would be "no walk in the park," says Cipla'sHamied. Much rests on the implementation of the follow-on biologics pathway in the US.
While the US sorts out its implementation plan, some Indian firms are focusing on Europe in the short term. For example, Biocon's Shaw said the firm is in the process of registering its insulin for the European market and has licensed its G-CSF (granulocyte colony stimulating factor) to a North American firm and to AbraxisBioScience for the European market. Biocon is in the midst of setting up a marketing office in London, making Europe its focus during the next 12 months.
RanjitKapadia, vice-president of the institutional research firm HDFC Securities in Mumbai, adds that, because the "US law will take a while to be implemented and could undergo some revisions, Indian companies will not be able to launch their biosimilar anytime soon. And that is why the Biocon deal with Pfizer makes perfect sense. They have sold the rights to Pfizer. Now, Pfizer will have to fight to market their biosimilars in the US, whereas the Indian firm can sit pretty."