Lipitor-like exclusivity awaits Indian drug companies as 46 patents expire in 2012-15.
On Tuesday, India’s leading drug maker Ranbaxy announced the launch of an authorised generic version of Pfizer drug Caduet in the United States. A week earlier, the same company had launched a low cost generic version of Pfizer’s biggest revenue earning drug, Lipitor, in the US market.
The launch of these two cholesterol-lowering drugs was made possible by a series of patent litigations waged by Ranbaxy against Pfizer. Ranbaxy now enjoys an exclusive or semi-exclusive limited period marketing opportunity for low cost versions of Rs 40,239 crore Lipitor and Rs 1,728.9 crore Caduet.
| MAJOR PATENT EXPIRIES IN THE US IN 2012 | |||
| Brand Category | Therapeutic | Company | US annual sales ($/bn) |
| Plavix | Anti-platelet | Sanofi-Aventis | 1.6 |
| Seroquel | Antipsychotic | AstraZeneca | 3.7 |
| Singulair | Asthma | Merck | 3.6 |
| Actos | Diabetes | Takeda | 3.6 |
| Enbrel | Arthritis | Amgen | 3.3 |
| Compiled by Joe C Mathew | |||
Indian companies have benefited from a strategy of patent litigation and subsequent claims to a limited period of exclusive marketing rights. With most of the patent expiries expected to happen by 2015 in the US, the opportunity remains tremendous, provided US law makers do not clear a proposed rule to speed entry of low cost versions of off patent medicines into that markets by doing away with the current system of marketing exclusivity.
US law
The Fair Generic Act 2011, being considered by the US law makers, talks about relaxing the current 180-day exclusivity system to allow the right to share exclusivity to any generic filer who wins a patent challenge in the district court or is not sued for patent infringement by the brand company. The new law will maximise the incentive for all generic challengers who want to bring the low-cost drug to the market, rather than limiting it to one drug company. Industry experts say the proposed law, if legislated, may reduce the revenue gains for individual players, but will allow a greater number of generic companies, including Indian players, to have a share of the US generics business.
Under the current law, domestic pharmaceutical majors expect to launch the generic versions of at least a dozen among the 18 drugs that get off patent in the US in 2012. In addition to the 180-day exclusive marketing opportunity, Indian firms will gain from marketing chances arising out of patent settlements and authorised generic supply contracts with the innovator company.
A big gain
“The US generics market, the biggest market for Indian generics overseas, is in a multi-year cyclical upturn as drugs worth Rs 48.45 lakh crore go off patient from 2011-15,” said a recent report from equity research firm Nirmal Bang. It said domestic drug companies such as Sun Pharma, Ranbaxy, Dr Reddy’s, Lupin and Glenmark have combined exposure to over 70 per cent of the products whose patents expire in the next five years. While 18 patent expiries are expected in the US in 2012 alone, 28 are likely to follow during 2013-15 period.
“We believe 50-60 per cent of these opportunities would involve multiple players, while the remaining will be limited competition opportunities. Assuming a 10 per cent market share, Indian generics are likely to see Rs 7,600 crore of revenue upside over 2011-15, more than half of which is likely to materialise in the next two years”, said Nirmal Bang.
Incidentally, the projections are not suggesting a new trend, but a continuing trend that has contributed to the growth in American sales for every generic company, including ones from India. With over 100 drug manufacturing facilities approved by the United States drug regulator, US Food and Drugs Administration (FDA), India is the most important production centre outside US soil for off patent medicines.
Lipitor generic might be the biggest exclusive marketing opportunity for Ranbaxy, but it is not the company’s first. It had successfully launched the generic version of Aricept, a dementia drug of Japanese drug major Eisai that had an annual sales of Rs 13,260 crore in the US, in November 2010.
Who benefits
In October, Dr Reddy’s announced the launch of the generic version of a particular strength of Eli Lilly’s Zyprexa utilising a similar exclusive 180-day marketing opportunity in the United States.
Sun Pharma, Lupin and Glenmark have made regulatory filings that can qualify for some kind of marketing opportunity under limited competition as patent expiries allow dozens of companies to launch low-cost versions of the same product in US and drag down the prices of medicines even by 90 per cent of the original.
Ranjit Kapadia, an analyst with Centrum Broking, said Ranbaxy’s opportunity to sell Lipitor generic cannot be compared with other such opportunities as the sheer size of the product had tempted the innovator company — Pfizer — to adopt all possible means to preserve its Lipitor revenues.
“In the case of smaller drugs, the companies may not resort to such expensive litigations or may not plan such elaborate off-patent market strategy as Pfizer did for Lipitor. Due to the same reason, the companies that have gained exclusive marketing rights for such drugs may enjoy higher rate of returns,” said Kapadia.
