Indian pharma majors cash in on off-patent drugs

As the Indian pharmaceutical companies aggressively pursue research and development to capture the market for drugs going off-patent, a dozen companies led by Aurobindo Pharma, Wockhardt, Ranbaxy, Dr Reddy's Lab and Sun Pharma have bagged almost one-fourth of generic drug approvals in the US in the four-and-a-half month from December 2006.

Out of the 186 original abbreviated new drug application (ANDA) approvals granted by the US Food and Drug Administration (FDA) during the period, about a dozen Indian companies bagged 43 approvals, which is 23.11 per cent of the total approvals granted.

In comparison, Indian companies received only 23 out of 139 final approvals (16.54 per cent) in the corresponding period last year.

As per the US rules, an ANDA with data on safety, efficacy and processes have to be submitted to the US FDA for getting marketing approval for generics in that country.

Waxman-Hatch Act, enacted by the US government in 1984, was to ensure availability of less costly generic drugs by permitting FDA to approve applications to market generic versions of brand-name drugs without conducting costly and duplicative clinical trials.

Dr R B Smarta, managing director of Interlink Marketing Consultancy, said, "This signifies how aggressive and technologically capable Indian companies are to compete in the global generics market. An ANDA for a drug is submitted years before the patent expires and requires high skill levels to develop a process to manufacture a generic version of the same potency and efficacy. The successful and consistent approvals for many molecules show how prepared our companies are to face the future. Globally, the trend is towards generic drugs and this will augur well for Indian companies."

Industry analysts said this achievement is significant considering the fact that Indian firms got only 57 final approvals (for 13 companies including 11 approvals for Dr Reddy's Lab and seven for Orchid) in the 11-month period between January and November 2006. During the same period in 2005, the US FDA had approved only 50 ANDAs of nine Indian companies.

"The approvals show bright prospects for Indian pharma firms in the US market and I feel pricing pressures will be less in this year compared to previous years. Overall margins will be good for Indian companies and with more approvals during the year and in the future, Indian companies are likely to get a good share of the US generics market," said Pakhi Jain, pharma analyst with Edelweiss Securities.

"The approval for generics is high in the recent past because some blockbuster drugs like Zocor and Zoloft came off-patent last year. Availability of drugs is a concern and the FDA is likely to approve drugs on the same day of patent expiry in the coming years," noted an analyst.

Among the Indian companies, Aurobindo Pharma got the maximum approvals (December 2006-15 April 2007) with eight, followed by Wockhardt (seven), Ranbaxy (six) and Dr Reddy's (five).

While Zydus Cadila received four final approvals during the period, Sun Pharma and its US subsidiary Caraco got six approvals. The other companies include Lupin, Glenmark, Torrent and Unichem.

Interestingly, out of the 18 approvals given for sertraline hydrochloride (generic for Pfizer's blockbuster antidepressant Zoloft, which got off-patent in 2006) in February this year, seven Indian firms "" Dr Reddy's, Sun Pharma, Ranbaxy, Torrent, Lupin, Aurobindo and Zydus "" got final approval.

Zoloft had sales of $3.3 billion in 2005. Similarly, out of the six simvastatin (Zocor) final approvals in December 2006, three approvals were granted to Zydus Cadila, Dr Reddy's and Aurobindo. Merck's patent on Zocor, the blockbuster cholesterol-cutting drug that totalled $4.4 billion sales in 2005, had expired in June 2006.

Generic drugs, therapeutic equivalents of innovator drugs arrived at through different processes, have a growing market in the US. North America, which accounts for 45 per cent of global pharmaceutical sales, grew 8.3 per cent to $290.1 billion in 2006, up from 5.4 per cent in the previous year. Generics constitute almost half of the volume sales and has a market in the US valued at $54 billion, according to IMS Health.

Legislative attempts to control drug expenditures, the increased influence of payers to drive more cost-effective healthcare, generics competition, and the introduction of new biosimilars will impact US prescription growth in five years.

In 2006, prescription volume of unbranded generics grew by 13 per cent and sales of unbranded generics grew by 22 per cent, especially due to generics entering the market for Zoloft and Zocor.

"Branded blockbusters such as Norvasc and Ambien are set to lose patent protection in 2007. US pharmaceutical sales would growth at 6-9 per cent through 2010 as a result of the influence of lower-priced generics," predicts IMS Health. It is estimated that $80 billion worth of drugs are set to go off-patent progressively by 2010-15.