A fiscally stressed Washington’s policy support to low-priced alternatives to innovator drugs and a flurry of recent acquisitions have helped Indian drug companies outdo their American counterparts in the latter’s home turf in securing approvals for generic medicines.
According to the US Food and Drug Administration (FDA) data reviewed by FE, one in four abbreviated new drug applications (ANDAs) approved by the regulator in 2012 belonged to an Indian company, a shade better than the performance by the US generic drug companies led by Mylan and Watson Labs. Available data for this year (till October-end) have only cemented India’s lead.
An ANDA pertains to a generic drug that is therapeutically equivalent (bio-equivalent) to an already approved innovator drug but is exempt from the requirements of generating pre-clinical and clinical trials data for regulatory validation. The exemption reduces drug development costs and allows companies to sell their drugs at a fraction of the branded drug’s price.
Indian drug companies have long been the most aggressive foreign players in the big and fast-growing US generic drug industry, accounting for a third of ANDA approvals and second only to the US’ own generics industry, with a 40% share in these approvals. Together, Indian and US firms bagged three-fourths of ANDAs approved over the last seven years (see table). Five out of the 10 top ANDA filers since January 2007 have been Indian firms, with Sun Pharma in the second slot after Mylan.
According to analysts, Indian firms have gone one better than the US in the approved ANDA kitty over the last couple of years primarily because of Sun Pharma’s acquisition of US-based Caraco and Taro Pharmaceutical Industries in 2010 and Mutual Pharma in 2012. These takeovers enabled the Indian firm to add ANDAs held by these companies to its kitty. Other factors that have buttressed India’s ANDA performance are the focus of US President Barack Obama’s healthcare plan on low-cost drugs and dismal growth in the alternative (European) markets, hit by the economic slump.
It is, however, pertinent to note that India’s share (13%) in the $30-billion US generic drugs market does not reflect its top slot on the ANDA table. This is because the country, credited with over 150 pharmaceutical manufacturing plants approved by the USFDA (the highest outside the US) focuses on high-volume generics and is yet to build competitive strength in the high-value specialty generics that offer attractive margins. India exported drugs worth $4 billion to the US in 2012.
There are a host of factors that augur well for Indian drugmakers in the US market. A big segment of the US branded-drugs market would be deprived of patent protection by 2018 due to a ‘patent cliff’, making available a $50-billion market for aggressive generic players.
In 2014 alone, at least four branded drugs — Cymbalta, Nexium, Clarinex and Celebrex — with a generic sales potential of billions of dollars will lose patent protection in the US.
Besides the more common generic drugs applications, US laws also allow ANDAs to be filed with a “para-IV certification” and a clutch of Indian firms is keen to seize this lucrative (yet high-risk) opportunity. A generic drugmaker making the para-IV challenge undertakes that its product does not infringe on the listed patents, or that those patents are not enforceable. If the generic company is the first to file a para IV, it gets ‘exclusive rights’ to sell its version of a branded drug for 180 days, with only the patent holder in the market. Dr Reddy’s Laboratories and Lupin have been the most prolific filers for para IVs, followed by Sun Pharma, Glenmark and Aurobindo.
The recent move by the USFDA to allow generic drug companies to independently update product labelling (on safety) with the requirement of just informing the brand-name manufacturer of the same is perceived to be friendly to the generic industry.
The generic drugs sector has witnessed a lot of controversy over the impending patent cliff with innovator companies angling for “pay-for-delay” deals. The patent holder would negotiate with a generic drug company to delay the entrance of the generic equivalent to the market. However, the US Supreme Court ruled that such agreements are subject to antitrust scrutiny as they prevent cheaper options from entering the market.
Increasingly, as regards para IV filings, innovators and generic drugmakers are entering into settlements where the generic product would be launched after a particular date, usually just before the patent expires. This arrangement provides some additional time for the innovator while the generic drugmaker can hold the “first-to-file” advantage which gives it 180 days of marketing exclusivity.
The ANDA data set is also influenced by Israel’s Teva acquisitions over the years. In the time period relevant to the data set, the company bought US-based Barr Pharmaceuticals and Croatian drug major Pliva. ANDA rights also crossed international boundaries when Sandoz acquired US generic drugmakers Fougera Pharmaceuticals and Ebewe Pharma.
While the Big Pharma companies like Merck and GlaxoSmithKline keep their distance from the generic drugs market or set up a subsidiary that handles the business — for example, US-based Roxane Labs is a subsidiary of Germany’s Boehringer Ingelheim — Pfizer stands apart from its peers in the data examined. The world’s largest drug company by revenue received 16 ANDAs from January 2007 to October 2013.
On a company-wise basis, Mylan, which ranks second globally among generic drugmakers, tops the list with 207 ANDA approvals to its credit in the seven-year period. Teva has 153 approvals and ranks third.
Indian companies have faced various compliance issues in 2013 with overseas health regulators — the USFDA and the UK’s Medicines and Healthcare products Regulatory Agency — finding Indian manufacturing facilities failing to meet the good manufacturing standards laid out by them. With top Indian companies like Ranbaxy and Wockhardt under the scanner, it was assumed that approvals from the regulators would be hard to come by.
But the numbers show that despite the problems, Indian companies are still getting the USFDA nod. Since late May — when Wockhardt’s troubles first cropped up — Indian companies have received approval for 60 ANDAs, compared with 45 approvals the US companies have got.