Domestic Generic Drug Manufacturers- Opportunity to Invest

Domestic generic drug manufacturers are looking forward for huge business by the end of next year i.e. 2012, as around $3-4 billion worth blockbuster drugs going off patent i.e. losing patent protection in the US by the end of Year 2011-2012.

Drugs around $30-40 billion worth , including top-selling drugs like Lipitor (Pfizer), Nexium (Astra Zeneca) and Plavix ( Bristol Myers Squibb), are going to be out of the scope of patent protection this year or by the end of next year. As soon as the patents for these popular drugs will expire, it will open doors for generic drug manufacturers to launch their products in the US market. It is a huge opportunity for domestic generic companies, such as Dr Reddy's Labs, Ranbaxy Laboratories Ltd., Cipla Ltd., Glenmark Pharmaceuticals Ltd. and Lupin Ltd. over the next few years.

Experts feel that once generic drug versions appear in the market, it will lead to around 90% price reductions, and due to the intense market competition, both the original brand and me-too versions will be sold at a very lower price.

Ranbaxy is expected to launch generic Lipitor, which is the largest-selling drug in the whole world, after settlement with Pfizer. It is the #1 prescribed cholesterol-lowering medicine in the world and one of the most widely studied medicines— with more than 18 years of research. It has been studied in over 400 ongoing or completed clinical studies involving over 80,000 patients.

First-to-file (FTF) applications filed by generic companies, which ensures 180-day market exclusivity to the drug manufacturer is going to be cherry on the cake for generic companies. The first-to-file Para IV certification on cholesterol-lowering drug Lipitor lies with Ranbaxy.

Another approach is authorized agreement between the innovator and generic drug manufactureres who partners to sell a "me too" version, allowing the innovator to hold the larger share of revenues generated thereby. This is a Win-Win situation for both parties. Similarly, Merck had already entered in such an agreement with Dr Reddy's to launch generic versions of simvastatin (Zocor) and finasteride (Proscar) in the US market.

The opportunity for domestic generics is huge, but competition is also huge because all generic companies both Indian, Western (Teva) as well as big MNC's (Pfizer) will also be competing for the same drugs.

Some important launches include Dr Reddy's, Aurobindo, Ranbaxy, Torrent and Wockhardt of generic diabetes drug Actos (innovator Takeda), while Sun Pharma and Lupin have settled with Wyeth for anti-depressant pill Effexor last year.

It is expected that these generic companies will file aggressively for these drugs on FTF basis. Ranjit Kapadia, vice-president institutional sales, HDFC Securities, said "The full benefit (of patent expirations) will be available to generic companies only from next fiscal. During this year we will see only a part of the contribution."

Source:
Newspaper: The Mint (Hindustan Times)
Section: Corporate News
Date: 4th Feb, 2011