Pharma- The biogenerics opportunity

The 30-year-old biologicals industry is over $50 billion in size. At 15 per cent growth rate, it is also the fastest growing category of drugs in the global pharma market. Of course, conventional pharma, at $500 billion, is 10 times as big, but it is growing at about 8 per cent.

Today, biologicals present another opportunity for Indian pharma — in the form of biogenerics (also called biosimilars) or generic copies of biologicals.

Here’s how. In the last few years, new filings of conventional drugs have shrunk. So, there are fewer drugs to make copies of. Stricter regulations, higher failure in clinical trials, and longer time taken for approval of generics are other dampeners. Meanwhile, development of new biologicals has been on the rise. Besides, biologicals worth $14 billion are expected to go off patent by 2010. While insulin and erythropoietin are already off patent, products like interferon (Schering-Plough, Biogen) and granulocyte colony stimulating factor or G-CSF (Amgen) are scheduled to go off patent soon.

Even assuming a 50 per cent price erosion (since biopharmaceutical companies, creators of original biologicals, slash prices at the first sign of a biogeneric), it is a $7 billion-$9 billion opportunity for generic players. And, unlike in conventional pharma, Indian companies are on par with global ones to make good of this opportunity.

Roadblocks Galore

Cracking biogenerics is easier said than done, though. First, programming microbes to secrete a specific drug is much tougher than stringing together a group of chemicals to create a copy of a drug.This makes developing a biogeneric a more time-consuming affair (5-7 years) than a conventional drug (2-5 years). Also, controls over manufacturing conditions are far more stringent, leading to high investment.

But, perhaps, the biggest obstacle is that in lucrative markets like the US and EU, regulatory bodies (US FDA and EMEA or European Medicine Evaluation Agency, respectively) have not defined standard procedures for approving biogenerics, unlike conventional pharma generics. In a conventional pharma generic, provided you create the same molecule, and do a clinical trial to show that it works as well as the original, you are through.

In the case of biogenerics, biopharmaceutical companies contend that when the manufacturing process of a biological is changed, it may not be as effective or even similar. So, innovators’ data cannot be used to get regulatory approval. A biogeneric, thus, has to generate its own data through extensive clinical trials on far more patients before approval is given.

Fortunately for companies eyeing biogenerics, in 2005, EMEA defined a regulatory pathway for four biogeneric products — insulin, erythropoietin, human growth hormone (hGH) and G-CSF. The FDA, though, has approved only one — Sandoz’s Omnitrope (human growth hormone) — that, too, after prolonged litigation. But it has clarified that a standard regulatory pathway has not been defined for biogenerics.

All these factors have restricted pharma companies worldwide from getting into biogenerics. So, unlike the pharma space where western companies like Teva and Mylan had a headstart of more than a decade over Indian companies, in biogenerics all players are starting off on the same footing.

Revving Up Biogenerics in India

Mostly, Indian companies have preferred products that are relatively easier to make, like insulin or even erythropoietin. Few companies have chosen to tackle products like hGH and G-CSF, which are tougher to make but offer higher margins.

Things first started happening in the 1990s. First off the blocks was Dr. Reddy’s in 1994 (with a biologics department that was converted into a full-fledged division in 1999). It launched its first product, filgrastim (a G-CSF) in 2001, which was re-launched earlier this year in India and Brazil as Grafeel.

Then came Wockhardt in 1998. It launched its Hepatitis B vaccine in 2002, insulin in 2004 and erythropoietin in 2005. Also, in 2005, it created a separate division for biologicals R&D as well as manufacturing. They were followed by Biocon, which announced its plans for entering the market through insulin in 2002, and launched the product in 2005.

Strategy of Indian companies :

Dr. Reddy’s has chosen to focus on its areas of strength, oncology and related products, even in biologics. Brand building and marketing will be much easier because the products will move across the same channel. Wockhardt, on the other hand, is looking at products like insulin for India, developing countries as well as regulated markets. The strategy is to first enter the European market with products that have a defined pathway, and then look at the US once the pathway is clear.

And Biocon is initially targeting the biogeneric opportunity for its human insulin. The company is filing forapproval of its insulin in the regulated markets starting with Europe.Some companies, including Ranbaxy, are looking at taking biogeneric products developed by other companies and selling them in India and other less regulated markets. The idea is to take good products from small companies and use the bigger company’s marketing muscle to sell them. Some, of course, plan to eventually crack the US and European markets.

For instance, Concord Biotech, in Ahmedabad. Besides being the world’s only biogenerics company to manufacture all four immuno-suppressants, Concord also undertakes custom synthesis projects. In November 2005, Hyderabad-based Matrix Laboratories acquired majority stake in Concord. The products from Concord’s stable will be marketed in Europe through Docpharma (a generic company in Belgium that Matrix acquired last year) and then in the US.

Then, Ranbaxy has tied up with Hyderabad-based Zenotech Technologies to inlicense and market its products. Companies like Shreya Life Sciences, Intas, Cadila and Emcure also have well-defined marketing programmes. Shreya, which started as a distribution company in Russia and the CIS, is looking at products that can be imported and launched in India. Indus Biotherapeutics, a subsidiary of Intas, has developed human GCSF and recombinant erythropoietin for its parent. Cadila has launched Streptokinase under the brand name STPase. And Pune-based Emcure started by inlicensing biogenerics, and its current pipeline of products focuses on nephrology, oncology, cardiovascular diseases and gynaecology.

Brand Is The Key
Unlike generic pharma, in biopharmaceuticals, marketing is driven by brands simply because it is important for a company to establish that it has the capability to create a biogeneric successfully. Maximum value can be realised only from a finished formulation.” That’s because while raw material is cheap, the development process is long and expensive, making the final product almost as expensive as the innovators’. So, it makes sense to market under ones own brand name.

Aware that post approval, biogenerics will require extra promotion to sell in a new market, Indian companies are already setting up marketing front ends in Europe. Dr. Reddy’s plans to leverage its German acquisition, betapharm, to position its biogenerics in Germany and the UK. Others following suit include Ranbaxy in Germany, France, Belgium and Romania, and Wockhardt in the UK. Indian companies plan launches across the world. “India, rest of the world, Europe and the US, in that order. Wockhardt’s planned launch path is similar to Dr. Reddy’s.

so the race is on.

source BW