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Generics Companies Weigh In on Biological Drugs

February 01, 2011 By: Nadia Category: HealthCare, Medicine Advice, Medtipster, Prescription News, Prescription Savings

www.Medtipster.com Source: The Wall Street Journal, 1.31.2011 – By Goran Mijuk

Generic drug makers are expecting copies of complex biological drugs to become a multibillion dollar market in the near future. But a lack of clear regulation, intense scrutiny from makers of the original drugs and the high cost of research may damp their prospects.

Hopes that the U.S. and European market for these copies, known as biosimilars, will thrive are based on the fact that biological drugs with more than $60 billion in annual sales will lose patent protection by 2015, according to research firm Datamonitor.

Should the market develop according to plan, copies of these complex drugs alone could make up around 50% of the expected $10 billion biosimilars market by 2016, according to data compiled by Capgemini Consulting. The rest will come from simpler biosimilars, such as copies of insulin and human growth hormone.

Biological drugs are made of larger molecules than chemical drugs. They are generally more effective in treating diseases such as cancer but are more expensive because of the high costs involved in making them.

Among those with patents due to expire soon are Roche Holding AG’s blood cancer and rheumatoid arthritis medicine Rituxan, also known as MabThera, anti-inflammatory drug Remicade, which is co-marketed by Merck & Co. and Johnson & Johnson, and Amgen Inc.’s and Pfizer Inc.’s rheumatoid-arthritis drug Enbrel. Each drug had more than $5 billion in annual peak sales.

The European expiry in 2014 of Roche’s Rituxan, a complex monoclonal antibody, which allows for the direct targeting of affected cells, has recently prompted three generic players to start research on a copy. Novartis AG’s generics unit, Sandoz, said it has started midstage trials for the drug, following similar steps by U.S.-based Spectrum Pharmaceuticals Inc. in early January and Israel-based Teva Pharmaceutical Industries last year.

Sandoz, which is leading the market for biosimilars with a roughly 50% market share, ahead of Teva and U.S.-based Hospira Inc., expects the entire biosimilars business could reach more than $20 billion by 2020, up from a current $250 million. Swiss chemicals company Lonza Group AG, which is teaming up with Teva in its biosimilars venture, expects solid growth because patients, insurance companies and governments want drugs to be cheaper.

The generics companies base their argument on the high price of many complex biological medicines. Treatment with Roche’s lung and kidney cancer drug Avastin and the colorectal cancer drug Erbitux from Germany’s Merck KGaA can cost thousands of dollars a month. But some experts question the generics companies’ pricing rationale, saying the current constraints could even force larger generic producers such as Sandoz or Teva to rethink their operating models.

“Much will depend on how the price of these drugs will develop,” says David Kaegi, pharmaceuticals analyst at Bank Sarasin. “Depending on the price, operating models will have to be adjusted.”

He says prices for biosimilars could be just 30% lower than the prices of the originals, because only a couple of generics firms will compete against an original drug. “It thus won’t be like in the case of the simple generics, where many firms moved into the market and prices were aggressively cut. It will be more difficult,” he says.

Since generics of chemical drugs, which are made of small molecules, are relatively simple to copy, the market for generic drugs attracted a flurry of players and this brought prices down sharply.

The main risk, analysts say, is that if prices don’t come down much, original drug producers will be able to retain a large market share. On the other hand, if prices fall too fast, generics firms’ margins could suffer.

A Sandoz spokesman said the company expects pricing to continue to vary according to product and market, saying the entry bar for complex products would be high, which would limit competition and keep prices from falling too fast. Lonza’s chief executive, Stefan Borgas, said that even if prices fell by 50%, margins and growth would still be healthy.

Industry insiders and management consultants are also concerned the market may need longer than expected to establish itself, as research and development for these complex drugs is difficult and costly, and doctors and patients may be wary about their safety.

One of the main problems with generic versions of complex biological drugs is that, unlike simple-to-produce generics of chemical drugs, which are identical to the originator product, these medicines aren’t exact copies. Complex biological drugs such as Rituxan are genetically engineered and consist of large molecules produced in live cells.

Because the manufacturing process is difficult, requiring extensive genetic expertise, and it is also prone to errors, continuous testing and controlling is needed. At best, a generic copy can only be similar to the original protein.

Because biosimilars aren’t identical copies, “biotech and big pharma are looking to squash the movement by throwing bioequivalent issues and quality-control issues,” says Mary Ann Crandall, an independent pharmaceutical analyst at research firm Kalorama Information. “I think that will continue to hinder things. These products are too much of a cash cow to just let generics come in and cannibalize it.”

World-wide sales of all biological drugs reached $130 billion in 2009, according to research firm IMS Health, and are expected to grow much faster than conventional chemical drugs.

Another factor keeping the biosimilars market in check is the lack of clear regulatory guidelines.

While the European Medicines Agency has so far approved 13 simpler biosimilar drugs such as insulin, final guidelines for complex biosimilars are still pending. Analysts say they may be introduced next year.

In the U.S., regulators are currently working to establish how intensive testing for biosimilars needs to be and how the traditional three-phase drug-approval process for originals can be abbreviated. A key concern is to make sure that biosimilar drugs are safe and effective.

“I had predicted that it would be in place by 2009 but now, although there has been progress, there are still numerous regulatory hurdles. Big pharma is very influential and not about to go quietly,” Ms. Crandall says.

Roche, which has already prepared for generics competition but expects the impact from biosimilars on Rituxan to be limited, says that while it supports the development of regulatory frameworks for biosimilars, patient safety is of the utmost importance.

“Specific processes, data, research and experience are needed to ensure that a biosimilar monoclonal antibody has the same profile, efficacy and safety as the originator product,” Roche says.

This may prove too difficult for many players. Michael Frizberg, vice-president of Lonza Generics, said that developing a complex biosimilar can take up to eight years and cost more than $100 million.

Sandoz’s head, Jeff George, put the cost as high as $250 million for difficult-to-copy large-molecule drugs.

Although small U.S. biotech Spectrum Pharmaceutical, which has teamed up with Viropro Inc., says it has enough funds to develop a copy of Roche’s Rituxan—financial constraints may keep many smaller firms from entering the market. “It may cost too much time and money for a number of small to midsized generics manufacturers to embark on biosimilars production,” says Stephane Dutu, asset manager at Vernes & Associés in Geneva.

“Furthermore,” Mr. Dutu says, “doctors may be reluctant to use biosimilars as it is a new class of products with no track record in terms of safety and benefits.” A poll conducted in summer 2010 by GMS Dr. Jung GmbH, Gesellschaft für Markt- und Sozialforschung, found that more than 50% of physicians in Germany have heard or read little or nothing about biosimilars.

U.S. Drug Sales Saw Growth In 2009; Indicate Economy’s Comeback

April 05, 2010 By: Nadia Category: Medtipster, Prescription News

www.medtipster.com blog article source: www.drugstorenews.com – author: Alaric DeArment

U.S. Drug Sales Saw Growth In 2009, IMS Health Says

Pharmaceuticals appear to be slowly making a comeback, as 2009 saw drug sales almost three times as high as in 2008, according to a new report by IMS Health.

IMS reported 5.1% sales growth in ethical pharmaceuticals and insulins through retail and nonretail channels, with sales reaching $300.3 billion, compared with 1.8% growth in 2008.

“In 2009, demand for pharmaceuticals proved stronger than in the prior two years, yet remained at historically low levels,” IMS SVP Healthcare Insight Muray Aitken said. “While the 32 innovative products launched last year brought important new treatment options to patients in a number of disease areas – including cancer, thrombosis and atrial fibrillation – they drove only a limited increase in drug spending. Access for the first time to lower-cost generic treatment options in the areas of epilepsy, migraine and immune system disorders had a more moderate impact on market growth than generic launches in previous years.”

Greater use of specialty drugs accounted for much of the growth, growing 7.5% last year and now constituting 21% of U.S. market value, and sales of monoclonal antibodies for treating cancer – such as Genentech’s Avastin (bevacizumab) and Herceptin (trastuzumab) and Rituxan (rituximab), by Genentech and Biogen Idec – grew by 9%.

Meanwhile, economic conditions didn’t dampen demand for prescription drugs, as the volume of dispensed prescriptions grew by 2.1%, to 3.9 billion, compared with 1% growth in 2008; while the volume of new therapy starts in 17 major chronic disease areas declined by around 1%, the volume of add-on therapy starts, switches and refills rose by almost 2%. Use of generic drugs has continued to rise, and generics now represent 75% of all dispensed prescriptions in the United States, with the total number of prescriptions having increased in 2009 by 5.9%.

“The greater availability of generic options, growing differentials in co-pays between brands and generics and efforts by patients, insurers and employers to encourage appropriate use of lower-cost alternatives were all factors in the changing mix of medicines used in patient treatment last year,” Aitken said.

Prescription sales of antipsychotics remained unchanged compared with 2008, at $14.6 billion, but the class remained the top-selling one in the United States. Measured by dispensed prescription volume, lipid regulators remained the largest therapy class, with prescriptions growing by 5%, to 212 million. At the same time, proton-pump inhibitors replaced lipid regulators as the second-largest therapeutic class in terms of sales, with sales of $13.6 billion, though that represented a 2% year-over-year decline. Lipid regulators had sales of $13.1 billion, a 10% decline from 2008 that resulted from an ongoing shift to generics.

WHAT IT MEANS AND WHY IT’S IMPORTANT

The uptick in prescription drug sales growth may or may not be yet another indicator of improvement in the U.S. economy, but it is, without a doubt, indicative of a return to growth for the prescription drug market and, by extension, an indicator of growth among retail pharmacies.

When IMS Health reported that prescription drug sales had $300.3 billion in sales in 2009, a 5.1% increase over 2008, the figure included every distribution channel. But the bulk of those sales, $164 billion, were through retail channels, including retail pharmacy chains, independents and supermarket pharmacies.

The biggest increase between 2008 and 2009 was in chain stores, which saw a 3.6% increase in prescription drug sales, from $101.8 billion to $105.5 billion. Sales in supermarkets increased by 1.4%, from $20.9 billion to $21.2 billion. Meanwhile, independents had a 2.1% decrease, from $38.1 billion to $37.3 billion. A similar trend appears when figures for dispensed prescriptions are broken down by distribution channel, with a large increase in chain stores, a smaller increase in supermarkets and a decrease in independents.

Sales of specialty drugs went up as well. With $8 billion in sales, compared with $7.5 billion in 2008, monoclonal antibodies for treating cancer rank sixth in IMS’ list of the top 15 therapeutic classes, compared with their seventh-place ranking last year. Biotech drugs for treating arthritis and inflammatory diseases rank eighth and fourteenth, respectively, though erythropoietins, for treating anemia, had a $900 million decrease in sales.

IMS doesn’t have a specific category for the specialty channel, but it does have them for mail service and home health care, two channels used extensively by specialty pharmacies. Though drug sales through the home healthcare channel had a slight decrease, from $2.6 billion in 2008 to $2.5 billion in 2009, mail-service sales increased from $46 billion to $51.5 billion, placing the channel in second place, below retail pharmacy chains, even though it ranked last when measured by U.S. dispensed prescriptions, which also decreased slightly, from 238.4 million in 2008 to 237.5 million in 2009.

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