Pharma News Analysis

Merck in an Authorized Generic Deal for Fosamax

Merck has entered into yet another authorized generic deal - this time for its blockbuster Fosamax. However, the name of the generic partner is unknown... Here is what was reported in today's New York Times:

"said on Friday it had signed a deal for an authorized generic form of its blockbuster osteoporosis drug Fosamax, to become available after the United States patent on the drug lapses on Feb. 6.

“We can confirm an authorized generic deal for Fosamax has been signed, although specific details of the deal are proprietary,” said a Merck spokesman, Ron Rogers.

Fosamax, whose chemical name is alendronate, has annual sales of about $3 billion, making it the world’s top-selling osteoporosis drug. Now available in a once-weekly formulation, it was the first member of the widely used family of treatments known as bisphosphonates that inhibit cells called osteoclasts that break down bone tissue.

An authorized generic is a copycat form of a company’s branded medicine that is sold through a licensing agreement, usually with a generic-drug manufacturer. Such deals allow the original seller of a branded drug to hold on to a greater revenue stream from the medicine once it loses patent protection and becomes prey to competition from generics.

An authorized generic can significantly hurt sales of rival generics waiting to be launched once a branded drug’s patent lapses.

Analysts have said cheaper generics will not only batter sales of Merck’s branded Fosamax, but could hurt another once-weekly bisphosphonate, Actonel, which is sold by Procter & Gamble and the French drugmaker Sanofi-Aventis.

...

“I think generic Fosamax should do some damage to Actonel, but the impact to Boniva should be much less because Boniva is more differentiated as a once-monthly pill,” said Shaojing Tong, an analyst with Mehta Partners.

Barr Pharmaceuticals said Friday that it plans to launch its generic of the basic 70-milligram form of Fosamax on Feb. 6.

A spokeswoman for Barr said the company expects the Israeli drugmaker Teva Pharmaceutical Industries to launch its own generic about the same time and that Barr and Teva would share 180-day marketing exclusivity for their products. ....

Typically, the first generic-drug maker to seek approval of a generic form of a branded medicine is entitled to six months of marketing exclusivity in the United States, assuming its product is approved. But an authorized generic upsets that lucrative scenario.

Fosamax is also sold in a formulation that is combined with either 2,800 units or 5,600 units of Vitamin D, a nutrient that supports bone and other tissues.

The formulation with the lower dose of Vitamin D will lose United States patent protection two months after basic Fosamax, while the combination product containing the higher dose of Vitamin D will be patent-protected through 2010, according to Mr. Rogers of Merck.

Cowen & Company forecast in July that 85 percent of United States prescriptions for alendronate and up to half of international prescriptions will be generic this year.

It forecast that global sales of Fosamax would plunge to $1.85 billion in 2008, hurt by the generics, and decline to $800 million in 2009....

Top 10 Trends for Pharmaceutical Industry in 2008

With 27 days left in 2007, it is time to look forward to 2008. Based on my recent conversations with pharma executives, VCs and suppliers, the top ten issues or trends in 2008 will be:

1. Outsourcing & Off-shoring to Continue: While outsourcing and off-shoring seem to have taken off in 2007, it will be accelerated even more in 2008. Pharma companies are getting more and more comfortable, experienced and used-to with doing business globally, especially in India and China. Outsourcing companies in both the countries have scaled up significantly and companies like GVK Bio, SAI, Advinus, WuXi, Hikal and others have received significant private equity money as well. Look out for even more outsourcing and off-shoring deals in these two countries across the value chain, including but not limited to: drug discovery, clinical trials, data management, manufacturing of APIs and formulations (late stage). I.e.: Sanofi-Aventis opens R&D centre in Goa, India. “Sanofi-Aventis has opened its largest Asian and first Indian pharmaceutical development centre in Goa, with an investment of Rs. 100 crore (almost $25 million)...This is the group’s single largest investment in India, as part of its strategy to expand its presence and accelerate growth both in India and Asia, a note from the company said. The centre is operational with around 50 employees, a company official told Business Line, indicating that the number could increase. The centre will be an Asian hub for analytical and pharmaceutical formulation development, with the capacity to develop 12 pharmaceutical compounds per year. No further details were given.”
2. Global Licensing: Licensing is not a new phenomenon in our industry, however, licensing from companies in India and other emerging countries is relatively a new business practice. Look for more deals where pharma and biotech companies will partner with companies like Glenmark, Nicholas Piramal and others.
3. Layoffs and Lean Operations: Pfizer, J&J, BMS, Wyeth and many others have been announcing their plans for layoffs and lean operations. This trend will definitely continue will global pharma companies. However, Chinese and Indian pharma and contract research and manufacturing services companies will continue to ramp up and hire additional people. 
4. Growing importance and dominance of generic companies: Watch for Barr, Ranbaxy, Mylan, Teva, Actavis, Dr. Reddy’s Labs to become even more prominent, important and dominant as they keep launching more and more generics and also keep moving up the value chain by focusing on their NCEs.
5. Challenging times for Wholesalers: Wholesalers and distributors will face more hurdles in 2008 as they face more problems with their business models. More and more retailers, hospitals and PBMs (customers) and manufacturers (suppliers) are trying to figure out the true role (and value) of wholesalers and how to compensate them. Wall Street Analysts have not been kind to this sector and it is not likely to change anytime soon.
6. M&A / Consolidation: It is likely that 2008 will see even more M&A and consolidation. However, the major twist will be that a great deal of buyers will come from outside the US.
7. Eliminating Hospital Infections: Companies like Cardinal Health are already putting a lot of energy, resources and focus on the prevention and treatment of hospital infections. In 2008, in addition to treatment, pharma industry will work more and more towards preventing infections and creating solutions that treat infections in an expedited manner. This is a huge shift when the onus was solely on hospital staff.
8. Prevention of Medical errors: In previous posts, I have talked about the recent problems related to medical errors. Medical errors are almost as big, if not bigger, than hospital infections. Pharma companies are already working on informatics and other IT tools to prevent medical errors in partnerships with healthcare institutions.
9. Emergence of new global players: Pay attention to companies like Actavis, Ranbaxy, Nicholas Piramal, Dr. Reddy’s, Zydus, Wuxi Pharmatech to take lead in a wide range of M&A activities. More and more of these companies have the dreams to become leading pharma companies not just in their own countries or regions but also globally.
10. Additional pressure, limelight and scrutiny of US Pharma industry due to elections: Whether it is Hillary Clinton, Obama, Rudy or Mitt Romney….look for more rhetoric, more pressure and more limelight on the US pharma industry’s practices. Thanks to the upcoming elections, pharma industry will be sure to become a punching bag for many politicians and Presidential candidates.

Deals, Investments and Partnerships Surge in India…

It seems that the Indian pharma industry is on fire lately… Recent deals prove this…

Nicholas Piramal India Ltd. (NPIL) entered into a drug discovery collaboration deal for two cancer molecules with MSD Pharmaceuticals, subsidiary of global pharma company Merck & Company. NPIL will discover and develop new drugs for two selected targets provided by Merck in the area of cancer. http://www.nicholaspiramal.com/media_pr48.htm

Eli Lilly will acquire the rights to a portfolio of transient receptor potential vanilloid sub-family 1 (TRPV1) antagonist molecules, including a clinicalcompound, GRC 6211 from Glenmark Pharmaceuticals. GRC 6211 is currently in early clinical Phase II development as apotential next-generation treatment for various pain conditions, including osteoarthriticpain. Under the terms of the agreement, Glenmark will receive an upfront fee of $45 million and could receive up to an additional $215 million in potential development and sales milestones for the initial indication, as well as royalties on sales if GRC 6211 is successfully commercialized. If other indications are successfully developed, Glenmark would be entitled to additional milestones up to $90 million. Lilly will have marketing rights for North America, Europe and Japan, while Glenmark will retain the marketing rights in all other countries. www.glenmarkpharma.com/media/pdf/releases/Rel_Lilly-Glenmark_Oct30_07.pdf

Key Observations, Thoughts and Questions:

There are several reasons for the surge in deals between Indian and the global pharma companies, including: ­ 

• Global pharma companies are trying to launch drugs in a faster and cheaper manner. Partnering represents a fantastic opportunity for them to lower risk.
• However, partnering with Indian companies is even more appealing as some of them have exepertise, capabilities, infrastructure and money.

• India

  has English speaking scientific talent that has experience in chemistry, drug discovery
• Comparable to NIH in the US, India has CSIR - allowing for the industry to tap into a great deal of knowledge, expertise and resources
• Global companies have developed a higher level of comfort around working with Indian companies than ever before. The key inflection point has been the implementation of patent regime in 2001.

It would be fascinating to see an Indian company take a drug from a concept to launch - all the way, on its own...