tools launching generics

8/8/2019 Tools Launching Generics

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Tools and Strategies for Launching a SuccessfulGeneric in Todays Ultra Competitive Environment

KATE KUHRT

BERLINSEPTEMBER 27, 2008


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BEST OF TIMES

Population all over the world getting older

Increase in the size of middle class in manycountries

Governments and employers promoting use ofgeneric drugs in efforts to slow down increase inhealth care spending

Increased acceptance of generic drugs by patients

and physicians

A number of blockbusters losing patent protection


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AND WORST OF TIMES

Innovation drought

ANDA backlog and authorized generics

Pressure on prices and diminishing margins

Government regulation

Consolidation among wholesalers and retailers

Increased competition

Generic filings and approvals at all-time high

A number of new entrants, many from India, often with accessto low-cost APIs

Overcapacity in manufacturing

Focus on market share rather than bottom line

Authorized generics in the U.S.


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ANDA APPROVALS BY INDIAN GENERICS

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2007 YTD FINAL ANDA APPROVALS BYCOUNTRY

USA; 116; 39%

In ia; 85; 28%

G many; 25; 8%

I a ; 23; 8%

Oth ; 20; 7%

Ic an ; 6; 2%

Cana a; 11; 4%

Switz an ; 13;

4%

Source: Newport Strategies Horizon Global system

Through August

, 2007


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ARE THE GENERICS INDUSTRTS GOLDENYEARS OVER?

Expectation that only the fittest will survive

Coping strategies aimed at:

Reducing cost

Reducing risk Improving speed to market

Differentiation

Achieving critical mass


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COPING STRATEGIES: CONSOLIDATION

Consolidation expected to continue in pursuit of

Top-line growth

Opportunities in new markets

Synergies

Example: Barrs acquisition of Pliva

Biogenerics

New dose forms

Presence in emerging markets

Access to API

Result: Industry will likely be dominated by a handful of globalplayers plus many small, focused players


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LEAGUE TABLES ARE CONSTANTLY SHIFTING

Source: TS Research

Global IsraelTeva 8400

Global AustriaSandoz 5960

Global GermanyMerck KGaA 2200

EU SloveniaKrka 600

Global USMylan 1260

EU Germanyratiopharm 2000

Global IndiaRanbaxy 1170

EU GermanyStada 1400

Global IndiaCipla 740

US USPerrigo 1024

Global CanadaApotex 770

US USWatson 2550

Global USBarr 3000

EU HungaryGedeon Richter 600

Focus HQSales $M

Global USHospira 3480

Global IndiaDr Reddys 550

US USActavis 1835

US USEndo 650

Purchase by Mylan expected to close H2 07

Sold US Business

Lost Bid for Pliva

Acquired Mayne

Acquired Pliva

Acquired Andrx

Acquired Betapharm

Majority stake in Matrix; Acquiring Merck KGaA


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COPING STRATEGIES: GEOGRAPHICDIVERSIFICATION: EUROPE Recent Examples

Barr-Pliva

Mylan-Merck Generics

Hospira-Mayne

DRL-Betapharm

Matrix-Docpharma

Ranbaxy-Terapia

Aurobindo-Milpharm

Alkem close to buying two firms in UK and Germany

Pros Counterweight to the U.S. market

Some markets still focused on branded generic

Rapid growth of pharma industry in E. Europe and Russia

Cons Some markets as competitive as U.S.

Generic uptake high at the expense of margins


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COPING STRATEGIES: GEOGRAPHICDIVERSIFACTION: JAPAN

Pros

Japanese generics market seen as having a tremendousgrowth potential

Currently % by value, 7% by volume

Cons

Some still skeptical about actual market potential

Difficult for foreign companies to do it alone

Acquisitions, JVs, and marketing agreements provideready access to:

Manufacturing

Marketing

Distribution relationships


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Acquisitions

Zydus Cadila acquired a 00% stake in Nihon Universal Yakuhin in April 2007

Joint Ventures

In November 200 , Ranbaxy increased equity stake in Nippon Chemiphar from0% to 0%

Marketing Agreements

In August 200 , Lupin entered into a long-term marketing agreement with KyowaPharmaceutical

In March 200 , Hospira-Taiyo agreement to sell each others injection agents

Additional companies to watch

Continued speculation that Teva will eventually acquire a Japanese firm

Rumors that one of the three large generics (Nichi-iko, Sawai, Towa) will comeunder part ownership by a large multinational

Torrent Pharma opened a fully-owned subsidiary in Yokohama in April 200

Dr. Reddy's considering setting up an office in Tokyo or Osaka

COPING STRATEGIES: GEOGRAPHICDIVERSIFACTION: JAPAN


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COPING STRATEGIES: BACKWARDINTEGRATION INTO API Recent examples

Mylan-Matrix

Barr-Pliva

Pros

More control over cost and access to API

Decreasing number of established API manufacturers stillindependent due to M&A

Different parts of the value chain may make money in different products

Faster response times

Cons

No one plant can make all APIs required by a typical generic

Making just enough for captive use often not economical

Other dose companies wary of buying API from a competitor


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COPING STRATEGIES: MOVINGMANUFACTURING AND R&D TO LOWER-COST COUNTRIES Applies to both API and dose

Examples Sandoz multiple units in India

Teva scientists in Faridabad, acquired Regent Drugs (JK)

Apotex manufacturing and R&D facilities in Bangalore

Ratiopharm R&D center in Goa Stada production sites in Russia, Vietnam ( 0: 0 JV) and China

Perrigo JV in China for ibuprofen

Actavis API development facility and CRO in India

Pros Abundance of scientists

Cost savings Cons

Language barriers

Potential for intellectual property theft

Quality control


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COPING STRATEGIES: ALLIANCES WITHCOMPANIES IN LOWER-COST COUNTRIES Applies to both API and dose Manufacturing

Examples Alpharma-Shasun

200 agreement for 0 finished dose products and undisclosed number of APIs

Actavis-Orchid

2007 agreement involving cephs in Europe

Development, manufacturing, and distribution agreement for 0 non-cephs inthe U.S.

Pros Cost savings

Access to a diverse talent pool

Cons Longer response time to changes in market dynamics

Potential delays due to regulatory issues Potential loss of IP

Challenges with managing long-distance relationships


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COPING STRATEGIES: SOURCING APIFROM LOWER-COST COUNTRIES

Examples

Teva, Apotex, Watson has been sourcing from India for years

Indian companies increasingly sourcing out of China

Pros

Cost savings Many qualified API sources to choose from

Cons

Many API sources with limited track record

FDA inspections more lax overseas?

Language barrier QA costs

Potential shortages due to stricter enforcement of localenvironmental laws


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COPING STRATEGIES: SOURCING APIFROM LOWER-COST COUNTRIES (cont)

Source: Newport Strategies Horizon Global

74

2518

8

17

104

0

20

40

60

80

100

120

Established Less Established Potential Future

NumberofCorpo

rateGroups

India

China

+2

+

+2

-

+7

+

Change from 200


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COPING STRATEGIES: FOCUS ON NICHEPRODUCTS

Examples

Ranbaxy, DRL eyeing Bradley Pharmaceuticals(dermatology)

Pros Less competition

Margins in difficult formulations likely to remain higher

Inhaled products, certain injectables, controlled release

Cons Even $20M products attracting interest

If multiple generics get involved, may not recoupinvestment

Costly barriers to entry for certain products


18/27

COPING STRATEGIES: INNOVATION

New formulations

Andrx Altoprev (controlled-release lovastatin)

Ranbaxy Riomet (metformin oral solution)

New molecules

Best known examples: Pliva Zithromax (azithromycin), Teva

Copaxone (glatiramer) Ranbaxy expects to be the first Indian pharma co to launch a new NCE

(exp. 20 )

Pros

Potential for big returns during patent and exclusivity period

Cons Original R&D very expensive and risky: It may take 000s of failuresbefore a successful NCE

Possible reimbursement issues and higher marketing costs for genericplus products


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COPING STRATEGIES: PARAGRAPH IVPATENT CHALLENGES

Pros

Generic companies can make a considerable amount ofmoney during the 80-day exclusivity period

First-to-market generic company often maintains a big

market share even after the end of the exclusivity

Cons

Expensive and risky

Authorized generics and shared exclusivity reduce the

potential payoff from the initial 80 days


20/27

PARAGRAPH IV PATENT CHALLENGES

As of September 7, 2007, challenges on productsencompassing

unique brand names

282 unique molecules or molecule combinations

8 unique dose forms

In 200 , 27 molecules (or new combinations) first wereexposed to patent challenges

So far in 2007, 7 molecules (or combinations) have seentheir first patent challenges

Source: FDA, Newport Strategies Horizon Global


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IMPORTANCE OF API IN PATENTCHALLENGES

Risk of supplier failure is high for companies involved with patentchallenges

Even one day of delay can cost the company FTF status

Risk is also high for API manufacturers

Generics may settle with innovators or do deals with other

generics who use other API sources If dose company is backward integrated into API, may switch to

internal API source when convenient

If development starts too early, product may be withdrawn frommarket

Backward integration into API may provide crucial advantages Coordinated API and dose development

Coordinated regulatory submissions

Speedy addressing of any issues

Improved knowledge of polymorphs


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COPING STRATEGIES: SOPHISTICATEDPRODUCT SELECTION

Companies need to pick products for development very carefully

It is not enough to look at sales data!

Pharmacodynamics

Toxicity Country Regulations Pack Pricing Reimbursement

Data Needs during Product Selection

Approvals

API Sources Company Data Manufacturing Capabilities Bioequivalence Stability

Sales

Dose Form and Strength Patents, Patent Challenges Labeling Chemistry, Synthesis Data Exclusivity Market Exclusivity

Targeting EvaluationDeal

MakingFormulation

DevtRegistration

& ReviewLaunch

LaunchL 8 monthsL 8 years L 7 years L years


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COPING STRATEGIES: SOPHISTICATEDPARTNER SELECTION

Companies need to pick partners and acquisitiontargets carefully

Data Needs during Partner Selection

Patent portfolio

Patent challenge experience Approvals Backward/forward integration Current alliances Location

Product portfolio

Product pipeline Geographic reach Financials Regulatory experience Manufacturing capabilities


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TOOLS TO TH RESCUE!

Access global market, intellectual property and product info

Predict key data in advance (e.g. competitiveness, genericlaunch date)

Flexible, fast searching across multiple, exacting criteria

Identify early, viable source of API supply and backupsources

Spot in- and out-licensing capabilities

Identify potential partner companies with multiple, exacting

criteria

Keep a watchful eye on potential acquisition targets and trackcompetitors


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THANK YOU!

Kate Kuhrt

Newport Strategies

Thomson Reuters

2 Commercial Street

Portland, Maine 0 0

USA

+ (207) 87 - 700 x2

[email protected]

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