Indian drugmakers switching to fresh strategies as US amends norms.

HYDERABAD: Indian generic drug producers are devising fresh strategies to continue benefiting from the world's largest pharmaceutical market the United States because exclusive marketing rights for offpatent drugs are not so exclusive any more. The US Food and Drug Administration (USFDA) has been clearing applications to make generic drugs that are going off patent at a faster pace, which is resulting in increased competition.

Moreover, the FDA has been granting joint 'first to file' (FTF) status for several generics, diluting the value of the exclusive marketing right that comes with such a status. FTF refers to drugs whose generic, or low-cost, versions can be launched by a drugmaker who enjoys an 180-day exclusive marketing period during which no other generic versions can be sold.

FTFs are the main growth drivers for most leading Indian companies that make generic versions of expensive drugs that have gone off patent. Industry experts and analysts point out that many domestic pharmaceutical companies that once enjoyed windfall gains frequently through 180-day market exclusivity are realising that they cannot remain the sole players to reap benefits of market exclusivity after the FDA amended guidelines to allow joint firsts to copycat drugmakers.

Out of India's $15-billion global pharmaceutical exports, domestic drugmakers depend on the US market for at least $4 billion in sales. Abhijit Mukherjee, COO of Dr Reddy's Labs said the era of windfall gains from FTF is over. "Because of the increasing competition among the generic drug companies, there is no guarantee that one company can solely enjoy the 180-day market exclusivity." Because of the changing dynamics of the US generic market, Dr Reddy's has devised new business strategies, including shifting focus to complex and difficult to make generics, which address competition and ensure better growth and high-er margins.

IDFC Securities' pharma analyst Nitin Agarwal said the value of the 180-day market exclusivity, which is considered the holy grail of the US generics market, now stands "considerably diminished" thanks to growing competition among players. Reflecting the changing situation in recent months, more than a dozen generics makers have been sharing marketing exclusivity for about 70% of the applications for off-patent drugs. A recent example is Vimpat, an anti-epileptic drug with innovator rights belonging to UCB.

As many as 15 Indian companies including Ranbaxy, Aurobindo, Glenmark, Sun Pharma, Cadila, Alembic and Hetero are competing to share the exclusivity, apart from multinationals like Mylan, Sandoz and Watson. But this does not mean sole exclusivity is absent — among the beneficiaries are Dr Reddy's and Lupin. The latter reported windfall gains from ophthalmic solution Zymaxid ($60 million) and anti-HIV drug Trizivir ($110 million), while Dr Reddy's enjoyed market exclusivity from anti-psychotic medicine Ziprasidone.

Analysts said large Indian drugmakers are shifting their focus towards niche products with huge entry barriers, like complex generics. Accordingly, the expenditure of Indian medicine manufacturers towards research and development has risen significantly. Asenior executive of a Hyderabadbased generic firm said on condition of anonymity that the strategy of focusing on FTFs for market exclusivity and spending large amounts on patent infringement battles is slowly losing takers.

The new game is to judiciously shift attention to injectables and drugs with limited competition to maintain growth and earn high margins, he said. Expedited clearance of generic applications by FDA offers both rewards and drawbacks, said IDFC Securities' Nitin Agarwal. "While this will lead to accelerated monetisation of for larger players, it will also reduce opportunities for profits arising out of delay in approval of competing generic products."

Source : economictimes.indiatimes.com