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Generic Growth Strategies - Manufacturers to Increase Focus on Super Generics and Biosimilars to Drive Revenues

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Generic Growth Strategies - Manufacturers to Increase Focus on Super Generics and Biosimilars to Drive Revenues Summary GBI Research has released its research “Generic Growth Strategies - Manufacturers to Increase Focus on Super Generics and Biosimilars to Drive Revenues”. It provides a comprehensive overview of the generic drugs market, analysis of upcoming noteworthy patent expirations, and trends and issues facing the generics market. The report delves into much detail on the current landscape; changes that have structured the generic drugs market in the last 30 years; and the reason behind the players’ urgency in developing and implementing generic growth strategies. The report also contains impact analysis of the regulatory landscape in the major geographies pertaining to the generic drugs market. Major strategies adopted by the leading companies in the generic drugs market have been analyzed in much detail, along with an elaborate company portfolio and strategic analysis of leading generic players. This report is built using data and information sourced from proprietary databases, primary and secondary research and in-house analysis by GBI Research’s team of industry experts. GBI Research has found that the pharmaceutical industry in general and the generics sector in particular have turned out to be highly competitive of late. There is rampant consolidation; novel business models are developing, such as hybrid models between generic and innovator companies; and generics companies partnering with third-party sales teams to increase growth. The benefits from these partnerships are wide ranging for the generics companies, from higher access to research and development capabilities and innovator drugs’ access to wider penetration in new markets. Scope The scope of this report includes - - Detailed study of generic growth strategies with special emphasis on strategies which help in combating intensive competition. - Analysis of the major strategies

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									    Generic Growth Strategies - Manufacturers to Increase
  Focus on Super Generics and Biosimilars to Drive Revenues
 Reference Code: GBIHC089MR                                                                                                                                                                                 Publication Date: May 2011


   Novel business models             GBI Research has found that the pharmaceutical industry in general and the generics sector in
   such as hybrid models             particular have turned out to be highly competitive of late. There is rampant consolidation; novel
   between generic and               business models are developing such as hybrid models between generic and innovator companies;
   innovator companies fuel          and generics companies partnering with third-party sales to increase growth. Such joint ventures
   generic drugs market              and co-operations are being adapted to leverage each partner‘s strengths. The benefits from these
                                     partnerships are wide ranging for the generics companies, from higher access to research and
                                     development (R&D) capabilities and innovator drugs access to wider penetration in new markets.
                                     Patent Expiries in Near Future Will Drive Generics’ Growth
                                     The pharmaceutical industry is going to experience major patent expiries during 2010-2014, of
                                     which 2010 to 2012 are expected to be the peak years, with the loss of patents for drugs whose
                                     sales were worth more than $60 billion during 2009. In 2010, major drugs like Lipitor (atorvastatin),
                                     Cozaar (losartan), Advair (fluticasone/salmeterol), Arimidex (anastrozole), Flomax (tamsulosin)and
                                     Gemzar (gemcitabine), which together had sales of more than $24 billion, are facing generic
                                     competition. In 2011, several blockbusters are facing impending patent expiry and thus present
                                     opportunities for generics proliferation.

                                      Generic Growth Strategies, Global, Revenues of Top 10 Drugs due for Patent Expiry ($m),
                                      2010-2014

                                                         14,000

                                                         12,000   $11,434



                                                         10,000
                                         Revenues ($m)




                                                          8,000
                                                                                       $6,146            $6,087             $6,013
                                                          6,000
                                                                                                                                                 $4,977             $4,915                 $4,866

                                                          4,000                                                                                                                                               $3,561
                                                                                                                                                                                                                                $3,075        $3,043


                                                          2,000

                                                             0
                                                                                                                                                                     Eli Lilly / Zyprexa
                                                                    Pfizer / Lipitor




                                                                                                                                                                                                               Merck / Cozaar
                                                                                                          Roche / Rituxan




                                                                                                                                                                                                                                Cymbalta
                                                                                                                             Novartis / Diovan
                                                                                       Squibb / Avapro




                                                                                                                                                                                           Astra-Zeneca /




                                                                                                                                                                                                                                              Sanofi-Aventis /
                                                                                                                                                 GlaxoSmithKline/




                                                                                                                                                                                                                                Eli Lilly /
                                                                                        Bristo-Myer's/




                                                                                                                                                                                             Seroquel




                                                                                                                                                                                                                                                 Lovenox
                                                                                                                                                      Advair




                                                                                                                             Name of Company/ Drug Name

                                      Source: GBI Research, Company Reports




Generic Growth Strategies - Manufacturers to Increase                                                                                                                                         GBIHC089MR /Published MAY 2011
Focus on Super Generics and Biosimilars to Drive Revenues
                                                                                                                                                                                                                                                         Page 1
                                                                                                                 © GBI Research. This is a licensed product and is not to be photocopied
                                     Legal and Socio-Economic Factors Favor Increasing Genericization
                                     The US generic industry has grown considerably ever since the enactment of the Hatch-Waxman
                                     Act, in 1984 which provided substantial power to generic companies to challenge drug patents and
                                     avail the benefit of a 180-day exclusivity period given to the first-to-file generic company. Since
                                     then, generic companies have used this Act to challenge the patents of branded drugs. Moreover,
                                     healthcare providers are under pressure from rising healthcare costs and prescription drug
                                     spending in particular. With increasing prices for the prescription drugs, healthcare providers such
                                     as federal and state-funded programs, employers, insurance companies, and even end-consumers
                                     under the co-pay agreements, are feeling the economic pressure. In such an environment, generic
                                     drugs provide several advantages over prescription drugs.
                                     Generics’ Approval on a the Rise Since 2005
                                     Available data from the Center for Drug Evaluation and Research (CDER) and U.S Food and Drug
                                     Administration (FDA) shows that since 2005 there had been 588 first-time generic drug approvals
                                     by 2010 in the US. First-time generics are defined as those drug products that are being approved
                                     for the first time as generic drug products and are therefore novel generic products to the market.
                                     The year 2009 saw the most first-time generic drug approvals since 2005, with 112 generic dug
                                     products approvals. There were 93 generic drug approvals in 2010. On average, there have been
                                     98 first-time generic drug products approvals each year between 2005 and 2010.
                                     Different Strategies are Adopted by Innovators to Dissuade Generics
                                     Pharmaceutical products are not protected by only one patent, but by many. Sometimes a molecule
                                     is protected twice, once in a racemic form and once as an enantiomer; a specific salt may also be
                                     protected as well as a crystalline form (or lack of) for that salt. Each drug is guarded with more than
                                     one patent application, which in turn helps in extending patent life.
                                     Molecules including omeprazole, citalopram and loratidine have been replaced by esomeprazole,
                                     escitalopram and desloratidine, respectively though such replacement hardly offers any
                                     advantages over the original formulations. Often supported by elaborate advertising and
                                     promotional expenditure, it leads to physicians prescribing the new product. For instance Servier,
                                     the pharmaceutical firm, introduced Coversyl Novum, a therapeutically identical version of their
                                     antihypertensive product Coversyl.
                                     Super Generics and Other Products with Higher Barriers to Entry are an Attractive Product
                                     Category
     Generic drug                    Generic companies traditionally offer large discounts; however, these companies are now
     manufacturers are adding        undertaking portfolio-management strategies by offering drug products that have high barriers to
     novel drugs with high           entry and are as a result available at higher prices. These are called super generics, which are
     barriers for entry to their     developed as value-added reformulations of off-patent drugs that require New Drug Application
     products portfolio              (NDA) submissions. This category of products offers a means of differentiation in the industry. The
                                     other attractive opportunity area for generic companies is in biosimilars, which are generic versions
                                     of biologics.




Generic Growth Strategies - Manufacturers to Increase                                                      GBIHC089MR /Published MAY 2011
Focus on Super Generics and Biosimilars to Drive Revenues
                                                                                                                                         Page 2
                                                                         © GBI Research. This is a licensed product and is not to be photocopied
                                     1      Table of Contents
                                     1   Table of Contents ........................................................................................................................ 3
                                         1.1    List of Tables..................................................................................................................... 5
                                         1.2    List of Figures ................................................................................................................... 5
                                     2   Generic Growth Strategies: Introduction ...................................................................................... 6
                                         2.1    GBI Research Report Guidance ....................................................................................... 7
                                     3   Generic Growth Strategies: Market Overview.............................................................................. 8
                                         3.1    Overview of the Generics Market ...................................................................................... 8
                                         3.2    Patent Expiries – Peak Years ........................................................................................... 8
                                         3.3    Patent Expiration of Blockbuster Drugs, By Therapeutic Area ........................................ 10
                                         3.4    Upcoming Patent Expiries ............................................................................................... 11
                                         3.5    Trends and Issues .......................................................................................................... 11
                                            3.5.1    ANDA Filings and Approvals are on the Rise .......................................................... 11
                                            3.5.2    European Market for Small Molecule Generic Drugs versus Biosimilars ................. 13
                                            3.5.3    Untapped Generics Market in Certain European Countries ..................................... 14
                                            3.5.4    Biosimilars Focus – Innovators as Well as Generics Companies ............................ 15
                                            3.5.5    Drop in Patent Applications by Top Innovator Companies a Cause of Worry for
                                                     Generics .................................................................................................................. 16
                                            3.5.6    Evergreening Strategies Pose an Issue .................................................................. 17
                                            3.5.7    Market Forces in the European Union ..................................................................... 17
                                     4   Generic Growth Strategies: Current Generic Landscape .......................................................... 19
                                         4.1    Generic Industry Structure .............................................................................................. 19
                                         4.2    Generic Drug Industry Evolution – Changes in the Last 30 Years .................................. 20
                                            4.2.1    Stronger Patent Protection ...................................................................................... 20
                                            4.2.2    Need to Differentiate is Important for Generics Now More Than Ever ..................... 20
                                            4.2.3    Hatch-Waxman Act and ANDA ................................................................................ 21
                                         4.3    Challenges Facing Generics Industry ............................................................................. 23
                                            4.3.1    LCM Strategy Adopted by Innovators to Stay Competitive Poses Challenge to
                                                     Generics .................................................................................................................. 23
                                            4.3.2    R&D Productivity at a Low for Innovator Companies – Likely to Affect Generics in
                                                     the Long Run ........................................................................................................... 24
                                         4.4    Reasons to Implement Generic Growth Strategies ......................................................... 26
                                     5   Generic Growth Strategies: Regulatory Landscape with Impact Analysis ................................. 27
                                         5.1    The US ............................................................................................................................ 27
                                            5.1.1    Shortening Market Exclusivity of Biopharmaceuticals and Impact on Generics ...... 27
                                            5.1.2    ‘Pay-For-Delay’ Ban to be Detrimental to Innovators as Well as Generics .............. 27
                                            5.1.3    Impact of Supplemental Examination Provision of Patent Reform Act on Generics 28
                                            5.1.4    Biologics Price Competition and Innovation Act Falls Short .................................... 28
                                         5.2    Europe ............................................................................................................................ 29
                                            5.2.1    Common European Union Patent System ............................................................... 29
                                            5.2.2    Tendering ................................................................................................................ 30
                                            5.2.3    Future of Biosimilars Is Advancing Along a Path Smoothened By European
                                                     Groundwork ............................................................................................................. 30
                                         5.3    Japan .............................................................................................................................. 31
                                     6   Generic Growth Strategies: Major Strategies ............................................................................ 32
                                         6.1    Authorized Generics ....................................................................................................... 32
                                            6.1.1    Case Study .............................................................................................................. 33
                                         6.2    Mergers and Acquisitions ................................................................................................ 34
                                            6.2.1    Vertical Integration................................................................................................... 34
                                            6.2.2    Therapeutic Expansion – Biosimilars....................................................................... 36
                                            6.2.3    Patent Challenge Access ........................................................................................ 36
                                            6.2.4    Geographic Expansion and Diversification .............................................................. 37
                                         6.3    Outsourcing..................................................................................................................... 37
                                            6.3.1    Outsourcing Opportunities in Biosimilars ................................................................. 37
                                            6.3.2    Outsourcing is Also a Source of Income to Generic Companies ............................. 38


Generic Growth Strategies - Manufacturers to Increase                                                                                 GBIHC089MR /Published MAY 2011
Focus on Super Generics and Biosimilars to Drive Revenues
                                                                                                                                                                             Page 3
                                                                                       © GBI Research. This is a licensed product and is not to be photocopied
                                          6.3.3     Contract Sales Organizations: Strategic Partnership ............................................... 39
                                       6.4    Marketing Partnership ..................................................................................................... 40
                                          6.4.1     Case Study .............................................................................................................. 40
                                       6.5    Paragraph IV Certifications ............................................................................................. 41
                                          6.5.1     Case Study .............................................................................................................. 41
                                          6.5.2     Example of Paragraph IV Challenge That Did Not Work Out for a Generic ............. 42
                                       6.6    Expansion to Pharmerging Markets – Opportunities in BRIC Countries ......................... 43
                                          6.6.1     Emerging Markets Pose an Attractive Option for Innovators Going Generic ........... 44
                                          6.6.2     Generic Companies and Innovators Synergize Capabilities to Explore New
                                                    Territories ................................................................................................................ 45
                                          6.6.3     Case Study .............................................................................................................. 46
                                       6.7    R&D Strategies Employed by Key Players in the Generics Market ................................. 47
                                          6.7.1     Super Generics........................................................................................................ 47
                                          6.7.2     Biosimilars ............................................................................................................... 48
                                          6.7.3     Case Study .............................................................................................................. 52
                                     7 Generic Growth Strategies: Company Portfolio and Strategic Analysis of Leading Generics
                                       Players ...................................................................................................................................... 53
                                          7.1.1     Teva ........................................................................................................................ 53
                                          7.1.2     Sandoz .................................................................................................................... 55
                                          7.1.3     Hospira .................................................................................................................... 56
                                          7.1.4     Watson .................................................................................................................... 57
                                          7.1.5     Mylan ....................................................................................................................... 58
                                          7.1.6     Perrigo ..................................................................................................................... 59
                                          7.1.7     STADA .................................................................................................................... 60
                                          7.1.8     DRL ......................................................................................................................... 61
                                          7.1.9     Par Pharma ............................................................................................................. 61
                                          7.1.10 Apotex ..................................................................................................................... 63
                                          7.1.11 Lupin........................................................................................................................ 64
                                          7.1.12 Actavis ..................................................................................................................... 65
                                     8 Generic Growth Strategies: Appendix ....................................................................................... 66
                                       8.1    Market Definitions ........................................................................................................... 66
                                       8.2    List of Abbreviations ........................................................................................................ 66
                                       8.3    Research Methodology ................................................................................................... 67
                                          8.3.1     Coverage ................................................................................................................. 67
                                          8.3.2     Secondary Research ............................................................................................... 67
                                          8.3.3     Primary Research .................................................................................................... 68
                                          8.3.4     Expert Panel Validation ........................................................................................... 68
                                       8.4    Contact Us ...................................................................................................................... 68
                                       8.5    Disclaimer ....................................................................................................................... 69
                                       8.6    Sources ........................................................................................................................... 69




Generic Growth Strategies - Manufacturers to Increase                                                                                  GBIHC089MR /Published MAY 2011
Focus on Super Generics and Biosimilars to Drive Revenues
                                                                                                                                                                              Page 4
                                                                                        © GBI Research. This is a licensed product and is not to be photocopied
                                     1.1       List of Tables
                                     Table 1:        Generic Growth Strategies , Notable Patent Expiries Due by 2014 ............................... 11
                                     Table 2:        Generic Growth Strategies, Market Rules for Use of Generic Drugs Across Certain EU
                                                     Markets .......................................................................................................................... 18
                                     Table 3:        Generic Growth Strategies, Market Incentives for Use of Generic Drugs Across Certain
                                                     EU Markets .................................................................................................................... 18
                                     Table 4:        Generic Growth Strategies, Notable Authorized Generics by 2010................................ 32
                                     Table 5:        Generic Growth Strategies, Strengthening Backward Integration .................................. 34
                                     Table 6:        Generic Growth Strategies, Biosimilars Approval Pathways in the US and Europe,
                                                     Patent Expiry for Major Biologic Drugs, 2010-2016........................................................ 51
                                     Table 7:        Generic Growth Strategies, Top Generics Manufacturers by Sales, 2004 and 2009 ..... 53


                                     1.2       List of Figures
                                     Figure 1: Generic Growth Strategies, Global, Revenues of Top Generic Companies ($m), 2008-
                                                2009 ................................................................................................................................. 6
                                     Figure 2: Generic Growth Strategies, Global, Revenues of Top 10 Drugs due for Patent Expiry
                                                ($m), 2010-2014............................................................................................................... 9
                                     Figure 3: Generic Growth Strategies, Global, Total Value of the Drugs to Lose Patent Protection
                                                by 2014, by Therapeutic Segment ($bn) ........................................................................ 10
                                     Figure 4: Generic Growth Strategies, ANDA Filings, 2001–2009 .................................................. 12
                                     Figure 5: Generic Growth Strategies, ANDA Approvals, 2005–2010 ............................................ 13
                                     Figure 6: Generic Growth Strategies, Generic Market Share in Selected Countries in Off-patent
                                                Drugs Market, 2009........................................................................................................ 14
                                     Figure 7: Generic Growth Strategies, Top Six Biopharmaceuticals of 2009 – High Biosimilars
                                                Market Potential ............................................................................................................. 15
                                     Figure 8: Generic Growth Strategies, Patent Applications by Top 10 Pharmaceutical Patent
                                                Applicants at US Patent Office, 1995–2008 ................................................................... 16
                                     Figure 9: Generic Growth Strategies, Market Share of Leading Generic Companies, 2009 ......... 19
                                     Figure 10: Generic Growth Strategies, Revenue of Top Generic Companies ($m), 2008-2009...... 20
                                     Figure 11: Generic Growth Strategies, Generic Drug Review Process ........................................... 21
                                     Figure 12: Generic Growth Strategies, ANDA Patent Certification Types and FDA Approval
                                                Processes ...................................................................................................................... 22
                                     Figure 13: Generic Growth Strategies, Proportion of LCM Projects in the Late-stage Development
                                                Pipeline by Therapeutic Area, 2010 ............................................................................... 23
                                     Figure 14: Generic Growth Strategies, Comparison of CAGR of R&D Expenditure and Growth of
                                                Sales Over the Last Five Years for the Top Five Companies, 2003–2008..................... 25
                                     Figure 15: Generic Growth Strategies, the US, Impact Analysis of Changing Regulatory Landscape,
                                                ....................................................................................................................................... 27
                                     Figure 16: Generic Growth Strategies, Acquisitions by Matrix Labs ................................................ 35
                                     Figure 17: Generic Growth Strategies, Benefits of Marketing Partnership to Watson and Moksha8
                                                ....................................................................................................................................... 40
                                     Figure 18: Generic Growth Strategies, Contribution to Growth, 2009-2014 .................................... 43
                                     Figure 19: Generic Growth Strategies, Percentage of Out-of-Pocket Healthcare Financing by
                                                Country .......................................................................................................................... 44
                                     Figure 20: Generic Growth Strategies, Top Strategies to Expand in Pharmerging Markets ............ 46
                                     Figure 21: Generics Growth Strategies, SWOT Analysis for Teva .................................................. 54
                                     Figure 22: Generics Growth Strategies, SWOT Analysis for Sandoz .............................................. 55
                                     Figure 23: Generics Growth Strategies, SWOT Analysis for Hospira .............................................. 56
                                     Figure 24: Generics Growth Strategies, SWOT Analysis for Watson .............................................. 57
                                     Figure 25: Generics Growth Strategies, SWOT Analysis for Mylan ................................................ 58
                                     Figure 26: Generics Growth Strategies, SWOT Analysis for Perrigo .............................................. 59
                                     Figure 27: Generics Growth Strategies, SWOT Analysis for STADA .............................................. 60
                                     Figure 28: Generics Growth Strategies, SWOT Analysis for PAR................................................... 62
                                     Figure 29: Generics Growth Strategies, SWOT Analysis for Apotex ............................................... 63
                                     Figure 30: Generics Growth Strategies, SWOT Analysis for Lupin ................................................. 64
                                     Figure 31: Generics Growth Strategies, SWOT Analysis for Actavis .............................................. 65




Generic Growth Strategies - Manufacturers to Increase                                                                                   GBIHC089MR /Published MAY 2011
Focus on Super Generics and Biosimilars to Drive Revenues
                                                                                                                                                                                Page 5
                                                                                         © GBI Research. This is a licensed product and is not to be photocopied
                                     2    Generic Growth Strategies: Introduction
     Generic companies               The pharmaceutical industry is going to experience major patent expiries during 2011-2014, with
     increasingly launching          the loss of patents for drugs whose sales were more than $60 billion during 2009. The expiry of
     their products before the       some of the major drug patents in the period will reduce the revenues in the pharmaceutical
     approval of their               industry considerably and innovator companies will be exposed to significant generic competition.
     Paragraph IV certification      Though generic drug companies are expected to experience lucrative opportunities due to the
                                     impending patent expiries, they are gearing up to face competition from entities such as innovator
                                     companies vying for a share of the generic drugs market, and intense contest from other generic
                                     companies.
                                     Generic companies are increasingly observed to be launching their generic drug products before
                                     the approval of their Paragraph IV certification. For instance, Teva launched its generic drug Famvir
                                     in September 2007, a copycat version of Novartis‘ original drug before winning the patent challenge
                                     that the former had filed against the latter under Paragraph IV of the Hatch-Waxman Act. It is a
                                     risky strategy that involves the launching of generic versions of innovator drugs before winning
                                     patent challenges, therefore risking losing the patent challenge and thus paying heavy damages to
                                     the innovator company. Teva had successfully adopted this strategy to earn significant profits on
                                     blockbuster drugs; but the exposure to risk due to this strategy is considerable and damages to be
                                  
								
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