Pharma firms see scope in US patent expiry

Fortune seekers in the Indian pharmaceutical space will find this irresistible. In less than 24 months, 26 blockbuster medicines, worth over $69 billion (about Rs 3,10,000 crore) — or thrice the size of the domestic industry — are going off-patent in the world’s largest drug market, the United States.

In other words, the increasing aggression shown by domestic pharmaceutical firms to penetrate the US market — despite severe setbacks faced by established players such as Ranbaxy and Sun Pharma in terms of regulatory hurdles posed by the United States Food and Drugs Administration (USFDA) — is driven by the huge market that remains open to them during 2010-12.

The potential business that can be looked at from the US patent expiry will, however, be a fraction of the current sales figures, as all these medicines undergo tremendous value erosion soon after it gets open to generic competition.

“It’s not just Pfizer’s cholesterol lowering medicine Lipitor (the largest-selling drug globally) that goes off-patent in 2011, but dozens of products marketed by companies such as Eli Lilly, Johnson & Johnson, Sanofi-Aventis, Astra Zeneca and Bristol Myers Squibb (BMS),” said HDFC Securities Vice-President (institutional research) Ranjit Kapadia.

A recent study carried out by HDFC Securities identifies 34 Indian companies as having positioned themselves to tap this emerging opportunity. While Dr Reddy’s, with its aggressive patent challenge strategies stands to gain most, Ranbaxy and Sun Pharma — despite their troubles with the US regulator — figure in the top 10 list. Even Cipla, the leading Indian company known for its risk-free US strategy, has applied for marketing generic or low-cost versions of medicines that enjoy a current market value of over $45 billion (over Rs 2 lakh crore).

The addressable market for most Indian companies are the same, as many of them have applied for marketing applications for the same medicine. For instance, at least 10 domestic firms have applied for marketing low-cost versions of Lipitor after its goes off-patent in the US market.

According to industry estimates, of the 15 medicines that go off-patent this year, Indian firms have filed marketing applications for 11. Merck’s diabetic medicine Cozaar and Astra Zeneca’s cancer medicine Arimidex are having most generic applicants from India. Similarly, Indian players are prepared to launch generic versions of 14 products out of the 16 that go off-patent in 2011. Apart from the three products, the US will have Indian penetration for all other 22 products whose patent expire in 2012.

“We are well-positioned to supply off-patent medicines to the US through our partners,” Amar Lulla, joint managing director of Cipla said. The company, known for its aggressive patent challenge strategy in the developing world, has opted for the partnership route to enter the US market.

With over 100 USFDA-approved manufacturing facilities in India, domestic drug makers are well prepared to avail of this ‘generic’ opportunity. Indian companies also account for more number of abbreviated new drug applications filed in the US.