Companies target pediatric medicine
Similasan is one homeopathic company making a move into pediatric cough/cold. “Pharmacists have endorsed the Similasan brand,” noted Dan Quail, VP sales at Similasan, which will help bridge the eye/ear care sets with pediatric cough/cold. “So when mom goes into cough syrup, there’s a natural tie-in to take care of the ears and the eyes,” he said. “It’s a solution-driven process.”
Sales of cough syrups totaled $42.6 million, up 11.6% for the 12 weeks ended Aug. 12, according to SymphonyIRI Group data across food, drug and mass (excluding Walmart) channels.
Kids’ cough/cold has been a key growth area for homeopathic manufacturers in recent years.
Mergers among generics cos. on the rise
Over the last few years of DSN’s coverage of the impending patent cliff and how it would affect the generic drug industry, IMS Health VP industry relations Doug Long predicted that the gradual commoditization of primary care drugs — long the lifeblood of generic drug makers — would lead to consolidation of the industry.
Now, it appears to be happening, and at the National Association of Chain Drug Stores’ 2012 Pharmacy and Technology Conference in Denver last month, Long predicted a “big increase” in mergers and acquisitions among generic companies in the future.
The past year has seen a number of large-scale buyouts among generic drug makers, most notably Watson’s $5.6 billion purchase of Actavis in April, which made Watson the world’s third-largest generic drug company after Teva Pharmaceutical Industries and Mylan. During the 12-month period that ended in June, Watson was the fastest-growing drug company in absolute terms and the world’s 15th-largest drug maker on a dollar basis, with sales of more than $6 billion. A month after the deal between Watson and Actavis, Sandoz, the generics arm of Swiss drug maker Novartis and the world’s fourth-largest generic drug maker, announced it would buy Melville, N.Y.-based Fougera for $1.5 billion in a deal that would make Sandoz the world’s biggest maker of generic dermatology drugs. In July, Woodcliff Lake, N.J.-based Par Pharmaceutical, the world’s fifth-largest drug maker, announced that private investment firm TPG would buy it for $1.9 billion. Par itself had bought Anchen Pharmaceuticals in November 2011, for $410 million. In August 2012, the board of India-based Sun Pharmaceutical Industries announced it would take Israel-based Taro Pharmaceutical Industries private in a $39.50-per-share acquisition agreement. Sun, the seventh-largest generic drug maker, has sought to buy Taro since 2007.
Other acquisitions have taken place as well. In April 2012, Takeda Pharmaceutical announced it would buy Philadelphia-based URL Pharma for $800 million. URL has shifted to branded drugs as its primary revenue source over the past few years, but still maintains a portfolio of 288 generic drugs, according to its website. And last year, Perrigo, the 13th-largest generic drug maker, bought Minneapolis-based Paddock Labs.
Needless to say, the list of the 30 largest generic drug companies listed by IMS Health is likely to see some shifts as some companies grow and others are absorbed. But in a broader sense, the predicted consolidation in the industry now under way shows how the market has been changing overall.
In a basic sense, the patent cliff means that drugs for conditions like cardiovascular disease, psychotic and mood disorders, ulcers, Alzheimer’s disease and osteoporosis are in what Long called at the NACDS show the “cone of commoditization,” meaning that they are or will soon be entirely dominated by generics, and it will soon no longer be profitable for branded drug makers to develop new therapies for them. Meanwhile drugs for respiratory diseases, diabetes, cancer and HIV and other chronic viral infections are outside the “cone.” This is prompting branded and generic drug companies alike to move up the value chain. For branded companies, it means developing new drugs for conditions outside the cone; for generic companies, it means developing generic drugs with more complex methods of delivery, such as injectables and transdermal patches, as well as biosimilars, which could have a U.S. market of up to $25 billion by 2020, according to Long’s presentation.
Meijer offers Lipitor generic for free
It’s a little hard not to say “Oh, how the mighty have fallen” when a retailer announces that it will give away for free what was once the world’s top-selling drug. But for retailers, it also makes good business sense.
In what could symbolize the so-called “patent cliff” affecting the branded and generic drug industries, Midwestern mass merchandise chain Meijer announced earlier this month that it would provide, free of charge, generic versions of Pfizer’s cholesterol-lowering drug Lipitor (atorvastatin) to patients with valid prescriptions in all of its 199 pharmacies, saying it would be the first retailer in the Midwest to do so. The program is the fourth free-drug program offered by the retailer over the last six years.
“We’re pleased to announce that our customers will now be able to fill their generic cholesterol-lowering atorvastatin calcium prescriptions for free in all of our pharmacies,” co-chairman Hank Meijer said. “In keeping with our commitment to provide low-cost solutions for the families we serve, the free cholesterol-lowering medication program is another way to help the customers who rely on our pharmacies.”
When Walmart launched its $4 generics program in 2006, some critics dismissed it as a public relations stunt to drive foot traffic, but it looked like the mass merchandise retailer was onto something as it quickly spawned imitators across the country. A 2007 consumer poll by Wilson Health Information for the 2007 WilsonRx/Boehringer Ingelheim Pharmacy Satisfaction Digest found that 25% of respondents had purchased a $4 generic from Walmart or from one of the many imitators that the mass merchandise retailer quickly spawned, while a Walmart pharmacy district manager told Drug Store News in an August 2007 interview that prescription-unit business had increased by 50% in some stores thanks to the program, and OTC business had increased as well. A number of retailers have been giving away free drugs, such as antibiotics; but by giving away for free a drug that, according to IMS Health, experienced the fastest prescription growth and second-highest dollar growth during the 12-month period ended in June, Meijer is taking the idea behind $4 generics to the next level.
Before it lost patent protection, in November 2011, Lipitor had sales exceeding $7 billion per year in the United States. Ranbaxy Labs was the first to launch a generic version when the drug’s patents expired, and Ranbaxy’s own market exclusivity period expired in May of this year. At the National Association of Chain Drug Stores’ Pharmacy and Technology Conference last month, IMS VP industry relations Doug Long said during a presentation that “we’re in the teeth of the patent cliff,” which refers to a period taking place over the next few years when a wave of expirations of several top-selling drugs’ patents will occur, eventually leaving many therapeutic indications, such as cholesterol, heavily commoditized and dominated by multiple generics.
“This [Meijer] initiative will have a huge impact because the cost of pharmaceuticals is frequently a barrier to getting appropriate treatment,” West Michigan Heart cardiologist and Spectrum Health Meijer Heart Center Cardiac Catheterization Labs director David Wohns said. “The biggest way to reduce the risk of heart disease comes from treating cholesterol. To have that drug available for free has the ability to impact countless lives.”