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.”
NewsBytes — Generics, 9/24/12
NEW YORK — Generic drug makers Hospira, Sagent Pharmaceuticals and Teva Pharmaceutical Industries have launched generic versions of a chemotherapy drug made by Sanofi, the three companies said last month.
The drug makers announced the launch of oxaliplatin injection, which Sanofi markets under the brand name Eloxatin. Eloxatin had sales of $1.7 billion during the 12-month period ended in June, according to IMS Health. Hospira and Sagent launched their versions of the drug on Aug. 9, while Teva Health Systems, an Irvine, Calif.-based division of the Israeli drug maker, launched the drug on Aug. 15.
Hospira originally launched generic oxaliplatin in August 2009 after a court ruled in its favor in a patent-infringement suit filed by Sanofi. Sanofi and Hospira later settled the suit in 2010, requiring Hospira to suspend sales of the drug in June 2010, but allowing it to relaunch ahead of the expiration of Sanofi’s patent. The patents on Eloxatin expire between January 2013 and February 2016, according to Food and Drug Administration records.
ALLEGAN, Mich. — The FDA has approved an oral painkiller made by Perrigo, the drug maker said.
Perrigo announced the approval of morphine sulfate oral solution in the 100-mL/5% strength. The drug is a schedule II controlled substance and is used to treat moderate to severe acute and chronic pain. Sales of the drug are about $26 million per year, according to Wolters Kluwer Health. Perrigo said it would ship the drug immediately.
PRINCETON, N.J. — Sandoz has launched a generic version of a topical medication used to treat psoriasis, the company said.
Sandoz, the generics arm of Swiss drug maker Novartis, announced the launch of calcipotriene cream in the 0.005% strength, calling it the first generic version of Leo Pharma’s Dovonex. Dovonex had sales of about $118.8 million during the 12-month period ended in May, according to IMS Health.
BRIDGEWATER, N.J. — Generic drug maker Amneal Pharmaceuticals will spend $120 million to expand three of its plants, the privately owned drug maker said. Amneal said it would spend the money over a two-year period lasting through 2014 to “significantly” grow operations at research-and-development, manufacturing and distribution plants in New York, New Jersey and Kentucky. The company, which employs more than 1,100 people in the United States, said the expansion would create 500 more jobs.
“We clearly understand the value of, and are fully committed to, investing and growing within the market we serve, significantly expanding our number of ‘Made in the USA’ products,” Amneal president Chirag Patel said. “Generic pharmaceuticals ensure the lowest cost of medications to help make health care more affordable to all consumers.”
PARSIPPANY, N.J. — Teva Pharmaceutical Industries, Mylan and Ranbaxy Labs launched generic versions of a Type 2 diabetes drug made by Takeda Pharmaceutical last month, as Watson Pharmaceuticals sued the FDA after the agency prevented it from launching its own version.
Watson said it was entitled to share market exclusivity for a generic version of Takeda’s Type 2 diabetes drug Actos (pioglitazone). Under the Hatch-Waxman Act of 1984, the first company to file a complete regulatory approval application with the FDA for a generic version of a drug is entitled to 180 days in which to compete exclusively with the branded version upon approval. In some cases, multiple companies share exclusivity, and a 2010 settlement with Takeda would allow Watson, Teva Pharmaceutical Industries, Mylan and Ranbaxy Labs to launch generic versions of Actos.
Watson said the FDA denied its claim of shared exclusivity based on the timing of its reinstatement of several of its original paragraph IV certifications, a type of challenge to a branded drug maker’s patent commonly issued by generic drug companies. Watson said it had converted its paragraph IV certification to a different type of challenge at the FDA’s direction, later reinstating the paragraph IV certification after it settled a patent-infringement suit with Takeda. The FDA’s denial of Watson’s claim would delay its launch of the drug by six months, the company said.
“When we learned of [the] FDA’s position regarding our application, we made efforts to work cooperatively with [the] FDA to resolve the situation,” Watson president and CEO Paul Bisaro said. “[The] FDA has refused to grant shared exclusivity and seeks to unnecessarily delay the launch of Watson’s generic Actos product, with potential harm to consumers who may face constraints on supply as a result of this action.”
Actos had sales of about $2.7 billion during the 12-month period ended in May, according to IMS Health. The lawsuit remained unresolved at press time.
PITTSBURGH — Mylan has launched a generic drug used to treat sleep disorders, the company said. The generic drug maker announced the launch of modafinil tablets in the 100-mg and 200-mg strengths. The drug is a generic version of Provigil, made by Cephalon — a company that Teva Pharmaceutical Industries acquired last year — and is used to treat narcolepsy, obstructive sleep apnea and shift work disorder.
There has been some contention surrounding the drug since the FDA determined in April that Teva was the first company to file for regulatory approval of the generic, thus entitling it to 180 days in which to compete with the branded version, as provided for under the Hatch-Waxman Act of 1984.
But under an agreement with the Federal Trade Commission related to Teva’s acquisition of Cephalon in October 2011, Par Pharmaceutical launched the generic version on April 6, while Teva launched an authorized generic, a term used to refer to the branded drug marketed under its generic name at a reduced price. Mylan responded by suing the FDA, asserting that Teva was disqualified from submitting a regulatory filing challenging Provigil’s patent protection because a company could not infringe its own patent, and that Mylan should be considered the first-to-file company.
Mylan CEO Heather Bresch said she was “pleased” that Mylan would be launching the drug prior to the expiration of the 180-day exclusivity period. Branded and generic versions of the drug had sales of about $1.3 billion during the 12-month period ended in June, according to IMS Health.
Mylan also announced the launch of lithium carbonate extended-release tablets, a drug used to treat manic episodes of bipolar disorder. Various versions of the drug had sales of about $15.2 million during the 12-month period ended in June, according to IMS Health.
JERUSALEM — Teva Select Brands has launched a new drug used to treat schizophrenia. The company, a subsidiary of Israeli drug maker Teva Pharmaceutical Industries, announced late last month the launch of clozapine orally disintegrating tablets in the 12.5-mg, 25-mg and 100-mg strengths.
The drug is a generic version of Jazz Pharmaceuticals’ FazaClo.