Indian drug factories erode US generic prices

MUMBAI: The most recent earnings reports across the generic drug industry have read like dispatches from the front lines of a price war.

Downtrend: A logo of Sun Pharmaceutical Industries Ltd is pictured at its research and development centre in Mumbai, India. In August, the world’s largest copycat drugmaker, Israel’s Teva Pharmaceutical Industries Ltd, slashed its dividend; US giant Mylan NV lowered its profit target; and Sun Pharmaceutical reported its first quarterly loss in at least 12 years. — Reuters

Friday, 1 September 2017

Family-owned drugmakers driving price war

This month, the world’s largest copycat drugmaker, Israel’s Teva Pharmaceutical Industries Ltd, slashed its dividend; US giant Mylan NV lowered its profit target; and India’s Sun Pharmaceutical Industries Ltd reported its first quarterly loss in at least 12 years.

The source of the pain?

At least some of it can be traced to the global ambitions of a growing constellation of family-owned drug factories in India. Their expansion is boosting competition in the US, where mergers among pharmacy chains and pricing wars between drugmakers had already been driving down the cost of generics.

“The assumption was there would be a step-down, but nobody expected it would be this bad,” said Ronny Gal, an analyst at Sanford C Bernstein & Co.

As the smaller Indian manufacturers are growing stronger, the US Food and Drug Administration is working to boost competition by handing out approvals at a record pace. The agency has said it will specifically favor generic drug applications for products that have few competitors as a way to drive down prices further.

India was already the world’s largest exporter of generic drugs, with US$16.4bil sold abroad last year. In the first half of 2017, Indian firms got about 40% of new US approvals for generics, up from 35% just a year earlier, and with a wider base of companies than ever before taking part, according to FDA data analysed by Bloomberg News.

“With more and more companies in the fray, the competition has intensified,” Pankaj Patel, chairman of Ahmedabad-based Cadila Healthcare Ltd, said in an email.

The company’s main US subsidiary has received 27 approvals this year through July, compared with eight last year. “The pure generics sphere has seen price erosion.”

India is home to about 6,000 drugmakers, according to its government’s estimates, members of a cutthroat market characterized by price controls, limited insurance levels and low patient incomes.

That makes the US look like easy pickings, according to Surajit Pal, an analyst at Prabhudas Lilladher Pvt Ltd in Mumbai.

Instead of introducing a generic product and then lowering the price when forced to, many of the Indian companies will play a far more brutal game, Pal said.

“The US business is basically icing on the cake, so they don’t mind giving you a 90% discount on the very first day,” Pal said. “The US will get cheaper products going forward.

“The US will get more competition from Indian guys.”

Thirty-two different Indian firms received US approvals to sell new generics in the first half of this year - almost double the number from two years ago.

The approvals came as India’s top 10 drugmakers grew their share of the US generics market from 14% in 2010 to about 24% today, according to Bernstein’s Gal.

Among the leaders in approvals were Hyderabad-based Aurobindo Pharma Ltd and Cadila, two of India’s biggest drugmakers who have only turned their attention to the US more recently. The companies, controlled by their founding families, are worth US$6.8bil and US$8.2bil respectively on the local stock exchange.

Smaller Indian firms that previously had little presence in the US are also seeing approvals surge.

Mumbai-based Macleods Pharmaceuticals Ltd, a closely held company that came onto the US scene in 2012 with 12 approvals, has been one of India’s most prolific filers every year since. It’s gained approvals for eight new drugs this year to treat conditions including pain, high blood pressure and depression. Ajanta Pharma Ltd, a US$1.6bil public firm that’s been operating in India since 1973, only had two US approvals to its name until 2014.

Last year, it had nine new approvals.

Or Alkem Laboratories Ltd, also operating in India for nearly fifty years.

Alkem had been chugging along with about two or three US approvals a year since 2009, but this year it’s received six.

Aurobindo, Macleods, Ajanta and Alkem didn’t respond to requests for comment.

With so many rivals in the generics space, Cadila’s pipeline needs to broader, said Patel, whose father founded the company.

“It will be crucial to look beyond pure generics at specialty products if we need to stay ahead of competition,” said Patel.

“We have a large pipeline of products which are under approval, and the attempt has been to create a judicious mix of generics, specialty and niche products.”

Successful drug makers will be ones who can develop complex technologies to deliver drugs and new formulations to create a specialty niche portfolio with less competition, he said.

Shares of Sun Pharmaceutical declined 0.9% as of 10:02 am in Mumbai. Cadila Healthcare fell 0.4%, Cipla Ltd dropped by 0.7%, Alkem Laboratories dropped 0.8% and Ajanta Pharma advanced 0.6%. The benchmark S&P BSE Sensex Index fell 0.2%.

In the US, falling prices are sweeping across the industry.

Mylan’s revenue growth has slowed in part by pressure on generic-drug prices, prompting the company to try to stave off the damage through acquisitions and new products.

Teva said it was in danger of breaching covenants on its debt amid a drop in cash flow that’s forcing it to cut jobs and exit markets. When Swiss giant Novartis AG reported earnings results in July, it said US generics sales were down 15%, driven largely by price pressure.

Overall, US generic drug prices fell 8% last quarter compared with a 4% increase in sales volume, according to Bloomberg Intelligence.

It’s not just the drugmakers that have been suffering. McKesson Corp and other major wholesalers that distribute about US$400bil worth of drugs each year cited generic pricing as a reason for their shrinking margins.

McKesson and Mylan declined to comment.

While prices of some specialty medicines have surged in recent years, such increases are harder to pull off amid greater political scrutiny and a wide-ranging US Justice Department investigation that is looking into possible price collusion in the US generics industry.

The deep discounts offered by the new Indian players to gain market share force the incumbent players to match them.

That can cut the total value of the market by as much as half, said Kumar Saurabh, an analyst at Motilal Oswal Securities Ltd

While Indian companies have drawn scrutiny from US regulators over manufacturing quality in recent years, curtailing some of the biggest players’ ability to win approvals, other firms have stepped in.— Bloomberg

http://www.thestar.com.my/business/business-news/2017/09/01/indian-drug-factories-erode-us-generic-prices/

Foreign patients turn to India in search of cut-price cures

NEW DELHI: When doctors told Australian Greg Jefferys he had Hepatitis C and the disease was destroying his liver, the devastating diagnosis was compounded by the cost of a cure.

Saturday, 5 March 2016

Unable to afford Sovaldi, hailed as a miracle drug, the 61-year-old flew to India, one of a growing army of patients seeking out low-cost, life-saving medicines on the subcontinent.

Their illnesses vary – Hepatitis C, cancer and HIV are among the most common – but they are almost always desperate, seeing in India their only hope to save their life or that of a loved one.

They contact underground “buyers clubs”, make the trip to India to buy from a legitimate distributor or seek out shady online pharmacies promising mail-order cures. “The doctors told me ‘you’ve got Hepatitis C, you’ve probably got liver cancer’,” recalled Jefferys, a PhD student.

“The chatter was around the new generic versions of Sovaldi being released in India. I hopped on a plane to Chennai and in about two days I had an appointment with a specialist,” he said.

India earned a nickname as “the pharmacy to the developing world” for its tough stance on patents.

Successive governments have taken a view that patents should be granted only for major innovations, not updates to existing compounds – allowing domestic manufacturers to make generic versions of drugs at vastly lower cost.

Sovaldi, chemically known as sofosbuvir, is made by US pharmaceutical giant Gilead and costs US$84,000 (RM344,000) for a 12-week cycle of treatment in the United States.

Rejected for a patent in India, generic drug makers, some licensed by Gilead, produce versions such as Mylan’s MyHep, that cost less than US$900 (RM3,880) a cycle.

“This is something I observe more and more,” said Leena Menghaney, who runs Medecins Sans Frontieres’ Access Campaign in India, which works to broaden access to drugs.

“All kinds of people and patients across the world are starting to access medicines from India. They travel themselves, or they contact a friend,” she said.

More than 130 million people live with chronic Hepatitis C worldwide, according to the World Health Organisation, and 500,000 die each year from related liver diseases.

Since writing a blog, Jefferys receives 150 emails a day from people in the United States, Britain and elsewhere asking for help.

“India’s production of these generic Hep. C drugs is saving thousands of lives a week.”

When Loon Gangte, a Delhi-based HIV activist was diagnosed with the virus in 1997, the price of treatment was far beyond his reach.

But the advent of generic Indian anti-retrovirals saved his life – and another main reason that made the country a global centre for cheap, lifesaving HIV drugs. — AFP

http://www.thestar.com.my/news/regional/2016/03/05/foreign-patients-turn-to-india-in-search-of-cutprice-cures/

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New hepatitis cure far too costly

October 13, 2014

This post is on Healthwise




BY MARTIN KHOR

A new cure for hepatitis C has given new hope, but its price is far too high, while a scheme to supply poor countries excludes Malaysia and other middle-income countries.

A CONTROVERSY is brewing over a new cure for hepatitis C because it is extremely expensive and patients in middle-income countries like Malaysia will find it way beyond their budget.

There are an estimated 400,000 Malaysians with hepatitis C, but this is probably a significant under-estimate since many people are not aware that they have the virus.

Worldwide, 170 million people live with the hepatitis C virus (HCV), and every year three to four million more are infected, and there are around 350,000 deaths.

Hepatitis C is thus a major public health problem and called a “silent killer” because it can lead to serious liver ailments including cancer for those who are infected.

The good news is that a new drug, sofosbuvir, was approved last year by the American health authorities.

The medicine has an effective rate of around 90%, making it superior to the older medicines which have a lower success rate and some serious side effects.

The bad news is that the producer, the US firm Gilead, put a very high price tag of US$84,000 (RM274,428) for a 12-week course.

Each pill thus costs US$1,000 (RM3,267).

The price could be set so high because the older and less effective alternatives cost about a third of that level, and the company also argued that a liver transplant (which the new medicine’s cure would make unnecessary) would cost much higher.

Revenue from the new medicine since late last year has already run into many billions of dollars.

At that kind of price, only the very rich can afford the new medicine.

Patients in the West have difficulty even if they are insured, as the insurance companies or the National Health Service might not be able to put this expensive drug on their approved list.

There is now a wave of anger among health and patients’ groups throughout the world.

Here is a life-saving medicine which is being priced out of reach, because the patents being filed by the company prevents competitors producing cheaper versions.

Opposition to a patent application was filed in India by a group, Initiative for Medicines, Access and Knowledge, on the ground that the drug made use of an existing compound.

In Indian law, patents need not be given for new uses of existing medicines or their compounds.

Facing mounting opposition, Gilead came up with a new initiative.

It made agreements with seven companies in India, allowing them to produce their own versions of sofosbuvir as well as another medicine, ledipasvir (which can be taken in combination), at prices these companies will set themselves.

A study at Liverpool University found that a full course of generic sofosbuvir could cost as low as US$101 (RM330) and ledipasvir, US$93 (RM303).

Another estimate is that the cost could be US$135-US$400 (RM441-RM1,306).

Thus the Indian companies’ prices are expected to be well below a thousand dollars.

An example from a decade ago is useful. When medicines for HIV-AIDS sold for US$15,000 (RM49,005) a patient a year, Indian companies produced generic versions for US$350 (RM1,143) a patient a year, and their prices fell further to about US$65 (RM212) today.

There is, however, a major flaw in this new plan. While the agreements allow the Indian companies to sell the medicine in India and in some other countries, they are not allowed to market it in 51 middle-income developing countries.

Malaysia is one of these countries, together with 50 others including Thailand, the Philippines, China, Brazil and Argentina.

Patients and governments in these countries will thus be blocked from obtaining the cheap medicine coming from India.

The originator company plans to sell its brand in these excluded countries and thus reap high profits.

The price they charge may be less than US$84,000 (RM274,428), but significantly higher than the Indian companies’ prices.

The medical group, Medicins Sans Frontiers, has criticised this discrimination.

It said: “Hepatitis C is especially prevalent in middle-income countries, with approximately 73% of the burden in these countries. But disappointingly many of these countries remain excluded from accessing Gilead’s lowest price and the generic versions licensed by these agreements.”

Patients in the excluded countries have expressed their anger. In Malaysia, the Positive Malaysian Treatment Access and Advocacy Group and the Third World Network said the new oral medicines bring new hope for hepatitis C patients but these hopes were dashed by the restrictive terms of the agreements, thus “condemning to death many of the 50 million HCV patients living in territories excluded from the scope from the voluntary licence such as Malaysia, Thailand, Philippines and China”.

Thirteen Thai NGOs issued a statement that they are appalled by the agreement that the originator signed with the Indian companies, which they said represented “corporate greed building yet another barrier to access to a new medicine needed by millions with hepatitis C infection in middle-income countries.

“In those middle-income countries not included in the deal, millions of people will be effectively handed a death sentence as the new life-saving medicine will be unaffordable.”

The Brazilian Network for Integration of Peoples said it “vehemently repudiates the agreements which treat medicines as commodities, preventing millions of people to have access to medicines”.

Patients in the affected countries, and their support groups, including the above, are calling on their governments to act to ensure that their citizens have access to the new medicines.

The countries are allowed by the WTO’s intellectual property agreement not to grant patents if the medicines are not new or genuine inventions.

If patents have been granted, the governments can issue compulsory licences that allow generic companies or government firms to produce and sell generic medicines at cheap prices.

Alternatively, the governments can ask the company to include their countries to be among those that the Indian companies can supply to, or else that the prices charged by the company are the same as the cheapest generics.

> Martin Khor is executive director of the South Centre, a research centre of 51 developing countries, based in Geneva. You can e-mail him at director@southcenter.org. The views expressed here are entirely his own.

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http://www.thestar.com.my/Opinion/Columnists/Global-Trends/Profile/Articles/2014/10/13/New-hepatitis-cure-far-too-costly/

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