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USFDA’s off-patent drugs list may not offer much to Indian firms

LiveMint logoLiveMint 29-06-2017 Isha Trivedi

Mumbai: The US Food and Drug Administration’s (FDA) list of off-patent branded drugs, published to encourage competition for their generic versions, is unlikely to offer much to Indian pharmaceutical companies as market opportunity is small, analysts said.

In its effort to increase availability of low-cost generic drugs in the market, the USFDA on Tuesday published a list of branded drugs, whose patents and exclusivity periods have ended, but no generic versions have been approved so far.

Brokerage firm HSBC Securities and Capital Markets (India) Pvt. Ltd said in a report that the list covers a $4 billion addressable market, which appears to be a small opportunity.

“There are many dye, infusion products in the list, which are not part of the current portfolio of Indian generic companies. There are few products such as Cerezyme, Thyrogen, and Somavert that are transitioning to classification under biologic and, hence, are not immediately addressable,” HSBC said.

According to broking firm CLSA, the USFDA’s list of 267 drugs has an addressable market of $7 billion to $10 billion but the reason for not having generic versions, despite many of these products being out of patent for several years, is that there could be manufacturing or development-related barriers for these drugs.

HSBC said in its report that Indian companies have opportunities in products such as Premarin, Elmiron, and Venofer but the list does not facilitate approval of complex generics, which is the need of the hour to improve access and drive earnings growth.

“This list or these names are already known to most of the pharma companies. There is likely to be no surprise. The reason that they do not yet have a generic is that they usually have some complexity in development or the market opportunity is small,” said Vikas Bhadoria, a senior partner at consulting firm McKinsey and Co.

The other step that USFDA announced on Tuesday was to expedite the review of generic drugs applications where competition is limited.

Analysts have flagged concerns that this move could heighten pricing pressure due to increased competition but company officials believe this step gives an opportunity to launch products faster in the US, which will help offset price erosion in existing products.

“While on the one hand faster approvals for complex generics and limited competition products will drive a busy launch calendar for most players, on the other hand pricing pressure should intensify even from the current levels,” Anmol Ganjoo, director at JM Financial Institutional Securities Ltd, said.

“We can’t be afraid of competition. USFDA’s push to give faster approvals to generic drugs is a positive step as it will help companies to monetise their R&D (research and development) pipeline,” a senior official at a Mumbai-based pharmaceutical company said.

Industry lobby group Indian Pharmaceutical Alliance (IPA) has been asking the USFDA to expedite the review of limited competition products for the last three years, D.G. Shah, secretary general of IPA, said, adding, “This is a positive development as it may also help expedite resolution of issues to resume supplies of drugs where competition is limited.”

However, in order to take advantage of this opportunity, it will be critical for Indian companies to fix their quality compliance issues with the USFDA, experts said.

Over the last three-four years, manufacturing units of several Indian drug makers, including Sun Pharmaceutical Industries Ltd, Dr. Reddy’s Laboratories Ltd and Wockhardt Ltd, have faced USFDA’s heat due to non-compliance of good manufacturing practices (cGMP), halting product approvals in the US market and affecting the earnings of the companies.

“Overall the message from the USFDA is to facilitate further generic competition and this could help Indian companies which remain cGMP compliant and possess strong R&D capability,” CLSA said in the report.

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