With blockbuster patents set to expire, the biogenerics market is set to cash in as previous challenges such as a lack of regulatory framework are nearing resolve, particularly in Western Europe, says a recent report from Frost & Sullivan.
Manufacturers of biopharmaceuticals now face the loss of commercialisation rights presented by their drug patents. The earliest biopharmaceuticals such as recombinant human insulin have lost patent protection, and many other drugs such as the blockbuster anaemia treatments incorporating recombinant erythropoietin will follow suit between 2005 and 2007.
With multi million dollar revenues at stake, pharmaceutical companies are fighting back by reformulating existing products to improve efficacy, implementing more efficient delivery systems, and engaging in high-level intellectual property (IP) battles.
Until now, the pharmaceutical industry has seen generics as more of a threat rather than an opportunity for development. The branded drugs industry has increasingly been striking deals with generic firms to allow them to manufacture the drugs earlier which has made the market more competitive and hurt the generic drug firms' sales over the past year.
In February this year, Novartis acquired two companies as it aimed to expand its generics drug portfolio and increase its presence in the generics sector.
The Swiss drugs firm has taken an unprecedented step into the usually hostile territory of generic pharmaceuticals agreeing to pay €5.65 billion in cash to buy German firm Hexal AG and just over two thirds of Eon Labs Inc of the US.
The merger of these firms made Novartis the world's largest manufacturer of generics, overtaking Teva Pharmaceuticals of Israel, which had been the world's biggest generic-drug producer, with $4.8 billion in annual sales.
The report, entitled "Strategic Analysis of the World Biogenerics," said that given the manufacturing costs for biogenerics were much higher than those of conventional, small molecule pharmaceuticals, developing proprietary expression systems could help minimise costs. Manufacturers would also need to ensure that their products were bioequivalent and produced at full cGMP standards.
The markets in Europe and the US have the potential to generate sales of $16.39 billion (€13.06 billion) by 2011, the report says.
Regulatory issues have been the biggest challenge to the development of the biogenerics market in North America and Western Europe.