The generics segment is moving ahead steadily as compared to branded or patent drugs in the highly regulated market like USA, Europe and Japan during the last couple of years. The growth in generic segment is mainly due to factors such as patent expirations on drugs, cost cutting measures on healthcare by governments and the rising aging population in advanced countries. The generic industry is likely to grow by more than 20 per cent every year till 2008 and the total size is estimated to be around US$ 80 billion by 2008.
The Indian majors like Ranbaxy Laboratories, Dr Reddy's Laboratories, Cipla, Sun Pharmaceuticals, Glenmark Pharmaceuticals, Orchid Chemicals, Cadila, Nicholas, Biocon, Matrix Laboratories, J. B. Chemicals, Divi's Laboratories, IPCA Laboratories, Wockhardt Ltd, Lupin and so many other companies are well set to grab this opportunity by investing in own research and development activities, mergers & acquisitions and new marketing tie-ups. India tops with the highest number of Drug Master Files (DMFs) and Abbreviated New Drug Applications (ANDAs) in the USA.
The stiff price competition emerged in the USA due to several regulations, price reduction, reference prices, parallel imports, higher patient co-payments and increased pressure on physicians to reduce their prescribing of prescription medicines. Further, the government is also favouring the use of generics to cut down healthcare expenditure. The US is currently experiencing a clear trend towards generic drugs as these drugs make up more than 55 per cent of all prescriptions written.
Ranbaxy Laboratories, one of the top 10 generic pharma players worldwide with nearly1000 scientists, has filed 29 ANDAs with US FDA during the year 2004 and it received 16 approvals. It has cumulatively filed about 146 ANDAs and received approval of about 96 ANDAs. Its consolidated international revenues worked out to 79 per cent of its total sales and its US sales accounts for more than half of its total sales.
The company recorded consolidated revenue of Rs 5,313 crore, registering a rise of 21 per cent and now targeting sales of US$ 2 billion by the year 2007. Its sales in US increased by 4 per cent to $ 426 million, constituting 36 per cent of company's sales as compared to 42 per cent in 2003. The slower growth in revenue in US is mainly due to emergence of stiff competition in generics products and cyclical nature of market.
Ranbaxy launched its first generic in US during 1998 and its product portfolio went up to 96 by the end of 2004. The company added 12 new products to its portfolio of generics during 2004. It launched metformin XR and cefpodoxime proxetil tablets in US during 2004. Its Sotret (isotretinoin) brand captured15 per cent market share as against 10 per cent in 2003. The company's discovery team has filed total 14 patents in USA and taken up research programmes in the segments of infectious diseases, urology, metabolic diseases and inflammatory/respiratory diseases. It has also undertaken process developmental work for 12 new APIs.
The stiff competition and pricing pressure in US generic market has given major blow to Dr Reddy's Laboratories (DRL) during 2004-05. The revenues for key products like fluoxetine and tizanidine suffer due to pricing pressure in US. Initially, the company entered the US market through product partnerships and now markets products under its own label. DRL has successfully expanded its US team to 61-members with US revenue of Rs 435 crore during 2004-05. Its generics sales declined to Rs 223 crore from Rs 340 crore in 2003-04. The company has setup six subsidiaries in USA.
DRL filed 9 DMFs during 2004-05. Its 65 DMFs and 45 ANDAs are awaiting approval from US FDA. Out of 45 ANDAs, 29 are Para IVs and 12 potential first-to-file opportunities. The company invested US$ 11 million for the acquisition of Trigenesis Therapeutics, Inc. a US based privately owned dermatology company. The company is spreading its business in USA and entered into a multi-product agreement for the development and marketing of generic products with Pharmascience Group. It also entered into alliance with a US biotechnology company for the development of a bio-generics portfolio.
DRL is going ahead with heavy investment in R&D and during 2004-05; its R&D expenditure went up by 41 per cent to Rs 280 crore from Rs 199 crore in the previous year. It has set up research lab in Atlanta. Recently, DRL invested US$ 56 million with ICICI Venture Funds Management Company for development, registration and legal costs related to the commercialization of most of the US ANDAs filed or to be filed in 2004-05 and 2005-06.
Cipla Ltd, a Mumbai based second largest Indian pharma company with net sales of Rs 2,242 crore, has strong presence in generic segment in USA. Its exports went up to 30 per cent to Rs 1053 crore during the year ended March 2005. Exports from America contributed 33 per cent of total exports. It has entered tie-up for more than 120 products and focusing more on filing of DMFs and ANDAs in USA. To spread its operations, it has entered strategic alliance with major generic producers like Watson, Ivax, Eon and Morton Grove. The company's partners filed 32 ANDAs during 2003-04 and planning to file another 35 more in the coming two years.
Glenmark has setup its subsidiary called Glenmark Pharmaceuticals Inc. USA (GPI) to increase its generic presence in the US market by 2007. It filed 6 ANDAs and 13 DMFs during 2004-05 and it is planning to submit 14 additional ANDAs in the current year. It is working on a portfolio of 14 DMFs to file in this year. GPI acquired 2 ANDA dossiers from Clonmel Healthcare Ltd, a subsidiary of Stada of Germany during August 2004. The market size of these products in the US is approximately US$ 50 million .
Further, GPI has in-licensed two generic product from Interpharma Inc and Konec Inc. These two companies will manufacture naproxen and nitroglycerin and supply to Glenmark for marketing in USA. It is launching at least 4-5 products under its own label in the year 2006.
In another development, Glenmark entered agreement with Chennai based Shasun Chemicals and Drugs Ltd for the joint development, filing and marketing of 12 generic pharmaceutical products for the US market during March 2005. Shasun will manufacture 12 products and GPI will take care for filing the ANDAs and marketing in US. The first filing is expected in the current year.
Orchid Chemicals and Pharmaceuticals has set up USFDA approved formulations facility at Irungattukottai near Chennai and filed first ANDA for cefazolin in April 2004. So far, it filed 18 ANDAs and 16 DMFs. Its other plant at Aurangabad also received USFDA approval during 2004-05. Starting initially with oral and sterile cephlosporins, the scope has been expanded to include high-end betalactam injectables and oral non-penicillin, non-cephalosporin products. Orchid has expanded its pharmaceutical R&D facility for development of ANDAs for generics market. The company is planning to double its filing in the US in the current year.
Orchid has marketing alliances with Apotex and Par of USA for marketing eight injectable antibiotics and seven oral cephaloosporins respectively in various dosage forms. Further, the company entered agreement with Stada Pharmaceuticals Inc, USA for distribution of 6 prescription generic drug products in the US market. It filed 40 patents in US and so far received 16 patents. The company set up two subsidiaries viz Gene Arrays Inc and Orchid Pharmaceuticals Inc. in USA.
Cadila is set to enter the US generic market in the current year and filed 12 ANDAs and 16 DMFs during 2004-05. Its cumulative total reached at 24 ANDAs and 28 DMFs. The company received approval from US FDA for marketing five product viz., atenolol, clindamycin, metformin hydrochloride tablet, metformin Ex and metformin ER during 2004-05. Cadila has 15 US patents to its credit. It has established two subsidiaries in US - Zydus Healthcare (USA) LLC and Zydus Pharmaceuticals USA Inc.
The generic market in US is characterized by substantial price competition and well-established and often regulated pricing and reimbursement schemes. The market growth is generated primarily by patent expirations of frequently prescribed drugs. Despite heavy launching expenses, the Indian companies are expanding their market base in USA.
Indian companies' aggressively strategy of entering the US generic market by filing cost effective products not without challenges. They are constantly faced with stiff opposition from innovator firms. The international players try to stop them by filing legal cases and other delaying tactics. However, Indian firms have already established strong brand image despite all odds and now trans national players are looking at them as partners in various alliances.