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Cancer generics - a booming market

Published on 09/10/03 at 03:26pm

The market for generic cancer drugs has never looked brighter. The increasing potential for these more low-cost treatments has attracted renewed interest from the generics industry. The value of cancer drugs losing patent protection over the next decade is forecast to exceed $15 billion across the seven major pharmaceutical markets, leading to enormous growth in the market for generic equivalents. The cancer generics market is currently estimated to be worth around $2 billion across these markets but could triple in size by 2010. This will fuel not only continued interest from generics companies currently active in this therapy area but also attract the attention of those companies currently operating outside oncology.

The steep growth of the cancer generics market is a direct consequence of the dramatic increase in the number of products approved for cancer indications over the last 20 years. Due to the protracted nature of the drug development process, novel drugs may only enjoy a few years of patent protection by the time they reach the market, although this can be extended by additional market exclusivity in certain cases. The increasing number of generic products is combined with anticipated regulatory and cost-containment policy changes that should see more rapid generic approval and the development of weaker European generics markets.

Increasing number of off-patent cancer blockbusters

Although numerous cancer drugs are anticipated to lose patent protection over the next decade, those with the highest sales represent the most lucrative targets for the generics industry. For example, the novel cytotoxic drug Taxol (paclitaxel), launched by Bristol-Myers Squibb in 1993, saw rapid revenue growth to become the leading cytotoxic drug, with sales of almost $1.6 billion globally in 2000. However, following a successful legal challenge to Taxol's patent protection, Ivax Pharmaceuticals, a leading generics manufacturer, was able to launch the first generic equivalent in the US in late 2000. Taxol's US sales declined by 45% the following year, with Ivax generating 17% ($206 million) of its annual revenue from sales of its generic version, Onxol, alone. The entrance of further competitors in the US paclitaxel market has since triggered rapid price erosion and enormous loss of revenue for BMS's original brand, which is unlikely to surpass sales of $150 million in the US this year.

Several other high growth products are expected to see generic competition over the next decade. AstraZeneca's Nolvadex (tamoxifen) loses paediatric exclusivity in the US in February 2003, opening the way for generic equivalents. Indeed, several generics manufacturers, including Ivax, Barr Laboratories and Teva Pharmaceuticals, have already received tentative approval for generic tamoxifen and await expiration of exclusivity. A number of generics companies already market tamoxifen generics in Europe. Barr already produces the only generic tamoxifen in the US following a legal settlement to patent litigation, but held a supply agreement with AstraZeneca as part of this settlement. Despite this, direct sales of Nolvadex from AstraZeneca were over $600 million in 2001 with combined sales for AstraZeneca and Barr's products in excess of $1 billion. BMS's Paraplatin (carboplatin) is another product for which generic equivalents exist in Europe but not the US. With global sales of over $700 million, Paraplatin should also be challenged by several US generic equivalents in 2004. Several other cancer drugs, such as AstraZeneca's Arimidex (anastrozole), Pharmacia/Aventis Camptosar/Campto (irinotecan) and Aventis Taxotere (docetaxel), are forecast to achieve annual sales in excess of $1 billion before patent loss, making them high priority targets for generics companies.

Within this expanding market, companies are seeking to compete on more than just drug price, or commodity generics. Generics manufacturers may seek to differentiate their cancer products through aggressive marketing by associating a brand name to the generic drug (branded generics). However, in markets with a strong emphasis on cost-containment such as the US, brand-name marketing of a generic cancer product alone is unlikely to enable a higher price-point for the drug. In these markets, branding of a generic drug can be associated with product enhancement to give supergeneric products that typically exhibit improvements in side-effects, efficacy or drug delivery. However, such products may be sufficiently different to the original product to necessitate additional clinical trials to prove their safety and efficacy, and as such may not be considered to be true generics.

Regulatory change expected to fuel US growth

The US generics drug market is the most mature in the world, following the formalisation of generic drug approval with the Hatch-Waxman Act in 1984. This defined the abbreviated new drug approval procedure that allows expedited generic drug approval on the basis of proving bioequivalence to the original product, negating the need to recreate the original clinical trials. Bioequivalence is demonstrated by showing similar uptake of the active ingredient into the body. Generics manufacturers in the US are also allowed to perform bioequivalency trials prior to patent expiry of the original product through the Roche-Bolar exemption, enabling generic drug launch immediately upon expiry of the original patent.

The US generics industry is awaiting the outcome of proposed regulatory reform that would favour the earlier introduction of generic drugs. The Greater Access to Affordable Pharmaceuticals Act of 2002 (GAAP), also known as Bill S812 or the McCain-Schumer Act, seeks to redress the regulations governing generic drug approval. Broadly speaking, GAAP would introduce measures limiting the delay to generic drug approval as a result of litigation proceedings, increasing scrutinisation of late-listed patents and allowing multiple methods to establish bioequivalence of the generic drug. GAAP is supported by a broad coalition including bipartisan political support, consumer groups, generics manufacturers and large corporations keen to reduce healthcare insurance for employees. The Bill is currently under debate in the House of Congress, following overwhelming approval from the Senate at the end of July 2002. If the Bill is passed into law, it should lead to generic drugs generally reaching the market earlier.

The issue of bioequivalence addressed by GAAP also has implications for the production of generic equivalents to biological products, or biogenerics. Several novel cancer therapies that have emerged onto the market in the past decade are biological agents. These include therapeutic proteins and monoclonal antibodies, such as Genentechs Herceptin (trastuzumab) and IDEC Pharmaceuticals Rituxan/MabThera (rituximab), which have the potential to generate multibillion dollar sales by the time of patent expiry. Current regulations make it impossible for generic equivalents to biological products to gain approval through demonstration of bioequivalency, mainly because the precise manufacturing route for these agents can lead to differential protein processing and activity. Upon patent loss, generics manufacturers can develop such products, but would have to proceed through full clinical trials, necessitating a similar price-point for the product. However, the high cost of these novel treatments and their rapid uptake in many indications due to increased efficacy over older cytotoxic therapies creates a focus on creating an approval route for biogenerics. Although this is not a simple process and is the focus of great contention by the biotech industry, regulations could be in place as early as 2005, and many generics manufacturers are already preparing for this potentially lucrative market to open up.

Cost-containment in Europe

The European generics market is highly fragmented. In Germany, the UK and the Netherlands, the proportion of prescriptions for generic drugs is around 50%, a similar level to the US market. However, may other European markets, such as France, Italy and Spain, show much lower generic penetration, at less than 10%. This is largely due to the cost-containment environments within these markets that, although under reform, have not traditionally promoted the prescribing of generic drugs. In Europe, generics manufacturers wishing to receive approval across multiple EU countries must currently seek initial approval in one member state followed by recognition of that approval in further member states through the mutual recognition procedure (MRP). Although this results in a simpler approval process than individual national registrations, the procedure can be time-consuming and member states do not always recognise the validity of the initial approval. Furthermore, there is no Roche-Bolar exemption operated across the EU, which results in European generics manufacturers being forced to develop their products in external markets. However, both reform of national cost-containment and regulatory reform should lead to expansion of the European generics market over the next decade. Within the less mature generics markets, the introduction of measures to incentivise generic prescribing and allow substitution of generic products for original product prescriptions is essential to reduce healthcare costs and is expected to fuel the rapid growth of these markets. Generics manufacturers within Europe are also promoting regulatory reform leading to simplification of the MRP, increased acceptance between member states and reduced time for approval. In addition, a Roche-Bolar type exemption is being considered to allow the development of generic drugs within the EU.

Several international generics manufacturers are increasing their focus on the European generics market, which is regarded as having high potential. Ivax and Teva, two of the largest generics companies which both focus on oncology products, have recently consolidated their positions within the European market through acquisition of facilities in France.

The European market will also see the continued expansion of generics companies from developing pharmaceutical markets such as India and Central Eastern Europe (CEE), which benefit from low pharmaceutical ingredient and production costs. For example, Dabur, an Indian generics manufacturer with substantial export operations, established a manufacturing facility in the UK in 2001 specifically for the production of cytotoxic drugs, and with the intention of establishing itself as a major player in the EU cancer generics market. Several CEE-based companies are also developing operations within Europe. Pliva, based in Croatia and already marketing generic cancer drugs in CEE, has now established subsidiary operations in all five of the major European markets and recently gained its first drug approval in Western Europe, outside oncology, for ciprofloxacin in the UK. With EU accession looming on the horizon, several more CEE generics companies could become major players.

The future for the cancer market

With new markets and new products for generics manufacturers within the cancer market this would seem to suggest a harsh environment for those companies focusing on novel cancer treatments. However, within the cancer market there remains a high level of unmet need, and novel products demonstrating improved clinical attributes to any degree would be expected to capture market share from older generic drugs. Indeed, with increasing availability of generic equivalents to older products, US companies invest more money on R&D than their European counterparts, and the US biotech industry is booming. Therefore, as the cancer generics market grows, so too does the focus on novel products from the research-based pharma industry. The result is a balanced industry producing low-cost older drugs and increasingly efficacious novel therapies.

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