Fundamentals are strong for the US generic drug industry. Double-digit growth is projected, and growth for active pharmaceutical ingredients (APIs) for generic drugs outpaces growth for APIs for innovator drugs. Also, the industry is positioning for further growth with growing support for biosimilars.
Drugs with sales of $160 billion are expected to come off patent by 2015, according to Datamonitor PLC (London). 2008 and 2011 are projected as particularly strong years for growth in generic drugs. Over the next several years, an estimated $80 billion in 2005 product sales will be exposed to generic competition and a further $77 billion will be subject to generic incursion between 2011 and 2015, according to Datamonitor (1).
Several top-selling drugs either lost US patent protection in 2006 or will in 2007. Merck & Co. Inc.'s(Whitehouse Station, NJ) "Zocor" (simvastatin) lost US patent protection in 2006, and the patent for Sanofi-Aventis's Plavix"(clopidogel) was challenged. In 2007, Pfizer. Inc.'s( (New York, NY) "Norvasc"(amlodipine) and "Risperdal" (risperdal) by Johnson & Johnson 's(J&J, New Brunswick, NJ) subsidiary Janssen LP will lose patent protection (1).In addition to Zocor in 2006 and Norvasc and Risperdal in 2007, other key drugs recently came off patent or are slated to come off patent. In, 2006, key drugs that came off patent included Pfizer's "Zoloft" (sertraline), Bristol-Myers Squibb Company's(New York, NY) "Pravachol" (pravastatin), GlaxoSmithKline's (GSK, London) "Zofran" (ondansetron) and "Flonase" (fluticasone), and Boehringer Ingelheim's (Ingelheim, Germany) "Mobic" (meloxicam). In 2007, key drug coming off patent are Pfizer's "Zyrtec" (cetirizine), GSK's "Coreg" (carvedilol), and Sanofi-Aventis's "Ambien" (zolpidem) (1).
Rising influence of generic drugs
2005 was a watershed year for the US generics industry. In 2005, for the first time in US history, generic prescription volume was higher than branded volume. Generic prescription grew by 13% in 2005, compared with 7% growth for the overall market, according to data from IMS Health(Plymouth Meeting, PA). In all, generic prescription volume reached 60%, an all-time high (2).
The rising influence of the generic drug industry on the US pharmaceutical industry is evident by the positioning of generic drug manufacturers among the top 20 pharmaceutical companies, based on total US dispensed prescriptions in 2005. Three generic drug manufacturers, Teva Pharmaceuticals (Petach Tikva, Israel), Mylan Laboratories (Canonsburg, PA), and Watson Pharmaceuticals (Corona, PA), respectively ranked third, fourth, and fifth among the top 20 pharmaceutical companies in 2005, according to IMS Health. Teva pulled in prescriptions of 245.3 million, representing 15% growth and a 7% share of the US prescription market on a volume basis. Mylan pulled in 228.4 prescriptions, representing 7% growth and a 6.3% market share. Watson Pharmaceuticals pulled in 188.4 prescriptions, representing 8% growth and a 5.2 market share. Only two companies performed better in 2005–Pfizer, with 324.5 million prescriptions and Novartis (Basel, Switzerland) with 281.6 million prescriptions (2).
Other generic drug companies making the top 20 companies in 2005 were Ivax Corporation (acquired by Teva Pharmaceuticals in 2006), which pulled in at number 8, with 109.6 million prescriptions, Barr Laboratories (Woodcliff Lake, NJ) at number 13 with 83.1 million prescriptions, Qualitest Products at 74.7 million prescriptions (ranking number 16) ,and Par Pharmaceuticals (Woodcliff Lake, NJ) (ranking number 18) with 70.3 million prescriptions.
Opportunities for APIs
The growth in generics drugs is reflected in the growth for active pharmaceutical ingredients (APIs) to the generic drug indusry. In 2005, generic APIs accounted for 43.5% (or $13.5 billion) of the total merchant API market (including both APIs and advanced intermediates), according to the Chemical Pharmaceutical Generic Association (CPA, Milan, Italy). Branded or innovative APIs accounted for 56.5% or $17.5 billion (1).
Global demand for APIs as a whole (both branded or innovative and generic APIs) is expected to increase at an average annual rate of 8.2% over the next five years, according to CPA. The merchant market for APIs is expected to reach $46 billion by 2010, with demand for generic APIs growing faster than APIs for branded or innovative drugs. Demand for generic APIs is projected to increase at an annual average rate of 10.9% over the next five years to reach $22.7 billion by 2010. In contrast, demand for APIs for branded or innovative drugs is forecast to increase at an annual average rate of 5.9% to reach $23.3 billion by 2010. This differential in growth rates will shift the balance of API power to near parity by 2010 with generic APIs at 49.4% and branded or innovative APIs at 50.6%, according to CPA (1).
Biogenerics or biosimilars
Biosimilars are an emerging opportunity for the US generics market as the industry awaits a regulatory pathway for biogeneric drugs. As biologics assume a larger share of Big Pharma's ethical drug sales, the impact of biogenerics (known as biosimilars in Europe) will be key. Because of biogeneric erosion, the market for branded biologics in four key classes in the United States is expected to decline, according to Decision Resources (Waltham, MA) (1). The US branded market for erythropoiesis-stimulating proteins (ESPs), granulocyte-colony stimulating factors (G-CSFs), insulins and insulin analogues, and human growth hormone (hGH) was $9.5 billion in 2006, and is expected to fall to $8 billion in 2012, and to $3.8 billion by 2015, notes Decision Resources (1).
"Epogen" (epoetin alfa) by Amgen(Thousand Oaks, CA) and J&J's "Procrit" and "Eprex" (epoetin alfa) are examples of two key biologic products in the ESPs class losing US patent protection in 2013. Amgen also faces US patent expiration in 2013 for the G-CSF "Neupogen" (filgrastim), according to Decision Resource (1).
Patents for insulin for Eli Lilly's (Indianapolis, IN) "Humulin" and Novo Nordisk's (Bagsvaerd, Denmark) "Novolin" already have expired, and insulin analogues face near-term patent expiration in the United States in 2013–2015. These analogues include Eli Lilly's "Humalog," Novo Nordisk's "NovoLog" and "Levemir," and Sanofi-Aventis's "Lantus," says Decision Resources (1).
hGH products that face near-term US patent expiration include Eli Lilly's "Humatrope" and Pfizer's "Genotropin" in 2008, Genentech's "Nutropin" in 2009, and Novo Nordisk's "Norditropin" in 2015, although patent protection does not necessarily ensure that competition will not reach the market (1).
Regulatory considerations for biogenerics
The approval of Sandoz's (Holzkirchen, Germany) "Omnitrope" (somatropin recombinant) as a follow-on protein by the US Food and Drug Administration (Rockville, MD)in 2006 fueled the ongoing debate in the United States regarding regulatory pathways for approving biogenerics. Omnitrope was one of the first drugs approved under the biosimilar pathway established by the European Commission.
Sandoz received approval from FDA for "Omnitrope" (somatropin [rDNA origin]), as a follow-on version of a previously approved recombinant human growth hormone (rhGH) product. FDA's decision followed the approval of Omnitrope by European regulatory authorities in April 2006. Sandoz had filed a lawsuit against the FDA in September 2005 seeking a ruling on its new drug application, which it filed in July 2003.
In approving Omnitrope, FDA emphasized that the drug is not a generic biologic because it is not rated as therapeutically equivalent to any of the other approved human growth hormone products. Instead, FDA characterized the drug as a "follow-on protein product" and stressed that its approval did not create a new pathway for follow-on versions of all protein products (3).
"The approval of Omnitrope in a 505 (b)(2) application does not establish a pathway for approval of follow-on products for biological products licensed under Section 351 of the Public Health Service Act, nor does it mean that more complex and/or less well understood proteins approved as drugs under the Food, Drug, and Cosmetic Act could be approved as follow-on products," said FDA in its ruling. "The majority of protein products are licensed as biological products under the Public Health Service Act, not approved as drugs under the Food, Drug, and Cosmetic Act. There is no abbreviated approval pathway analogous to 505 (b)(2) of 505 (j) of the Act for protein products licensed under Section 351 of the Public Health Service Act. Such a pathway for the approval or licensure of follow-on protein products under the Public Health Service Act would require new legislation (3).
FDA also pointed out that its approval of Omnitrope does not involve the regulatory and legal questions raised with follow-on products licensed under the Public Health Service Act. These issues involve: protein products with unknown or multiple active ingredients (rhGH products have one known active ingredient, somatropin); protein products that are difficult to characterize (currently available technologies allow rhGH to be extensively characterized); protein products that are glycosylated (rhGH is not glycosylated); and protein products that have an unknown mechanism of action (rhGH's mechanism of action is well understood) (3).
In its statement, the agency also pointed out that Omnitrope is not FDA's first approval of a follow-on protein product. Other follow-on protein products approved under section 505 of the Food, Drug, and Cosmetic Act include: "GlucaGen"(glucagon recombinant for injection), "Hylenex" (hyaluronidase recombinant human), "Hydase" and "Amphadase"(hyaluronidase), and "Fortical" (calcitonin salmon recombinant) nasal spray (3).
Although the regulatory framework for biosimilars is more defined in Europe, the United States is moving toward standardized pathways for biogenerics, although this is a slow and evolving process, which is expected to continue over the next few years, with several legislative initiatives under consideration. The key issue for the US market, therefore, relates to the vast majority of biologics, which are regulated under biologics license applications (BLAs) rather than NDAs (1).
1. P.Van Arnum, "The Changing Fortunes of APIs," Pharm. Technol. 31 (1), 52–58, 2007.
2. E. Greb, D. McCormick, P. Van Arnum, "Pharmaceutical Technology's 2005 Manufacturing Rankings," Pharm. Technol. 30 (7), 36–50, 2006.
3. FDA, "Omnitrope (somatropin [rDNA origin]) Questions and Answers," (Rockville, MD, 2006), http://www.fda.gov/cder/drug/infopage/somatropin/qa.htm.