India will remain a branded drug market for many more yrs

UR Associates has come out with its report on pharma sector.

Last week there was a lot of publicity in media about a government policy that outlays $5.4 billion fund to provide free generic drugs to patients in government hospitals and rural clinics. The doctors will have to prescribe generic-only drugs and not the more commonly sold branded generics. India and majority of the emerging countries are branded generics markets, where doctors prescribe the brand name of the drug instead of the generic name and different pharma companies sell the same generic drug with different brand names and at different prices. The additional costs incurred by the pharma companies including marketing costs and salaries of medical representatives are priced in the MRP of a branded generic and hence are costlier than the generic-only drugs.

Over the years many emerging nations have tried to increase the scale of usage of generic-only drugs to reduce the healthcare expenditure of government and people. However, they could not be very successful because of apprehensions of people that generic-only drugs might be of substandard quality. The rise in counterfeit drugs, unwillingness of pharma companies to produce generic-only drugs in a large scale, reluctance of doctors to prescribe these drugs and lack of availability of these drugs in pharmacy stores are some of the other major reasons due to which the usage could not scale up. While the developed countries like US, UK and Western Europe are generic-only markets, it will take many more years for our Indian pharma market to mature and become generic-only drug market. Also, branded generics are a very profitable business for pharma companies with the EBITDA margins being around 30%-35% compared to the generic-only developed markets where the profitability is around 15-25%.

Although this government initiative might benefit many poor and middle class people who often see most of their savings getting evaporated due to hospital expenditure and medicines, it would need huge conviction on the part of the government to successfully implement this policy amidst a lot of challenges.

Lupin  receives US FDA approval for generic Lyrica: Lupin Pharmaceuticals Inc. has received final approval for its Pregabalin Capsules, 25 mg, 50 mg, 75 mg, 100 mg, 150 mg, 200 mg, 225 mg and 300 mg from the US FDA to market a generic version of C.P. Pharmaceuticals C.V., Lyrica (Pregabalin) capsules. Lyrica is indicated for neuropathic pain associated with diabetic peripheral neuropathy, post herpetic neuralgia, adjunctive treatment for adult patients with partial onset seizures and fibromyalgia. Lyrica capsules had US annual sales of $1.8 billion for the 12 months ending March 2012. Apart from Lupin, there are 3 other players selling the generic drug in US market.

Serum Institute buys Dutch company for Rs 5,500 million: Serum Institute of India, the flagship company of the $1-billion Poonawalla Group, has acquired The Netherlands-based Bilthoven Biologicals for Rs 5,500 million. This is the company's first overseas acquisition and involves acquiring 100% stake in Bilthoven Biologicals, the company said. Chairman of the Group, Cyrus Poonawalla, said that "The total deal size is 80 million Euros. We have already paid 32 million Euros. The remaining amount will have to be paid over a period of two to three years because of the liabilities and assets, which are pending." Through the acquisition, the Serum Institute will get access to technology and expertise for making the Injectable Polio Vaccine (Salk), a capability that is currently possessed by only 3 other vaccine manufacturing plants globally.

Dr Reddy's plans to launch biosimilars in developed markets: Dr Reddy's Laboratories Ltd is planning to launch its biosimilars in developed markets soon. In his letter to the shareholders, Dr K. Anji Reddy, Chairman, said biosimilars of his company were now commercially available in 13 emerging markets. "These are helping to treat patients suffering from cancer at prices that are significantly more affordable than the corresponding innovator drugs. Soon, I expect to see Dr Reddy's biosimilars entering developed markets,'' he said. At present, the biosimilar portfolio of the Hyderabad-based company comprises Filgrastim, peg-filgrastim, Rituximab and Darbepoetin alfa. Dr Reddy's global biosimilars business earned $26 million revenue during 2011-12 marking a 25% year-on-year growth.

Dishman to exit SEZ business to raise Rs 6,000 million: Dishman Pharmaceuticals will scrap its six-year old SEZ project and sell land near Ahmedabad for Rs 6,000 million. The Rs 10 billion contract research and manufacturing services company will pay off a bank debt of Rs 1,000 million from the proceeds of the sale. In 2009, Dishman scrapped its engineering SEZ owing to global slowdown and merged it with the adjoining pharma SEZ in Bavla. Both SEZ projects were valued at Rs 4,000 million. Now, the company will exit the SEZ business altogether.