By Randall Osborne
Generic pharmaceutical drug sales reap billions each year, as shrewd firms seize the day seize the patent-expiration day, that is to gear up and crank out equivalent formulations of chemicals for which the original developer no longer enjoys legal protection.
Chances at whopper earnings will keep coming. Analysts say about $50 billion worth of branded drugs in the U.S. will lose the vital patent shield in the next five years. With already about 45 percent of the total prescription share, the generic drug industry's slice of the pie is expected only to increase.
Are generic biologics next?
Those firms considering the generic-biologics space may be as excited as a shy man mulling the faraway prospect of buying sildenafil (Viagra) over the counter at Walgreen's, but for many in the biotechnology industry, the subject is a turn-off.
A number of factors conspire to prevent generic biologics from happening soon. One is: big molecules. The FDA fidgets over whether the biologics' "macro" molecules can be proved safe and effective for patients in generic form. Pharmaceuticals are made mostly of small molecules, which are more easily synthesized.
For the latter, "the bar is pretty low," said John Sonnier, analyst and vice president with Prudential Vector Healthcare. "Certain generic drugs are being dealt with almost as if they are branded drugs, like Eli Lilly and Co.'s [antibiotic] vancomycin, which is treated and marketed as a brand name drug." So refined are biologics, by comparison, that they often are approved "lot to lot," he noted.
Regulating generic biologics would likely mean changing the Hatch/Waxman Act, which has rumbled along rather nicely since its passage in 1984. Nobody much relishes the inevitable political fights when the hood is lifted on that law, and various parties begin their efforts to influence the tinkering.
It's no accident that three firms touting "generic biopharmaceuticals" work are in Canada: Cangene Corp., of Mississauga, Ontario; Microbix Biosystems Inc., of Toronto; and Novopharm Biotech Inc., also of Toronto. But even there, regulatory authorities are struggling with the subject.
Whatever's next, smart companies in the U.S. and elsewhere are making plans, Sonnier said.
"It does bring up the issue: Are there emerging technologies that allow parent companies to come up with mimic drugs that are a small molecule?" he told BioWorld Financial Watch. "That's what I would want to do, if I saw one of my drugs going off patent."
As examples of firms trying to head off generic trouble, Sonnier points to the powerhouse Amgen Inc., with its longer-acting form of Epogen (erythropoietin), called Aranesp, and a planned biologics license application for SD-01, which is sustained-release Neupogen (filgrastim), for neutropenia in the first half of this year.
Although the progress from branded drug to generic may not be as quick or smooth in the biologics world, Sonnier said, "we'll see a lot of the same strategy we saw with chemicals." That is, firms such as Amgen will make their own, new versions of drugs to protect income from their products against inroads by generics.
That would make more sense, after all, than battling out the matter in the political arena where according to a historically proven script consumer groups will claim the corporations only want to maintain their monopoly, and where biotechnology firms' pleas for safety (which the FDA has forced them to carefully ensure through costly trials) are chalked up to self-serving rhetoric.
Nobody wants that.
"Could somebody come in and make the economics work?" will be the question the biotechnology companies ask about would-be competitors, Sonnier said. Calling his own speculations "uneducated guesses," he said firms will focus less on deliberating such matters than on protecting themselves by vigorous research and development, with outcomes such as Amgen's.
Sonnier also cited MedImmune Inc., and its humanized monoclonal antibody Synagis (palivizumab) to prevent serious lower respiratory tract disease caused by respiratory syncytial virus (RSV) in pediatric patients at high risk.
MedImmune is working on a third-generation, more potent form of the drug, called Numax, for adults, which may be easier to use with fewer administrations. In a deal with Applied Molecular Evolution Inc., the latter created several new monoclonal antibody candidates against RSV, one of which will be used in Numax.
Exploring similar avenues is Trimeris Inc., with its viral fusion inhibitors, Sonnier said. "They have an injectable peptide, and they're working on a small-molecule mimic," he said. "It's early stage, but I think they would love to have a small molecule rather than a peptide."
Apart from its utility in helping firms make an "end run" with regard to generic biologics, the new-formulation strategy makes enough sense that at least one company has adopted it as a business model, Sonnier said.
That would be Sepracor Inc., which says its mission is to develop Improved Chemical Entities (ICE), enhanced forms of existing, widely sold pharmaceuticals, which cover product opportunities with strong market potential and that can be developed with less cost, time and risk than new chemical entities (NCE)."
In other words, "they exist really for one reason: to provide line extension for pharma for drugs that are going off patent," he said. "That's their purpose."
Sure to be at the center of any Hatch/Waxman generic biologics dispute is the Biotechnology Industry Organization (BIO), which has been expecting the issue for some time and is prepared to take it on.
Aware of the nervousness over dark clouds on the horizon, BIO's general counsel, Steve Lawton, urged an "enlightened approach" to the topic.
"BIO not only has a legislative committee [dedicated to generic biologics], but ultimately its board will be examining this issue very carefully, not only from a legal and political standpoint but also a scientific standpoint," Lawton told BioWorld Financial Watch.
A generic drug is bioequivalent when, over time, the patient keeps the same amount of it in his or her blood as the branded drug. That's not easy to achieve and needs to be rigorously tested, Lawton said.
"It is by no means clear that products can or should go on the market in the absence of clinical trials," he said. "The manufacturing of most biotechnology products is an enormously complex process. In our judgment, at least preliminarily, there's a clear issue of patients' safety here."
Although some may compare the biologics scenario to pharmaceutical drugs, Lawton said it is "not like the situation in 1984, when it was clear that it was quite possible to make generic versions of drugs with chemical synthesis."
Put most simply, biotechnology drugs are derived from living organisms, and must be more challenging in the laboratory and the manufacturing plant.
"This is not an easy issue at all," he said.
While the storm brews, Sonnier said investors and other firms might be wise to take their cues from Amgen's "make your own before someone else does" approach to the rising controversy.
"If you look at the bellwether of the sector, they're already there," he said. *