Market Place
Sun, Dr. Reddy’s rework strategies to deal with US market; Novartis sells troubled US biz to Aurobindo
This week, Phispers has news on Indian generic drug makers. First, Sun Pharma and Dr. Reddy’s Laboratories announced their reworked strategies that are driven by severe pressures in the US market. While DRL plans to double its US product portfolio, Sun is betting big on its specialty pipeline. India’s Aurobindo Pharma made news by buying Novartis’ Sandoz US generic oral solids and dermatology business for US$ 1 billion. Even as the FDA continued to approve generic drugs at a frenetic pace, beating its own previous records, several major hospitals in the US launched a not-for-profit generic drug company, named Civica Rx, to tackle chronic drug shortages and high prices. Meanwhile, former chairman of Teva got indicted in a “pump and dump” stock fraud and GSK suffered a setback as its asthma drug failed to win expanded FDA approval for COPD.
Novartis unloads troubled US generics to Aurobindo; investors in Mylan, Teva unhappy
Novartis finally got rid of some troubled US generic assets last week when it sold 300 products and several development projects in its Sandoz US generic oral solids and dermatology business to Indian drug maker Aurobindo Pharma for US$ 1 billion. Aurobindo will pay US$ 900 million upfront and up to US$ 100 million in performance payments.
The deal relieves Novartis of a troubled franchise, while catapulting Aurobindo to the position of the second-largest generics player by prescriptions in the US.
The acquisition also included some generic oral solids in autoimmune, antineoplastic and hormonal agents. The deal included three manufacturing plants and around 750 employees.
The deal with Aurobindo is part of Novartis’ effort to focus Sandoz’s US operations on higher-margin assets like biosimilars and complex generics, which would include injectables, respiratory drugs and eye therapies.
As part of the deal, Aurobindo also gets Sandoz’s dermatology development center, as well as manufacturing facilities in Wilson, North Carolina, and Hicksville and Melville, New York, which Aurobindo said are “highly complementary” to its existing production footprint.
Many drugmakers, including China’s Fosun Pharma, and several private equity buyers had reportedly evinced interest in the franchise.
In fact, investors in two other drug companies — Mylan and Teva — weren’t so happy with the deal. The reason? The US$ 900 million upfront payment reached by Novartis and Aurobindo was less than the 2017 annual revenue the portfolio sold, Wells Fargo analyst David Maris said.
“Although clearly Teva and Mylan have very different businesses than the largely commodity and dermatology portfolio Sandoz is selling, we believe some investors are looking at this as a proxy for what the commodity portions of Teva’s US and Mylan’s US businesses might be worth,” said Maris.
According to Aurobindo, the acquired portfolio brought in sales of about US$ 1.2 billion in 2017, higher than the US$ 1 billion the deal could eventually be worth if performance-related payments are added.
Due to increased pricing pressure that has wreaked havoc across the entire US generics industry, Novartis’ US Sandoz business has been suffering. Mylan and Teva face the same US pricing pressure as Novartis.
Meanwhile, Mylan finally revealed what it had bought during the last quarter for US$ 483 million.
The company had purchased Novartis’ Tobi Podhaler and Tobi liquid, two cystic fibrosis products. The company expects to pay US$ 240 million of that sum this year.
Mylan also mentioned the reason behind the secrecy. “The transaction was subject to … pre-closing confidentiality restrictions,” Mylan said in a statement.
Sun Pharma and Dr. Reddy’s rework strategy to deal with US market pressures
Indian drugmakers — Sun Pharmaceutical Industries Ltd and Dr. Reddy’s Laboratories Ltd (DRL) — made headlines recently for their new strategies. And the US market is at the helm of the strategical changes being implemented at both the companies. While Dr. Reddy’s plans to double its US product portfolio over the next five years, Sun Pharma is betting big on its specialty pipeline in a bid to climb up the value chain, and deal with increasing US market pressures.
India’s largest drugmaker Sun Pharma has a portfolio of about 10 specialty products, of which five are already in the market, two more are likely to be commercialized in the next few quarters; and two more await US Food and Drug Administration (FDA) approval.
According to Dilip Shanghvi, managing director of Sun Pharma, the company has been investing in building its global specialty business for the last few years so that they continue to earn reasonable returns on investments. The company plans to continue investing in global specialty business — a move that is driven by severe pressure in the US market, which in turn is forcing companies to increase their research and development spends.
Credit Suisse expects the specialty business of Sun Pharma to break even in financial year 2021.
Similarly, DRL plans to double its US product portfolio over the next five years. This was one of the five core growth areas that the company highlighted in a recent meeting with analysts and investors, Antique Stock Broking report said.
The company wants to ensure that no commercial opportunity is wasted due to issues related to its manufacturing plants, the report added. Quality is likely to remain center-stage for DRL and the company is making improvements in this regard over the last two years.
The five core growth areas for Dr Reddy’s are (i) intensifying efforts in complex generics and developing dossiers for world markets given the legacy strength in complex APIs; (ii) doubling the number of marketed molecules in the US in the coming years (iii) capitalizing on the first-mover advantage in China; (iv) breaking into the top-10 drug makers’ by sales list in India; and (v) keep enhancing the compliance processes at its plants.
The management has indicated that the US remains the focus area and the company is likely to launch 15 products annually with an aim to double the marketed products to 170 in the coming years. The company will focus more on oral solids and injectables in the US, while for China, the focus will be on the oncology segment.
US launches Civica Rx to tackle high prices, as FDA gets
set to approve record ANDAs
Shortages of lifesaving drugs is a key worry for several countries across the world. In the US, drug shortages have been widespread for more than a decade.
Last week, several major hospital groups in the US got together to launch their own generic drug company — christened Civica Rx — to tackle chronic drug shortages and high prices. The initiative was announced in January 2018. Since then, more than 120 health organizations representing about a third of America’s hospitals have contacted Civica Rx and have expressed a commitment or interest in participating with the new company.
This not-for-profit generic drug company will help patients by addressing drug shortages and high prices of lifesaving medications. Civica Rx will be headquartered in Utah.
Civica Rx plans to start with 14 widely used hospital drugs that have been in short supply for a long time. Besides creating a reliable supply for its 500 hospitals, Civica aims to reduce drug prices by about 20 percent.
On its part, the FDA is announcing a public meeting entitled ‘Identifying the Root Causes of Drug Shortages and Finding Enduring Solutions’. The purpose of the meeting is to give stakeholders, including healthcare providers, patients, manufacturers, wholesalers, pharmacists, pharmacy benefit managers, veterinarians, public and private insurers, academic researchers, and the public, the opportunity to provide input on the underlying systemic causes of drug shortages, and make recommendations for actions to prevent or mitigate drug shortages. The public meeting will be held on November 27, 2018.
Meanwhile, in Canada, about 1,200 drug products go into short supply every year. At any given moment, there are at least 700 to 1,000 drug shortages.
Last week, 25 new drugs were listed on Canada’s drug shortage website. These include treatments for migraines, Parkinson’s disease, schizophrenia, depression, hepatitis B, genital herpes, hypertension, and even generic Viagra.
Last week, Canada’s health minister signed an order permitting US supplies of another brand of epinephrine auto-injectors to be sold in Canada to help solve the EpiPen shortage.
This is happening at a time when the FDA is on track to approve a record number of abbreviated new drug applications (ANDAs) in FY 2018.
The FDA has approved 666 ANDAs in the fiscal year through July and has tentatively approved another 162 ANDAs. With an average of 67 ANDA approvals and 16 tentative approvals each month this year, FDA will likely top its record-setting FY 2017 performance.
In FY 2017, FDA approved or tentatively approved 937 ANDAs, breaking its previous record of 835 in 2016.
As part of FDA’s efforts to address growing prescription drug spending, Commissioner Scott Gottlieb has also made the approval of generic drugs, especially first generics and generics to drugs with little competition, a priority.
Ex-Teva chairman charged in ‘pump and dump’ stock fraud
Last week, the US Securities and Exchange Commission (SEC) said it charged 10 individuals and 10 associated entities for manipulating the stocks of three companies. An SEC statement said these individuals and the associated entities ran “fraudulent schemes that generated over US$ 27 million from unlawful stock sales and caused significant harm to retail investors who were left holding virtually worthless stock”.
According to the SEC, between 2013 and 2018, these “prolific South Florida-based investors” manipulated the share price of stocks in three unidentified companies. The SEC named investor Barry Honig and pharmaceutical billionaire Phillip Frost among the individuals. Frost allegedly participated in two of these three schemes.
Honig allegedly helped acquire large quantities of company stock and engaged in manipulative activity after taking ownership interests in the companies. OPKO Health Inc was also named among the charged entities. Frost is chairman and CEO of OPKO, a dual listed company traded in Tel Aviv and Wall Street.
Eighty-one year old Frost served as the chairman of the Israeli generic drug giant Teva Pharmaceuticals until 2014. OPKO has been traded on the Tel Aviv Stock Exchange since April 2013, after OPKO Health bought Israeli biomedical company, Prolor Biotech. This deal was of interest since Frost held both OPKO and Teva.
SEC investigators allege that Honig was the ringleader of the “pump and dump” scheme. In each of the three cases, the SEC says Honig orchestrated the purchase of shares at steep discounts. The participants would buy shares in coordination with each other, driving up the prices. The group would control the actions of the management without disclosing that they were in control. Then they would arrange for the publication of promotional articles to further raise the stock price.
According to the SEC complaint, Honig and his associates then dumped their shares into the inflated market, reaping millions of dollars at the expense of unsuspecting investors.
“As alleged, Honig and his associates engaged in brazen market manipulation that advanced their financial interests while fleecing innocent investors and undermining the integrity of our securities markets,” Sanjay Wadhwa, Senior Associate Director in the SEC’s Division of Enforcement, said.
GSK
suffers setback as its asthma drug fails to win expanded FDA approval for COPD
British drugmaker GlaxoSmithKline faced a setback a few days back when its bid to expand the use of its biologic Nucala in the US to include patients with coronary pulmonary obstructive disorder (COPD) got rejected by the FDA.
The company is seeking approval for Nucala (mepolizumab) as an add-on treatment to inhaled corticosteroid-based maintenance treatment for the reduction of exacerbations in patients with COPD, guided by blood eosinophil counts.
The FDA issued a complete response letter (CRL) to GSK that more clinical data are required to support an approval. GSK filed for the drug’s approval for COPD on the basis of two trials - Metrex and Metreo.
GSK will work closely with the FDA to determine the appropriate next steps for the supplementary biologics license application (sBLA), the company said in a statement.
Nucala is a monoclonal antibody, already approved for asthma, that works by inhibiting interleukin-5 (IL5) to decrease the maturation and survival of eosinophils (a type of disease-fighting white blood cells), overproduction of which can cause inflammation in the lungs.
Soon after receiving the CRL from the FDA for Nucala as an add-on COPD treatment, GSK released data that showed the same medication was a superior treatment in severe eosinophilic asthma in patients with similar blood eosinophil counts.
GSK released data from an indirect treatment comparison between Nucala and AstraZeneca's Fasenra (benralizumab) and Teva’s Cinqair (reslizumab). It showed Nucala “significantly reduced clinically significant exacerbations and improved asthma control” compared to the other two branded products.
Meanwhile, last week the European Commission approved Nucala for the treatment of children with severe asthma. The marketing authorization for Nucala has been granted as an add-on treatment for severe refractory eosinophilic asthma in pediatric patients aged six to 17 years.
As a result of this license extension, Nucala is now approved for use in severe refractory eosinophilic asthma in both adult and pediatric patients in the 31 European countries covered by the European Medicines Agency (EMA).
The PharmaCompass Newsletter – Sign Up, Stay Ahead
Feedback, help us to improve. Click here
Image Credit : #Phisper Infographic by SCORR MARKETING & PharmaCompass is licensed under CC BY 2.0
“ The article is based on the information available in public and which the author believes to be true. The author is not disseminating any information, which the author believes or knows, is confidential or in conflict with the privacy of any person. The views expressed or information supplied through this article is mere opinion and observation of the author. The author does not intend to defame, insult or, cause loss or damage to anyone, in any manner, through this article.”
