Pharma gets defensive over biogenerics

The report, published by Cutting Edge Information, estimated that biogenerics would command more than $12 billion (€9.1 billion) of the drug market by 2010.

By 2004, $13.5 billion in global sales worth of insulin, beta interferon and alpha interferon drugs will lose their patents. Front Line research estimates the size of the generic biologics market will reach $30 million worldwide in 2003 and nearly $12 billion in 2010.

While the scientific and regulatory pathways to generic approval still are unclear, blockbuster drugs, such as Johnson & Johnson's Procrit, Amgen's Epogen and Roche's NeoRecormon, will likely face generic competition over the next few years.

On average, branded drugs lose 15-30 per cent of their market share when a first generic version reaches the market. Sales erode as much as 75-90 per cent when subsequent generics launch.

The first opportunity into generic biologics is likely to be open via insulin and human growth hormone. Unlike other biological products, these drugs receive FDA approval under the standard New Drug Application (NDA) process. The first generic forms of these drugs will expect to gain FDA approval within the next two to three years.

Generics pioneers will be rewarded for entering this market - recombinant human insulin and erythropoietin are projected to account for 27 per cent and 36 per cent of the biogenerics market, respectively, by 2010.

The report also details companies' strategies and tactics for fending off generic competition and retaining market share. One such strategy that could help pharmaceutical brand teams block sales erosion is evergreening, the practice of producing improved versions of the branded drugs before their patents expire.

An example of this is Amgen, which launched second-generation product Aranesp, an improved version of EPO, to render generic forms of the first-generation drug obsolete before they could even reach the market.

In 2001, Astrazeneca faced patent expiration for one of the world's top selling drugs, Prilosec.

"Astrazeneca set the bar for evergreening with the launch of Nexium, a second-generation drug to replace Prilosec,"​ said Jon Hess, senior analyst at Cutting Edge Information​.

"AstraZeneca actually grew its share of the gastrointestinal market after Prilosec's patent expired and generics and over-the-counter forms came to market,"​ he added.

The pharmaceutical industry's biggest challenge is a regulatory one as there is no approval process for biologics not cleared for market under the NDA process. In addition it is not clear how much testing will be needed for drugs claiming to be comparable biologics.

Major biotech players such as Amgen and Genentech believe this lack of approval pathway means their drugs would enjoy near-monopolies even after patent expiry. The issue is of such concern that both companies are lobbying Congress and the FDA to establish clear guidelines for generic biologic approval.

In contrast, the EU has become the first western market to formally clarify its approval process for biogenerics, passing legislation in June 2003 letting companies apply to sell generic versions of genetically-engineered drugs. As regulators seek to fine-tune the guidelines, biogenerics are likely to be evaluated individually.

Also, new EU legislation due to take effect in 2005 should provide a boost to generics. With an ever-growing number of structural reforms in the pipeline, regulatory procedures will likely be streamlined to speed up the process of approving new generics, according to Frost and Sullivan.

The report predicts that whatever the complication and expense of producing biologics means the generic market, when it does evolve, will look different than the conventional generic market. Generic biologics may not bear the huge discounts normally associated with generic sales, and second-generation innovator products may have very clear medical benefits over them.