L16 Generics - commercial, IP, Healthcare/Societal Aspects

Question 1

Generics - Market Size

Answer 1

see onenote

• was valued at about $225 billion in 2011
• $358 billion in 2016

Question 2

Generics - Market Opportunity

Answer 2

see onenote

• innovators lost $100bn in sales due to “patent cliff” (expiring blockbuster drugs)
• with increasing drug costs, gov’t increase generic use to contact costs
• many leading generics companies are expanding globally
• innovator companies entering generics area
• strong focus on emerging markets which are characterised by high generics uptake and future growth potential

Question 3

Emerging markets

Answer 3

An emerging market is a country that has some characteristics of a developed market, but does not satisfy standards to be termed a developed market. This includes countries that may become developed markets in the future or were in the past.

There are many emerging markets around the world, but the four largest are known as the BRICs (an acronym for Brazil, Russia, India, and China)

Question 4

Vertical Integration

Answer 4

the combination in one firm of two or more stages of production normally operated by separate firms.

Vertical integration is when a company controls more than one stage of the supply chain. That’s the process businesses use to turn raw material into a product and get it to the consumer.

There are four phases of the supply chain: commodities, manufacturing, distribution, and retail. A company vertically integrates when it controls two or more of these stages.

Question 5

1984 legislation

Answer 5

The Drug Price Competition and Patent Term Restoration Act (Public Law 98-417), informally known as the Hatch-Waxman Act, is a 1984 United States federal law which encourages the manufacture of generic drugs by the pharmaceutical industry

Question 6

Generics - US Market share

Answer 6

• 84% of prescriptions dispensed in the US are generics, 16% are brands
• 85% of $ sales in the US are for branded products, 15% for generics

Question 7

Biosimilars - market oppportunity

Answer 7

see onenote slide

Question 8

Why are generics popular?

Answer 8

Cheap, just as good, subjected to the same quality control, more people starting to have more confidence in generics

Question 9

Drug product lifecycle and generic entry

Answer 9

see onenote

The “Shark Fin” Curve

1. launch
2. market growth, innovator promotion
3. generic entry

Question 10

Generics - product lifecycle

Answer 10

see onenote

• when market opens to generics, most drugs are subject to intense competition with upwards of 10 companies entering the market
• price falls dramatically immediately and in the first year
• innovators usually stop promoting innovator product
• as a consequence, total value and volume of sales of drugs drop substantially
• a 4-5 year profitable lifecycle is expected for simple generics vs innovator drugs of 7-10 years or more of high profitability
• complex generics and biosimilars have longer lifecycles than simple generics

Question 11

Pharmaceutical life cycle

Answer 11

see onenote diagram

• average time to develop new medicine at least 10 years
• average time on market before generic launch is 12.5 years
• may be multiple generic entrants with rapid price erosion

Question 12

Generics - product lifecycle, volume of originator decreases

Answer 12

see onenote diagram

Question 13

Generics - product lifecycle

Prices fall - more competitors enter market

Answer 13

see onenote

The more generic competitors, the more the price will drop

• Level of competition creates price drop
• The more generics entering the market, the more the price will drop

Question 14

Generics - cost advantages

Answer 14

see onenote and side notes

1. generics avoid expensive clinical trials
2. generics avoid large marketing costs
   - generics equivalent to and substitutable for innovator
   - market to wholesalers, not clinicians
3. biosimilars require larger marketing costs
   - comparable but not substitutable for innovator in US and EU
   - must market to clinicians
   - in AU, some biosimilars substitutable on case-by-case basis

Question 15

Generics - cost pressures and globalisation

Answer 15

see onenote

1. short lifecycle and cost sensitivity focus generic companies on time to market, profit margins, cost effectiveness of company
2. trend towards vertically integrated generic companies with API (active pharmaceutical ingredient) manufacturing facilities, drug product and packaging facilities, global marketing abilities, location of facilities in cost competitive countries e.g. china
3. generic companies frequently develop drugs very quickly, well before patent expiry to guarantee first to market
4. patent circumvention and challenges becoming more common

Question 16

Generics - IP

Answer 16

see onenote

1. published patents
2. trade secrets
3. data exclusivity
4. trade markets and branding

Question 17

Establishment of Generics Drugs - Hatch Waxman Act

Answer 17

see onenote

• in 1984, Hatch an Waxman sponsored the Drug Price Competition and Patent Term Restoration Act in the US Senate
• innovator company was protected by its patent term or series of data exclusivisities designed to patented drug at least 14 years of exclusivity in the market
• at the expiry of exclusivities a generic company could have the FDA use the data in the innovators original new drug application (NDA) in the review of the generic drug
• generic company submitting an ANDA had to certify that…1,2,3,4

Question 18

Data Exclusivity

Answer 18

see onenote

in a period of data exclusivity, a generic applicant cannot gain access to data held by regulatory authority from innovator for approval of its generic drug

Question 19

Generics - IP Challenge

Answer 19

see onenote

Question 20

Innovator IP strategies

Answer 20

see onenote

1. switch market to “improved” drug in same class
   2” evergreening” - extend patent by adding to patent on API
2. authorised generic
3. marketed generic
4. stop promotion of innovator and exit drug market

Question 21

Evergreening Case Study

Answer 21

see onenote

Question 22

Generics IP Strategies

Answer 22

see onenote

Question 23

Commercial Selection of a Generic Drug Pipeline

Answer 23

see onenote diagram

1. future market size for drug
2. patent exclusivity
3. data exclusivity
4. API availability
5. develop drug for approval at market formation
6. add drug to pipeline

Question 24

Value of generic medicines

Answer 24

1. increased patient access
2. patient-related value
3. overall economic value

US has saved $1.46 trillion in the last 10 years due to availability of low cost generics

Question 25

Biosimilar - US patent cliff, potential savings

Answer 25

see onenote diagrams

Question 26

Generic competition - a virtuous cycle

Answer 26

see onenote diagram

Question 27

Positions of generics in healthcare

Answer 27

see onenote

1. innovator companies charge higher prices for drugs during period of patent and data exclusivity
2. after patent and exclusivity expiry, competition leads to fall in cost of drugs to close to the cost of manufacture plus margin
3. generic drugs make medicines more affordable to patient and other payers e.g. health management organisations and governments
4. generic drug competition drives innovators to invent new drugs

Question 28

Commercial, IP, Societal Aspects Summary

Answer 28

see onenote