November 29, 2010 7:17 pm

Drug groups face new generics threat

Drug companies could face competition on their complex biological medicines as soon as 2012, following the release of draft generic guidelines from the European medicines regulator.

Analysts expect Roche of Switzerland to be among the first to be hit with cut-price alternatives for its cancer drugs. Other producers, including Merck of Germany, Johnson & Johnson, and Abbott are also set to be targeted soon by rival versions of some of their most lucrative biological medicines.

The long-awaited guidelines, released last Friday by the European Medicines Agency, lay out requirements for companies seeking to produce generic versions of monoclonal antibodies (MABs), one of the most profitable and important therapy areas in pharmaceuticals, currently estimated to generate about $40bn in annual sales.

GlaxoSmithKline and AstraZeneca, which are developing MABs, will also be affected, although they will initially be shielded because the new “biosimilar” rules only apply once patents on products expire, as is the case with existing generic versions of “small molecule” or chemically based drugs.

In a research note, Bernstein, the US research house, said generic companies led by Novartis, Teva and Hospira were most likely to gain from the rules, and it singled out Roche, with sales heavily driven by its antibodies Rituxan, Herceptin and Avastin, as among the companies most vulnerable.

Roche cautioned: “We believe that patient safety must be of highest concern when evaluating the development, approval and marketing of biosimilar products.”

With generic producers required in the guidelines to ensure that their products are equivalent to the original therapy, they will still require costly clinical trials.

Collins Stewart, the research house, estimated such trials would typically cost $100m each, limiting competition and resulting in annual sales reductions of 10-15 per cent on drugs coming off patent.

However, it highlighted that Celltrion, a South Korean company in partnership with Hospira, already has a biosimilar Herceptin for cancer under test, which it estimated could be launched in emerging markets in 2012, and in Europe by 2014.

Jefferies International argued that the guidelines were a “damp squib”, with the impact on originator companies “modest” because of the high entry barriers.

The European Medicines Agency has already approved 14 less complex types of biological generics since it introduced general guidelines in 2006, including a variety of human growth hormones. It has rejected one and three others have been withdrawn.

The draft MAB guidelines are open for consultation until the end of next May.

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