Healthcare Newsletter – November 2018

Sandoz drops Rituxan biosimilar in US after request for more data -Reminder of continuing commercial challenges
Home-Health Our estimates indicate potential market size of $240bn for biosimilars by 2030. With increasing market maturity in Europe and forthcoming approach of USFDA, market momentum is upbeat and corporate investment is increasing. In this context, Sandoz decision this month to not pursue the Rituximab biosimilar for the US market is a stark reminder of continuing complexities in this evolving market.
Roche’s Rituxan, a biologic drug used to treat cancer and rheumatoid arthritis reported revenues of $7.9 billion worldwide, and $4.4 billion in USA.Sandoz’ rituximab biosimilar, which previously met the stringent criteria for approval in Europe, Switzerland, Japan, New Zealand and Australia, was unable to fly through FDA approval and additional data was requested by the FDA. Sandoz’ decision is driven by the concern that ‘patient and marketplace needs in the US will be satisfied before we can generate the data required’. The announcement is stark as the competitive landscape and pipeline for Rituximab in US is relatively leaner as compared to other biosimilar assets -Celltrion and Teva Pharmaceutical’s biosimilar for rituximab, Truxima was unanimously recommended for approval by the FDA’s Oncologic Drugs Advisory Committee in October of this year and Amgen is advancing a Phase III asset. With the continuing prospect of being second or third to market, the decision is also an indicator of high price erosion thresholds that could result in poor investment justification for additional data for an asset where entire Phase III investment has already been made. Market access and return justification remains the last piece of the puzzle in the biosimilars maze but a highly complex one even for the largest contenders.
Despite this setback withdrawal by Sandoz, they have had some positive developments this month in the biosimilar space with FDA approval of theiradalimumab biosimilar, Hyrimoz at the beginning of this month. Launch in the US however will not be earlier than September 2023 due to the settlement with Abbvie. Abbvie also announced another settlement this month for the Humira biosimilar, now with Momenta Pharmaceuticals that intends to file the BLA by end of 2018. Per terms of the settlement, while Momenta will be free to launch the biosimilar in Europe on approval by the EMA, it will not launch the product in US until November 2023. The silver lining appears to be Coherus Biosciences’ pegfilgrastim biosimilar, Udenycathat was also approved by the FDA this month, and will be the second to market after Mylan and Biocon’s ‘Fulphila’.

Microsoft makes FHIR easier to access for developers
Home-Health Earlier this month, Microsoft announced the release of its open source FHIR server whichallows developers to take advantage of the readily available support infrastructure and removes barriers to adoption of technologies for healthcare interoperability, particularly ones enabled through the cloud and artificial intelligence.

Fast Healthcare Interoperability Resources (FHIR) is a combination of protocol to support authentication, authorization and context synchronization between FHIR enabled systems (EMR/HER portals, Health Information Exchanges and other Health IT system) in order to facilitate interoperation between disparate healthcare systems, to make it easier to provide information to healthcare providers, and individuals on a wide variety of device platforms and also to allow third party developers to create healthcare applications that can be seamlessly integrated into the system. It is rapidly gaining support in the healthcare community as it provides a simpler, easier-to-learn, and pragmatic framework, and major companies such as Amazon, Google, IBM, Salesforce, Microsoft and Oracle have adopted FHIR and are working towards accelerating interoperability.

Microsoft’s addition of FHIR to Azure, their cloud computing service, is expected to add to this momentum and will help to reduce the time and effort required to develop much-needed healthcare services. This can support advancement of the overall digital ecosystem with consolidated informationon the cloud that can be accessed by the required authorities to further research, develop innovative drugs and medical devices and also in combating drug abuse. We anticipated that the most transformative impact in this decade will be had by the three key pillars of digitization, leveraging data effectively with AI/ML and lastly, driving connected care by bringing together drugs, devices and overall healthcare delivery. Every step in this transformation is exciting and will be accretive and circular in impact.

Non – traditional partnership pursuing early diagnostic for Alzheimer’s disease
Interests Spike Alzheimer’s disease is the 6th leading cause of death in America and also the most common form of dementia. They key barrier to developing treatments for Alzheimer’s is the ability to noninvasively and inexpensively diagnose patients and be able to identify persons at risk at an early stage before first symptoms start to appear, which is when therapies can be provided to control the progression of the disease.

Nikon’s subsidiary Optos, an ophthalmology company specializing in capturing high resolution images of the retina in a single click, has formed an alliance with Amydis for the development of an eye test to address the large unmet clinical need for early diagnosis of Alzheimer’s disease. Amydis is a pharmaceutical company focused on developing innovative chemistry for diseases involving amyloid proteins, with a wide pipeline of compounds for detecting amyloid proteins in the retina. The compounds bind to specific biomarkers in the retina and fluoresce making them visible with an optomap retinal camera. Optos’ optomap ultra-wide retinal imaging devices in collaboration with Amydis’ technology points to a universal, non-invasive early diagnostic that is faster, more accessible, and more affordable than current tests for Alzheimer’s, and will expand Optos’ market opportunity into the field of neurodegeneration.

Although this is an early collaboration, it is encouraging as a non-traditional partnerships being pursued in the poorly served area of CNS diagnostics and prognostic testing. As clinical unmet needs loom large, we stay optimistic for more of such non-traditional partnership that create expanded possibilities for patients as well as pharmaceutical and device companies.

Encouraging Development for Strengthening Overall Healthcare Delivery Ecosystem in India
Private Vaccines Market in India As a step to improve the health system in the country, India’s Cabinet approved the Allied and Healthcare Professions Bill, 2018 this month. The bill targets regulation and standardization of education and services by allied and healthcare professionals in the country. The Bill requires setting up of an Allied and Healthcare Council of India and corresponding State Allied and Healthcare Councils to set a standard and facilitate Allied and Healthcare professions. It defines structure, constitution, composition and functions of the Central Council and State Councils. These councils will contribute towards framing policies and standards, regulation of professional conduct, creation and maintenance of live registers, provisions for common entry and exit examinations, etc. The legislationis a much needed initiative as it is likely to cover currently unregulated allied health professionals across 15 major professional categories including 53 professions such as lab technicians, X-ray technicians, ICU technicians under high quality standards and regulations. This could be a significant step in strengthening overall healthcare delivery ecosystem in India by enhancing level of regulatory framework and level of baseline skills.
While we are enthused by this development, it is critical to note that final impact will depend on implementation. For all of these categories of healthcare professionals, there has been no minimum standards before and no process of accreditation. This is a significant implementation exercise for the public machinery as well as a major wave of adaptation for the healthcare delivery industry. There have been initiatives such as the Healthcare Sector Skill Council and the Life Sciences Sector Skill Development Council that have built up some of the building blocks. While the task ahead is daunting, the change is much needed and can be achieved through an earnest implementation focus. Hopefully, public – private partnerships and a pragmatic plan will be critical cogs of the implementation vehicle.

Blurring Lines between Devices & Diagnostics in the Field of Oncology
Home-Health With constantly evolving medical technologies and significant integration of scientific methods, diagnosis of diseases have become progressively easy. In the case of cancer, diagnostic, prognostic and predictive testing are also pushing the envelope of clinical possibilities. In addition to clinical impact, enhanced molecular understanding of the disease and advances in genomics/proteomics has also resulted in the cancer diagnostics opportunity becoming attractive for businesses world over.
The trend has caught the attention of several device and equipment majors and the fine line between devices and diagnostics is rapidly blurring. Notable in this context is the agreement announced this month between leading medical device company Teleflex and Arcis Biotechnology for development of novel technologies for cancer detection. As per the agreement, Teleflex gains rights to use Arcis’ nucleic acid sample preparation platform for its product development. Access to Arcis’ exclusive portfolio covering DNA and RNA extraction and preservation for downstream processing by qPCR, RT-qPCR will enable Teleflex to develop sensitive and contemporary molecular offerings in the cancer diagnostics segment. The partnership also holds promise of expanding possibilities in much needed point-of-care, microfluidics or field-based testing categories.

Outbound M&A by Indian Pharma Giants Fueled By Specialty Pharma Focus
Home-Health Generic pharma business continues to get tougher, especially in regulated markets – no near term respite is anticipated from high level of price erosion, high competition continues and business discontinuity risks from high regulatory vigilance looms large on every manufacturer. Most generic majors are forced to strategically pivot growth into less squeezed business opportunities and two that have gained favor with Indian pharma companies are complex generics and specialty pharma. We anticipate high momentum for outbound M&A through 2019 from Indian pharma companies for portfolio development in both these segments.
Two acquisitions this month dovetail this trend – Cipla’s acquisition of US based Avenue Therapeutics and Aurobindo’s acquisition of portfolio assets from Australia based Advent Pharmaceuticals. Cipla, through its US subsidiary InvaGen Pharmaceuticals, Inc., signed an agreement to acquire US based pharma company Avenue Therapeutics Inc. in a two stage transaction with first outflow of USD 35 million for a 33.5% stake followed by a contingent complete acquisition for a total consideration of USD 215 million (INR 1,560 crore). Avenue is a single asset company and the acquisition gives Cipla access to a late stage asset for intravenous Tramadol, an opioidmedication for post-operative pain management. While there are more than 20 companies holding active ANDAs for the oral formulation, there is currently no competition at all in the US market for the injectable formulation. Injectable formulations are currently marketed in UK as well as several other countries and hence product risk is relatively low and an attractive portfolio addition for Cipla’s specialty business. Another segment with limited competition is inhalation drugs, and Aurobindo Pharma’s acquisition strengthens the company’s complex generics portfolio with Dry Powder Inhaler (DPI) assets from Australian company Advent Pharmaceuticals. While the transaction value is not disclosed, it is executed through Aurobindo’s Melbourne based subsidiary AuroScience Pty Limited and is likely to be completed by January 2019.

  1. Featured Publication

Indian Biosimilars Industry: Roadmap to actualize global leadership
Excerpts from the CII – Sathguru publication released at the 2nd National Biotechnology Conclave, November 2018

Current context:

  • Active industry engagement with about 70 biosimilars approved in India
  • Enhanced regulatory framework – India released its revised biosimilar guidelines in 2016, which overcomes several pitfalls in the earlier guidelines with respect to patient safety and development rigor

Challenges that call for attention:

Domestic market:

  • Relatively Small Market Size&Poor Volume Penetration despite Price Control
  • Slow Pace of Portfolio Development & Sunk Costs as Deterrents to Investment
  • Need for improving manufacturing competency

ROW Markers: Need for expanding and Value Realization Potential

  • Lack of Regulatory Harmony, a Market Entry Risk: highly country specific and un-harmonized with country level approvals needed for most markets
  • Low Market Maturity, a Significant Risk for Market Access and Realization of Return
  • Bridging Studies for Indian-made Assets: difficulties in the level of market readiness of Indian-made assets for approval in semi-regulated markets

Recommendations and Way Forward for Indian Industry:

  • Estimate global biosimilar market could be north of $ 240 Billion and Indian biosimilars market could be north of $ 40 billion by 2030
  • Recommendations for Indian Market

Expanding Markets in Domestic Landscape: urgent need for government intervention and a multi-stakeholder approach for expanding volume penetration

  • Better Transparency in Pricing
  • Inclusion of Critical Biologics In Public Programs
  • Move Towards Aggregated Buying For Public Access
  • Incentivize Technology Acquisition and Improve Fiscal Incentives
  • Recommendations for Global Markets:
    • Nurture Strategic Partnerships for Market Access
    • Foster Support Ecosystem to Drive Confidence In Assets
    • Establish Regulatory Reciprocity In ROW markets


    1. Sathguru’s Healthcare Practice Lead Moderates API Panel At The CII National Pharma Conclave& Biosimilars Panel at the CII National Biotech Conclave

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