Healthcare Newsletter – February 2017

Interests Spike in US Opioids Opportunity post New FDA Guidance for Abuse Deterrence
Interests Spike Companiesare willing to give an arm and a leg for a share of the flourishing US market opportunity forabuse deterrent prescription opioids. The new FDA draft guidance set forth in March last year, as part of FDA Opioids Action Plan, regulates generic versions of approved opioids with abuse-deterrent formulations. Thishas also contributed its share in spurring renewed market interest in the space. Thus, it is not surprising to see Zydus Cadila jumping on the bandwagon and adding muscle in the space with its recent acquisition of US based Sentynl therapeutics for $171 million. Sentynl currently holds the US market rights for Abstral, a unique sublingualabuse deterrent formulation of Fentanyl, relaunched for cancer pain, with no direct competition in the space. This acquisition also reinstates the trend of Indian pharma companies’ outbound acquisition interest in developed economies, focused on manufacturing capabilities and market access. Sentynl is the second acquisition of Zydus in the US, the first being Nesher Pharma in 2011, which also specialized in control substances. Thus, with targeted M&A, Zydus is all set to ride the hot opioid bus and we anticipate this interest to continue in the future and expect more deal activity in this space.
Affordability Qualms Remain a Deal breaker in Rare Disease Medicine Access
AffordabilityExorbitant pricing strategies,although not new to the world of rare orphan diseases, with existing examples of Alexion’s Soliris at $500,000 outlay per year, never fail to trigger public outcry. Yet another candidate that has fallen underprice scrutiny is Biogen’s recently approved drug Spinraza, for spinal muscular atrophy in children and adults. Pegged ata whopping price of $750,000 for the first year of treatment and $375,000 each year thereafter, Spinrazahas triggered extensive calls for price control interference, to the extent of advocacy groups calling for federal government to seize patentsbased on federal funding issued for the drug development. While Biogen and other rare disease pharma companies argue that such high price tags are essential to recover high R&D costs involved for serving a smaller target audience, pricing burden ironically also limits access of the drug to even the needy few. An increasing trend in co-pay contribution also adds fuel to affordability issues. With the new US government’s explicit focus on drug price scrutiny, the timing can’t be more perfect for rethinking drug pricing and access to ensurethat pursuit of orphan diseasesdoesn’t becomes an exercise in vainfor pharma companies, which is a no-win situationthat will come back to affect the patients involved.
US FDA continues to warm up to Biosimilars with the newDraft Guidance on Interchangeability
Private Vaccines Market in India US FDA’s historically slower pace of embracing biosimilars is a known point of debate in the pharma world, with just one approved biosimilar until early 2016. With the global biosimilars market opportunity to touch $ 240 Billion by 2030, as projected in our recently released white paper, FDA has shown renewed acceptance of biosimilars in the past year with several new approvals.Another step in that direction is the long-awaited draft guidance on biosimilars interchangeability, specifying data and information required from switching studies by sponsors to establish interchangeability. The regulatory uncertainty in the US on biosimilar substitution has so far been a big market access concern for manufacturers because, although an interchangeable biosimilar product can be substituted for the reference product without provider intervention, no approved biosimilars were deemed interchangeable so far. This guidance, when executed,will thus lift the ambiguity surrounding biosimilar substitutability and foster better consumer confidence on biosimilars. While it is no secret that the EMA has been the frontrunner in enabling success of biosimilars, US FDA is quickly catching up with evolving policy frameworks,and paving way for US becoming the largest biosimilars market globally.
Home Health Services Emerging as New Avenue for Growth in Medical Devices
Home-Health The medical device industry in developing economies, such as India, is currently at a crossroads between medical innovation and regulatory scrutiny. While increasing middle class affordability and rising healthcare spend is pavingway for better embracement of innovation, slowly permeating regulatory pressures on purchasing processes are starting to pressurize prices of hospital-based medical devices, a transformation that is relatively advanced in developed economies.As the markets get competitive, Philips Healthcare and Medtronicare among the many companies that are seen to tap into increasing public willingness to spend on healthcare. Theyfind ways to cater to the value-oriented customer base by pursuingservices as a revenue stream, in point of care diagnostics. Philips has forayed into home healthcare business by bringing healthcare diagnosis, treatment and care to the patients’ homes,with new Indian business unit—Philips Home Health. Medtronic on the other hand has taken a more global approach to services, and has partnered with Fitbit to createa mobile medical app that analyzes Fitbit activity in diabetic patients and helps them to make informed decisions in their insulin needs. This is planned as an add-on feature to the company’s FDA approved “closed-loop” glucose monitoring and insulin delivery system for patients, an industry first innovation.These ventures are reflective of the broader trend of medical device companies globally venturing on the path to becoming more comprehensive managed care providers with a significant service component.
Deconstructing the Decline in 2016 US FDA Approvals with a fine-tooth comb
noval-drug-approvals Following two generously rewarding years of record high number of US FDA approvals with 41 and 45 novel drugs approved in 2014 and 2015, 2016 has been a relatively mellow year, with just 22 new drug approvals.While at face value, this appears to be an alarming hit, there are several angles to consider, and it is important to closely analyze the broader dynamics surrounding drug approval trends in order to make sense of this sudden decrease.


Early Bird Approvals in 2015 and Increasing Trend of Expedited Drug Approvals
There were five early-bird drug approvals in 2015 that had goal dates in 2016 and this is the most common cause attributed for the decline in number of 2016 approvals. While the focus on expediting drug approvals is encouraging, it still does not account for the fall of approvals to almost half of previous year.

The positive growth trajectory of expedited approvals is seen to continue in 2016 as well. At 73%, the record of overall expedited approvals touched a 3 year high in 2016. This increase in number of breakthrough designations and priority reviews is a positive development that signifies the continuance of targeted innovation in the industry.

The timelines for priority approvals are also observed to be fairly consistent, with marginal improvement in 2016 over the past few years.CDER-Media This signifies a positive regulatory focus in accelerating time to market for drugs with significant medical potential and sucha robust regulatory system ensures quicker returns to pharma companies, thereby fostering a ripe innovation ecosystem.

Perpetuating Interest in Pursuit of Rare Diseases
The number of orphan drug approvals is also seen to be on an upward swing in 2016,


in line with the steep growth curve over the past several years, signifying a growinginterest in pursuit of solutions for rare diseases. Considering most rare disease drugs go through a priority review pathway, improving timelines has also served as an impetus to continued industry interest, thus bringing better healthcare output to marginalized patient populations.

Continuance of Robust Biologics Activity
It is also noteworthy that in 2016, many big pharma companies that have had considerable track record of new small molecule approvals in the past few years have stepped aside to allow for higher number of approvals of biologic drugs. Although number of biologics approval has also fallen in 2016, NDAs have fallen by a higher margin and the share of biologics have gone up from 22% in 2015 to 36% in 2016.This stands to prove that industry activity in biologics continue to be robust and is in line with the trend of mAbs and other biologics inching close to 20% of the biopharma market today.


Falling Quality Standards
While the above trends are harbingers of positive industry outcome, another factor that has led to decreased approvals in 2016 and needs to be carefully considered, is the higher number of complete response letters (CRLs) issued by FDA. CDER issued 14 CR letters for novel drugs in 2016, the bulk of which were not issued first cycle approval due to cGMP issues relating to facility and quality. This is alarming in light of the fact that only 4 of the 47 novel drug applications for which a CR was issued from 2010 through 2015 quoted cGMP issues as the primary deficiency. This calls for attention to the burgeoning issue of quality standards in manufacturing that is dampening industry’s current financial health, resulting in thinning of pipeline and also often impacting patients with long and unanticipated spells of drug shortages. The call for action is loud and urgent. It is critical that the industry and regulatory authorities work together to improve the environment of manufacturing quality controls and ensure higher standards of compliance on a regular basis.

Need to Rekindle Small Molecule R&D
While there is an overall fall in number of approvals, the decline in small molecule approvals has been far steeper than the decline in biologics. We note declining interest in pursuing novel small molecule drugs for large indications. This progressive decline in the recent past has also been partly fueled by higher regulatory scrutiny in this category on monitoring cardiovascular outcomes, especially in the case of drugs for metabolic diseases.

This trend of declining small molecule interest combined with the robust biologics pipeline and increasing interest in rare diseases compounds the looming challenge of drug pricing and affordability. Globally, we don’t have a novel funding mechanism for orphan drug discovery or an innovative reimbursement approach to facilitate drug access. The continuing industry focus on large molecules for small indications spells economic and sustainability concerns that are deep rooted. This is vital food for thought and we would like to conclude stressing on the need to take note of the grave implications of this trend. We urgently need to initiate efforts to rekindle interest in pursuit of affordable solutions for large and pervasive health concerns that remain unaddressed.

Sathguru Foot Print

Sathguru Announces $ 100 Mn Agri & food PE Fund

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Indian Union Budget 2017-18: DECODED

    • With an effort to decode and simplify the amendments of Finance Bill 2017, Sathguru brings to you a summary of the key proposals of the Union Budget 2017-18

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MEDCON 2017 – Delhi, India (March 2017)

    • Sathguru is the knowledge partner for ASSOCHAM’s MEDCON 2017 (Mar 22, 2017) with the theme of innovation in manufacturing, delivery & financing

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BIO 2017 (San Diego, CA – June 2017)

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1. In-licensing/Acquiring – ANDAs and specialty generics for leading Indian Pharma Company
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