Healthcare Newsletter – July 2017

Celebration Month for Biosimilars that also marks Indian Pharma stepping into USFDA approved zone
Interests Spike After an unsettling June marking two big US FDA slam downs for Pfizer’s Epogen and Coherus’s Neulasta biosimilars, July has been a thundering retaliation month. Two big biosimilars have sailed through regulatory review this month, including Amgen & Allergan’s bevacizumab for solid tumors and Bicon& Mylan’s trastuzumab for HER 2 positive breast cancer in the metastatic and adjuvant settings. Both the products are unanimously recommended for approval by FDA’s Oncological Drugs Advisory Committee (ODAC) and when approved, will be the first biosimilars for Roche’s blockbuster biologics Avastin and Herceptin respectively. July also marks approval of the first biosimilar developed and made in India to enter US markets. In light of recent situations where even multinational pharma giants face repetitive rebuffs from FDA, Biocon’s approval comes as a welcome respite. Trastuzumab is the first out of six target biosimilars planned as part of the Biocon-Mylan partnership and the company’s stock was seen to soar record high with the approval. With the largest pharmaceutcial market of US just beginning to open up for biosimilars, together with large number of biologics continuing to go off patent, the timing is perfect for smart contestents to begin participating in the ripe biosimilars market. We view Biocon’s approval as a strong testament to Indian industry strategically stepping into segments of growth to maintain continued dominance in the regulated markets’ pharma industry.
Indian Pharma Seeking Innovation-Centric Growth Beyond Generics
AffordabilityWhile Biocon leaps forward in the biosimilars world, Sun Pharma was in news for developments in novel biologics pipeline. The company’s recent announcement for a long term contract with Samsung Biologics to manufacture its psoriasis NBE candidate Tildrakizumab, currently under regulatory review,is reflective of Indian companies investing in creating their initial footprint in innovation-driven growth. There is an impressive legacy in India being known as the “pharmacy of the world”. Yet, Indian pharma has been actively looking to expand its footprint beyond its generic pharma superpower in the recent past, and with good reason. Although the generic pharma industry is here to stay as solution to the perennial quest for trimming healthcare costs, several challenges stagger industry momentum. Pressing manufacturing issues, escalating price erosion, macro-uncertainty and intensifying competition threaten profits, pushing companies to seek alternative sustainable game plans for continued success. Many Indian companies including Sun Pharma, Biocon, Zydus Cadila and Wockhardt are on the NCE/NBE path, having taken baby steps in making their presence felt in novel drug discovery. Examples include Zydus’s Lipaglyn under clincial trials in US, Biocon’s NBE approval in India for psoriasis, Wockhardt’s antibiotic pipeline and Glenmark’ NBE pipeline that is backed by credible out-licensing success. India-innovated molecules are now a reality and it is important for policymakers, industry and all stakeholders to together ensure we can continue building the required momentum and power the industry’s high risk growth engine.
Smart Partnerships remain Crucial in POC Diagnostics space
Private Vaccines Market in India Alere is one of the few companies in the Point of Care (PoC) diagnostics market, with an established global footprint and despite its financial struggles and uncertainties, remains an attractive target for companies such as Abbott and Quidel. While, Abbott has proposed to acquire Alere in entirety, Quidel has penned a deal to acquire Alere’s Triage MeterPro and B-type Naturietic Peptide assay businesses, subject to the completion of Abbott’s acquisition of Alere. The PoC diagnostics market remains under penetrated, especially in emerging countries which present the key target markets. While, there is an urgent need for deeper, wider and faster proliferation of PoC, there remains a dearth of device providers. The market is primarily dominated by MNCs like Abaxis, Roche, Abbott and Beckman Coulter. And with the exception of these MNCs, most other players remain sub-USD 500 million in size with financial and technological roadblocks. Therefore, to exploit the huge untapped market potential and cross the scale-up threshold, smaller companies are constantly relying on smarter partnerships with larger established players, as evident in the Quidel-Alere deal. Likewise larger players are exploring these partnerships to expand their geographical footprint and enhance product portfolio. The current active pursuit of M&A in the industry is on the right course to yield the much needed momentum that can counter the lackluster growth in today’s POC diagnostics industry.
Sanofi gets Flublok in a deal highlighting Scale up Challenges for Innovative Vaccine Ventures
Home-Health Sanofi has recently announced acquisition of Protein sciences, a US based specialty vaccine company. (For more on the deal, click here) Protein Sciences is a 20+ year old vaccine company that is recognized for its Virus Like Particle (VLP) platform; and the company’s Flublok vaccine became the first VLP vaccine to be approved by the US FDA in 2014. The VLP approach is a path breaking technology in vaccines that carries huge merits in terms of manufacturing efficiency, cost-effectiveness, safety and scalability for bulk manufacturing, especially in pandemic situations. Flublok is in fact clinically proven to be more effective than traditional influenza vaccine. Commercial production of VLPs, however is currently very limited given sunk costs in traditional vaccine manufacturing processes serving as a deterrent. However, Sanofi’s acquisition of Protein Sciences stands testament to the industry confidence in commercial potential of the VLP platform. At the other end, the acquisition also draws attention to scalability challenges faced by smaller vaccine companies in going to markets alone. Flu is particularly challenging, given promotion, placement and communication led market building required in a product that is reimbursed but not mandated in most population segments. The acquisition brings to light challenges of innovative younger companies in the vaccines segment in regulated markets in stark contrast to public health focused emerging market companies where there are more success stories at this point.
Flourishing Med Tech Infrastructure Initiatives in Asia calls attention to other Looming Issues
Home-Health Multinationals have long dominated the medical devices industry in emerging markets, with a handful of domestic manufacturers playing in the low value market segments. With government thrust on reducing import dependence, there is an increasing momentum in creation of medtech parks. Recent developments include Singapore’s Economic Development Board investing $ 13.2 million in National Additive Manufacturing Innovation Cluster (NAMIC) for a new specialist biomedical facility. Similar initiatives have been taken in India as well, with Kerala commencing construction of 360 degree innovation focused lifesciences park, land for HLL Biotech’s Chennai Meditech park being approved by the cabinet, construction commencing in the Andhra Medtech Zone and more developments in the works in Telengana and Gujarat. While such initiatives trigger a vibrant start-up ecosystem and easen challenges for companies seeking to expand in medtech manufacturing, emerging markets such as India are still replete with strucutral issues that impede industry growth. For instance in India,lopsided duty structure continues for several devices and diagnostics rendering import of final products more lucrative than importing input components and manufacturing products domestically. Secondly, with limited domestic technology access options, no in-house innovation backbone and no conducive ecosystem, most medtech companies fail to cross the technology access and adoption barrier. We are encouraged by by the Central Government and State Government initiatives but call for urgent attention to other structural issues that render domestic manufacturing business plans unattractive. Time to take a 360 degree perspective if we have to realize the Make-In-India dream.


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    3. The Make in India Imperative – Position Paper on Regulatory and Policy Changes required for Sustained Competitiveness of the Indian Vaccine Industry
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    5. Biosimilars – How can we realize the $ 240 Bn Opportunity

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