Race to takeover: Innovator to generic and generic to bigger generic; Teva to buy Barr pahrma?

In last few days a paradigm shift is being observed in Pharmaceutical industry. Innovator companies are turning to generic buissness. The recent exmple of Daiichi Sankyo aquiring Ranbaxy to enter into the generic market. Also, another innovator company Sanofi Aventis is making a bid to acquire Czech generics company Zentiva.
Generic to bigger generic
Also, some generic companies are aquiring other generic companies like Sun pharma trying to buy Taro. Teva in a bid to aquire generic firms have paid $400 million to buy CoGenesys and is expected to close soon on a deal to purchase Bentley Pharmaceuticals for about $350 million. Now a Israel news paper has speculated here that Teva will buy Barr Pharma for about 7-7.5 $ billion

Innovator to generic trend was started by Novartis by floating its generic unit Sandoz. Now many innovator companies are eyeing this strategy. The Reason for this U turn seems to be due to following factors:


1) Loss of innovation: Drug development is a very risky affair which can consume billion dollars. All the latest techniques of drug development have not led to a blockbuster drugs. In nutshell, the innovation pipeline has dried up. Although, research is going on but these companies know that its difficult to launch a drug in 2-5 yr time, to cover up that gap and fund research generic buissness is ideal choice


2) Off-patent Scenario: After the expiry of key patent of innovator, its difficult to sustain in competion with generic players. The market for innovator product after generic launch erode very quickly.


3) High cost of drug development: With drug intermediate and other raw material prices zooming, the new drug development has became more expensive. Further, clainical trials ae also becoming more expensive.

4) Thriving generic companies: Some of the generic companies have achieved sales equivalent to innovator. The innovator mostly get 5 yr exclusivity and sales normally rises yearwise. By the end of 4th year of exclusivity, generic companies are ready with their strategy and file dossier to challenge innovator. As in US First para IV filer got 180 days exclusivity, so if a generic player enter after the end of innovator's 5 yr exclusivity they got profit in the tune of millions (Some times sales achieved by innovator in first 3 years of exclusivity). Further, the risk and money involved for generic companies for development and launch is minimal.

5) Pro generic patent laws: The patent laws in US and EU are becoming more favorable to generic companies. The KSR V.s Teleflex decision which changed the obviousness concept is proving detrimental to product patents in US. Recent example for this are Pramipexole and Ramipril, whose product patent was invalidated by Us court. Recently, in Europe the product patent of Esomeprazole got invalidated.

6) Failure on Patent evergreening: Generic companies in the last 8 years have devloped their skills to stop patent evergreening attempts of innovator. Earlier, innovator in an attempt of evergreening of patent would get patents on polymorph, salt, formulation, purity, hausner ratio, bulk density, method of use, new combination etc. to thwart generic challenge. But all these patent are not sufficient to stop generic challenge once molecule or product patent expires.