Pfizer has agreed to license generic solid oral dosage forms and injectable medicines from India's Aurobindo Pharma Ltd to commercialize medicines that are no longer patent protected and have lost market exclusivity in the regulated market .
In the deal announced on Tuesday, Pfizer said it expected the products acquired to deliver more than $200 million in near future, according to David Simmons, general manager of Pfizer's established products business unit.
The products expand Pfizer's growing generics portfolio and are versions of drugs originally made by companies other than Pfizer. Financial terms of the deal were not disclosed.
Pfizer's Greenstone subsidiary already sells above 300 Pfizer medicines that have lost patent protection but still brought in a combined $10 billion last year. As per press release, Pfizer expects major revenue from generic business in 2013.
The licensing agreement with Aurbindo for generics can be attributed to patent expiry of blockbuster formulation of Pfizer like Atorvastatin, Sildenafil citrate, Celecoxcib, Pregabalin and Voriconazole etc. in near future. Pfizer is focusing on off-patent medicines as one avenue to spur profits as the drugmaker encounters generic competition that threatens revenue of its own top sellers.
Eralier, Pfizer acquired some major innovator companies like Warner-Lambert / Parke-Davis / Agouron, Pharmacia / Upjohn / Searle, SUGEN. Recently, Pfizer acquired Wyeth and Bayer to further strengthen its innovation approach.
Innovator companies are nowadays switching over to generic business after patent expiry of their blockbuster drugs. The trend was started by Novartis which opened it’s successful generic unit Sandoz, later on other innovator companies like Daiichi (Ranbaxy), Sanofi Aventis (Zentiva) entered into generic business.
Following are some factors for innovator companies interest in generic business:
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.
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