Monday, September 05, 2005

Future investment in drug industry: drug discovery down, reverse engineering up?

A recent article in concludes: Costs incurred through drug discovery and development may be redirected to product reverse engineering and process engineering.

The article also states:

Manufacturers of biopharmaceuticals now face the loss of commercialisation rights presented by their drug patents. The earliest biopharmaceuticals such as recombinant human insulin have lost patent protection, and many other drugs such as the blockbuster anaemia treatments incorporating recombinant erythropoietin will follow suit between 2005 and 2007.
With multi million dollar revenues at stake, pharmaceutical companies are fighting back by reformulating existing products to improve efficacy, implementing more efficient delivery systems, and engaging in high-level intellectual property (IP) battles.

"To overcome challenges laid down by these companies - the originators of biopharmaceuticals - participants in the biogenerics market may need to establish their own manufacturing systems to manufacture biogeneric products without infringing existing patents on active ingredients or manufacturing processes," commented Frost & Sullivan's industry analyst, Himanshu Parmar.

Until now, the pharmaceutical industry has seen generics as more of a threat rather than an opportunity for development. The branded drugs industry has increasingly been striking deals with generic firms to allow them to manufacture the drugs earlier which has made the market more competitive and hurt the generic drug firms' sales over the past year.

In February this year, Novartis acquired two companies as it aimed to expand its generics drug portfolio and increase its presence in the generics sector.

The Swiss drugs firm has taken an unprecedented step into the usually hostile territory of generic pharmaceuticals agreeing to pay €5.65 billion in cash to buy German firm Hexal AG and just over two thirds of Eon Labs Inc of the US.

The merger of these firms made Novartis the world's largest manufacturer of generics, overtaking Teva Pharmaceuticals of Israel, which had been the world's biggest generic-drug producer, with $4.8 billion in annual sales.

The report, entitled "Strategic Analysis of the World Biogenerics," said that given the manufacturing costs for biogenerics were much higher than those of conventional, small molecule pharmaceuticals, developing proprietary expression systems could help minimise costs. Manufacturers would also need to ensure that their products were bioequivalent and produced at full cGMP standards.

Novartis' deal is likely to accelerate the trend that may see an increasing number of big pharmaceutical companies creating a larger role for them in the generics sector.

Novartis' French rival Sanofi-Aventis, the world's third largest seller of branded drugs has equally followed suit and established its own generics division, Winthrop Medicines. Winthrop is planning to launch at least 30 generic medicines, including copycat versions of Sanofi-Aventis brands about to lose their patents.

One could also mention that the Supreme Court decision in Merck v. Integra may also accelerate the trend to reverse engineering and derivativization of the work of others.


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