Tag: Pharmaceuticals

India faces big dilemma as Chinese drug ingredient runs into trouble

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

On July 13th 2018, the USFDA announced a voluntary recall several medicines containing active pharmaceutical ingredient (API) Valsartan, used to treat blood pressure and heart failure. The recall was due to the API containing an impurity called N-nitrosodimethylamine or NDMA, a possible human carcinogen or cancer causing substance. This API is manufactured by Chinese company Zhejiang Huahai Pharma. The recall has now been extended to over 20 countries.

The Valsartan recall is another example according to experts of poor Chinese manufacturing. Incidents go back to a decade ago with 2007-2008 probably being a low point for China. In 2007 for example, the USFDA found contaminants in pet food imported into the US from China resulting in deaths and sickness in pets across the US. In the same year that toy maker Mattel recalled nearly a million Chinese toys due to lead paint dangers and the USFDA asked consumers to discard toothpaste made in China as it contained diethylene glycol, a poisonous chemical.

In 2008, in what was probably one of the most serious incidents yet Chinese exports of blood thinning drug Heparin were adulterated resulting in the death of 81 people and 785 serious injuries in the US. In 2016, US company Lumbar Liquidators decided not to sell laminate flooring sourced from China on concerns of it containing cancer causing substances. And in 2018, besides the Valsartan recall, the USFDA have informed drug makers in August 2018 not to use porcine thyroid API manufactured by Sichuan Friendly Pharma. This is over quality concerns as the API contains inconsistent levels of levothyroxine and liothyronine. The API manufacturer is asked to recall all batches of the API since 2015.

Instances of poor manufacturing standards are not just limited to the US. In 2008, six children died and 300,000 were sickened due to an incident of milk being laced with melamine, a plastic type substance. In 2012, Hunan Ava Dairy recalled baby formula after cancer causing agents were found in test samples with other incidents of milk containing high levels of mercury. The list goes but one of the latest examples is of 250,000 defective vaccines being administered to children in China, manufactured by one of the country’s largest vaccine manufacturers –Changesheng Biotechnology.

India, realizes this Chinese quality issue too. In January 2018, the drug controller of India – DCGI banned APIS from six Chinese companies. This alert was issued after inspection of the units by Indian regulators and a lack of quality compliance by the units. And with regards to the Valsartan API recall no locally available drug that uses Valsartan procures their API from ZH Pharma, so our products are safe. The DCGI has conducted the necessary checks, contacted the required ports and internal offices to keep a check on the issue in India. The exposure in India is in fact limited to one registered import agent and four Indian companies including the likes of Torrent Pharma that used the API only for exports. Torrent Pharma has recalled 16 lots of the drug manufactured by them for the US market.

While one cannot paint every company and in this case an entire country with one brush, the trend of severe issues emerging from noncompliance in China cannot be missed. Having said that China is actively trying to improve manufacturing standards. In June 2017 the country became a member of the International Council of Harmonization of Technical Requirements or ICH which requires adopting technical standards and guidelines. The latest measure has been a hard crackdown on cos not following regulatory and environmental guidelines. This has resulted in a suspension of a large number of API manufacturers. The crackdown has impacted Indian companies that import cheap key starting material or KSM (material to make the API) or the API itself from China. India sources 75-80 percent of API requirements from China. This supply shortage from China has caused a cost escalation of anywhere between 30-50 percent on an average. These 30-50 percent price rises are expected to sustain for at least the next one to one and half years and will eventually have to be passed on by finished dose manufacturers or take a margin hit.

Whether it is an argument on quality or over dependence on supply, the larger picture is that India is uncomfortably dependent on China on KSM and API supplies. And while India does have capacity to manufacture these key ingredients indigenously experts believe we lack the scale and cost competitiveness to bridge the gap effectively.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Aurobindo to acquire Apotex’s businesses in 5 European countries for 74 million euros

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Pharma major Aurobindo Pharma has signed a definitive agreement to acquire Apotex International businesses in five European countries for 74 million euros, the company said.

Aurobindo Pharma will acquire Apotex’s commercial operations and support infrastructure in Poland, Czech Republic, the Netherlands, Spain, and Belgium, the company said in a stock exchange filing on Saturday.

The Indian firm and Apotex will enter into a transitional manufacturing and supply arrangement to support the ongoing growth plans of these businesses, the statement said.

The acquisition is in line with the company’s strategy to strengthen and grow its European business by adding over 200 generics and around 88 OTC (over-the-counter) products that had total sales of 133 million euros in the year ending March 2018, the company said.

The acquisition will help Aurobindo to become a leading OTC company by volume in the Netherlands and the company will strengthen its position in the generics market in Spain.

The acquisition will provide Aurobindo with an entry into the retail generics space in Belgium.

In Poland and the Czech Republic, it will become one of top 15 generics (Gx) companies in each country.

Aurobindo has been expanding its presence in Europe since 2006 across several key markets.

In 2014, it had acquired Actavis’s commercial operations in seven Western European countries.

Last year it acquired Portugal-based Generis Farmaceutica.

The Hyderabad-based company currently has a presence in nine European countries, Portugal, France, Germany, the Netherlands, Spain, Italy, Belgium, UK and Romania. In the fiscal year ended March 2018, Aurobindo had sales in Europe of 577 million euros.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

How Natco defied the odds to rise up India’s pharma ladder

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

For the second year in a row, drugmaker Natco Pharma has rewarded its employees with a one-time special bonus even as peers, both large and small, are tightening their purse strings besieged with pricing pressure in the US coupled with lacklustre growth in domestic formulation market.

The bonus payout coincides with Natco’s dream run with profits and sales for the consecutive year.

In FY17 – the net profit rose three-fold to Rs 486 crore on year-on-year basis, and in FY18 it further jumped 43% to Rs 695 crore against a Rs 2,242-crore revenue. EBITDA margins stood at 33.5% and 43.2% in the last two years respectively — the highest among the peers.

Natco reaped those profits and margins on the back of windfall gains it made on 180-day marketing exclusivity of generic Tamiflu in FY17 and limited competition of generic Copaxone in US.

Roche’s Tamiflu generically called as Oseltamivir is an antiviral drug to treat flu caused by influenza virus, Teva’s blockbuster drug Copaxone called Glatiramer Acetate is used in treatment of multiple sclerosis.

Copaxone is expected to deliver another windfall in FY19 for Natco, before tapering-off slowly in FY20 with the launches from other generic rivals.

That windfall hasn’t come easy. It came with a decade of trials and tribulations. Copaxone is considered to be highly complex and difficult to copy. The drug is built on peptide chemistry or chemically synthesising protein (biological) molecules.

One analyst even said the approval was a learning curve for USFDA itself given the characterisation challenges.

Litigation was another hurdle to scale for Natco. It had to overcome the might of Teva for which Copaxone is a cash cow. Teva pooled in all of its legal resources to block the generic’s entry as Copaxone generates 50% of the company’s profits.

Near death 

Natco isn’t a new kid on the block. The company was founded in 1981 by US-returned technocrat-turned-entrepreneur Chowdary V Nannapaneni, three years before Dr Anji Reddy set up Dr Reddy’s Laboratories.

Led by Nannapaneni, a formulation scientist, the company was never short of chemistry know-how and strategies required to succeed in the generic industry. It, however, lost its way as the bet to get into bulk drugs or active pharmaceutical ingredients (APIs) failed to take-off.

Adding to that the unrelated diversification into infrastructure in the late ’90s also took away the focus of the top management. Though the company won a bid to set up port at Krishnapatnam in Nellore district of Andhra Pradesh, it had to shelve the project due to financial difficulties.

“They were far ahead of every other company in sustained and controlled release formulation technologies at one point of time, they developed popular brand medication called Coldact. They mastered the pellet technology (the drug release is faster in pellet), they were doing pretty well,” said Srinivas Lanka, pharma consultant who has had large stints at several large Indian drug makers.

“Somewhere in 1998-99, they became ambitious — they got into bulk drugs, biotechnology through fermentation plant. They established vitamins manufacturing plant near Chennai, put up major R&D centres in Hyderabad. They got into diversification with Krishnapatnam port development. The growth that they were expecting, however, didn’t come through. They had a lot of problems with bankers, they became NPA,” Lanka said.

The company was on the verge of being referred to the Board for Industrial and Financial Reconstruction (BIFR). A change in business strategy with some financial re-engineering lent the company a new lease of life. The company sold off its key brands to Sun Pharma in 1998, and became a contract manufacturer.

Lanka was executive director at Sun Pharma when the sale took place.

“Nannapaneni was a benevolent man. People loved working for him and in all those difficult years he never fired anyone,” Lanka added.

The recovery was a slow and painful process. Even as its counterparts Dr Reddy’s, Aurobindo Pharma and Divis Labs surged ahead becoming billion dollar companies in sales in the ensuing decade, Natco remained stagnant.

Recovery and growth

But it was Nannapaneni’s son Rajeev who changed the direction of the company. The Tufts University graduate joined Natco in 2000, put an end to company’s diversification plans and decided to re-enter formulation business taking advantage of the injectable plant at Nagarjuna Sagar, then part of Andhra Pradesh.

To make a mark in the highly competitive domestic formulation business Natco decided to pursue oncology, which is considered to be specialty therapeutic area with fewer competitors but largely catering to institutional business.

There was no way to catch up with rivals in generics business who were deep-pocketed and years ahead in the US market. Instead, Natco decided to focus on development of generic portfolio leaning towards complex generics and litigation-heavy para-IV filings.

In order to mitigate high litigation costs, regulatory filings and distribute the drugs in US, Natco entered into partnerships with big generic drugmakers on profit sharing basis. For generic Copaxone it partnered with Mylan, generic Tamiflu – Alvogen, generic Lanthanum Carbonate – Lupin and generic Doxil – Dr Reddy’s.

“Our whole model is litigation funded by partners,” Rajeev once said.

It’s first success in the domestic market came with Veenat, the generic version of Swiss multinational Novartis’ anti-cancer drug Gleevec in India at one-tenth the cost of the listed price. The next success was in 2013 when it beat Novartis in its patent protection battle for the drug.

Natco’s comeback strategy somewhat mirrors that of Sun Pharma’s Dilip Shanghvi’s — to focus on oncology to deliver industry-beating margins.

It’s no surpise that Rajeev considers Shanghvi as his inspiration in the industry. Shanghvi holds a 3.12% in Natco as on March 31, 2018, in his personal capacity. Shanghvi bought 3.5% stake for Rs 25 crore in Natco in 2011 by subscribing to company’s Rs 67.5 crore QIP meant to fund the development of Copaxone.

In today’s value, Shanghvi’s investment is now worth around Rs 437 crore

appreciating five-fold in a span of seven years.

Prolific litigant

The year 2012 was a watershed moment for Natco. The company won compulsory license from Indian patent office to produce and sell a generic version of Bayer’s patented cancer treatment Nexavar in India at a fraction of the price charged by the German firm.

The patent office, exercising one of the flexibility in the WTO’s agreement on intellectual property, granted compulsory license citing the life-saving drug was not available at a reasonably affordable price in the country.

Indian patent office decision became global headlines with MNCs and developed nations deriding India, while healthcare activists and patients groups hailing the decision in the interests of patients dying without access to life-saving drugs.

Nexavar revenues aren’t big contributor for Natco, but they brought it a wide coverage from western press, much of it negative.

Natco won yet another patent challenge in January 2015 — this time India’s patent office had rejected an application from US-based Gilead Sciences for its Hepatitis C drug Sovaldi, paving the way for local drug makers to launch cheaper generic versions of the USD 1,000-a-pill medicine in the US.

The application had been opposed by Natco and New York-based Initiative for Medicines, Access & Knowledge (I-MAK) on the grounds that the drug, chemically called Sofosbuvir, is not inventive enough compared with a previous formulation.

A year later, the Indian patent office revoked its earlier decision and granted patent on Sovaldi. The damage was done to Gilead.

Gilead licensed the drug to 11 generic manufacturers including Natco in India for distribution of the drug in 101 developing countries. Now the drug sells at USD 14 a pill. Natco now is among India’s top-3 players in Hepatitis-C segment.

What next for Natco?

There are a few windfall opportunities in the pipeline like generic version of Celgene’s chemotherapy drug Revlimid and generic Nexvar but they may take easily another 2-3 years for launch.

Natco knows that the current party can’t go on forever and it’s foolish to hedge all its bets on US, given the cutthroat competition, price erosion and channel consolidation in that market. Moreover, Natco’s isn’t as large as some of India’s big drugmakers to be able to play the commodity game.

The Natco management indicated that beyond FY19 it is looking to significantly ramp up revenues from emerging markets especially from the three markets of India, Canada and Brazil to make up for the loss in revenues and profits from generic Tamiflu and generic Copaxone.

The company recently raised Rs 915 crore of funds via QIP. The proceeds of the QIP has been utilised to pay off certain debts and fund some amount of capex for the company.

“We’re probably one of the first ones to say that we want to de-emphasise the US. We did that almost 12 months ago. And we largely focus our strength on these three markets (India, Canada and Brazil). I think we’re going to see a lot of this coming to fruition,” Rajeev said

The company said it looking for acquisitions to expand in the three chosen markets, even as it hones its complex pipeline in its R&D labs targeting US market.

Analysts are buying Natco’s story.

“With proven R&D capabilities post successful launch of multiple complex generics and a much stronger balance sheet, Natco has now created a strong platform to make relatively aggressive investments (vs the past) to move into the next growth orbit. Along with Copaxone, anticipated launches of Nexavar and Revlimid accompanied with the scale-up in India and RoW markets will keep up the earnings momentum over the next 3-5 years,” said IDFC Securities in its report.

Disclaimer: The views and investment tips expressed by investment experts are their own and not that of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

Source: Moneycontrol.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Aurobindo Pharma fourth-quarter profit misses estimates

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

India’s Aurobindo Pharma Ltd posted a 0.6% fall in fourth-quarter net profit on Monday that missed analysts’ estimates.

Net profit came in at 5.29 billion rupees ($78.49 million) in the quarter ended March 31, compared with 5.32 billion rupees a year earlier, the Hyderabad-headquartered drugmaker said.

Analysts on average had expected a profit of 5.98 billion rupees, according to Thomson Reuters data.

Net sales rose over 11% to 39.89 billion rupees.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Trump takes aim at drug prices but impact on Indian pharma may be minimal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

American president Donald Trump is likely to finally deliver that much delayed speech on bringing down prescription drug prices in the US.

The speech will be watched with bated breath by pharma companies. High drug prices were a key issue that Trump addressed during his campaign in 2016.

Remember his famous quote in January 2017: “Pharma companies are getting away with murder.” It sent pharma stocks tumbling down.

While the drug regulator USFDA has been stepping on the gas to reduce generic prices in the US, little has been done by the Trump administration.

Hence, given that this speech would be the first by Trump on prescription drug prices and given his bold moves on other issues, the street is understandably nervous.

Close Watch On Prices

However, if reports hold true, pharma companies both in the US and India should not fret much.

Trump is likely to focus on bringing down drug prices in the US by raising prices of the US manufactured innovative or branded drugs sold in foreign countries, especially the developed ones.

To give you an idea, as of 2015, US spending on pharma was above $1,000 per person, or 30-190% higher than developed counterparts such as Australia, Canada, France, Germany and the UK, among others.

The governments of these countries employ some form of price controls. For example, the UK, which has some of the lowest drug prices among developed countries, runs a government program named National Health Service, or NHS.

The NHS provides free healthcare and hence is one of the world’s biggest buyers of medicines. Such purchasing capacity gives the country greater negotiating power with drug companies.

Trump doesn’t seem to like this. The view of the US administration is that American companies spend on R&D, create new drugs, which are then protected by patents, and sell at exorbitant costs in the US to cover their costs.

But that is not the case in other countries. Due to existing government policies, these countries access the same innovative, patent-protected drugs at cheaper prices. This limits US companies from investing further in R&D and crimps their ability to lower prices in the domestic market.

Further evidence of the Trump administration’s rumination on the subject is provided in a February 2018 report by the White House.

“United States both conducts and finances much of the biopharmaceutical innovation that the world depends on, allowing foreign governments to enjoy bargain prices for such innovations.

This indicates that our current policies are neither wise nor just. Simply put, other nations are free-riding, or taking unfair advantage of the United States’ progress in this area,” the report says.

Though other issues might be highlighted, it seems most likely Trump’s will focus on correcting this long-existing anomaly.

While one cannot entirely rule out Trump focusing on bringing down prices of generic drugs, the fallout is expected to be mild or unlikely. Why? Because measures have already been undertaken to reduce generic prices and the impact is visible. Also, companies selling generic drugs in India and globally are hurting.

For example, Israel’s Teva, the largest manufacturer of generic drugs, is planning to slash its generic portfolio by 80% in the US and aggressively slash costs. Mylan of the US had its North American sales fall 19% due to declining sales of its key drug Epipen as well as price pressure.

Novartis’ Sandoz generic business is up for sale, with sales of the generic unit falling 18% year-on-year this past quarter.

Generic prices in the US have declined by an average of 30% in the past two years.

However, the extent of price reduction in a drug varies based on competition, with a fall of 5-10% in one drug to up to 80% in another. The reason is increased competition.

And the USFDA is taking measures to ensure generic competition increases. In 2017 for example, the USFDA approved a record number of generic drugs – 1,027 in total with over 800 final drug approvals. And analysts only expect this trend of increasing nods with shortening approval times to continue.

Indian Companies Should be Safe

So, net-net what is the impact on Indian companies if Trump sticks to prescription branded drugs sold at lower prices in mostly developed countries? Fortunately, not much.

Indian pharma companies such as Sun Pharma, Lupin, Dr Reddy’s and others have a dominant presence in the generic US market.

India comprises of 30% of the volume of the generic market in the US and 10% in value of the $70-80 billion US generic market.

Hence, while Indian companies should be innovating and creating prescription drugs, it could be fortunate that they are not in this case. Having said that, we are watching this space very closely for any rabbits from Trump’s hat.

Ekta Batra is an anchor and associate editor, research at CNBCTV18. She has been tracking pharma and healthcare for almost a decade.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow