Editorial
In late April, 2015, Teva Pharmaceutical Industries (Petach Tikva, Israel)—the largest generic drug manufacturer in the world—issued a US$40 million takeover bid for rival firm Mylan (Potters Bar, UK), currently the third largest generics maker. However, Mylan rejected the bid and instead bid for a smaller rival, Perrigo (Dublin, Ireland), which in turn declined Mylan’s offer. By merging with one of its biggest rivals, Teva estimated that the resulting company could have had an annual revenue of around $30 billion, and could have generated cost savings of about $2 billion, largely by exploiting economies of scale. But what are the implications of such mergers? The market for generic drugs is huge. According to IMS Health, in the US alone unbranded generic drugs accounted for 80% of prescriptions dispensed during the 2013 fiscal year. Oncology represents a particularly fruitful area for generics, with several drugs—eg, bendamustine, neralbine, and liposomal cytarabine— coming off patent in the near future. Additionally, the archetypal targeted agent, imatinib, will enter into the generic market in the USA in 2016, and its patent also expires in Europe in the next couple of years. Mergers between rival generics firms may allow access to previously untapped geographic markets, and will also permit more efforts to be directed into developing complex generics. While conventional generic drugs are structurally and formulaically identical copies of brandname drugs (ie, are bioequivalent), the production of biological agents by living organisms means that identical copies are not possible, and that the resulting complex generic version—biosimilars—are only highly similar to their reference product. In recent years, generics manufacturers have increased investment in the development of complex generics—in part via acquisitions. The potential financial rewards from developing a biosimilar are vast: whilst being the first to market with a conventional generic drug can give a generics manufacturer exclusivity for 180 days, the recent Biologics Price Competition and Innovation Act in the USA grants new biosimilars 12-year marketing exclusivity, with higher margins than conventional generics.
www.thelancet.com/oncology Vol 16 June 2015
Given the inherent differences between biosimilars and their reference products, post-marketing safety surveillance is essential. Nevertheless, biosimilars of epoetin and filgrastim have been available in the European Union for a number of years, and filgrastimsndz became the first biosimilar to be approved in the US in March this year. And beyond these supportive agents, molecularly targeted biological agents such as bevacizumab, trastuzumab, and rituximab will be coming off patent in the near future and offer great potential for companies poised to exploit the biosimilars market. In addition to the savings possible with generic versions of conventional drugs (which can cost as much as 80–85% less than the original compound), the introduction of biosimilars could result in further savings of up to $44 billion in the US alone in the next decade. The ability to purchase cheaper drugs should result in savings for patients, payers, and healthcare systems, allowing greater equity for patients. However, mergers have the potential to curtail these benefits by eradicating the very competition that helps to drive prices down. Indeed, a 2014 analysis by the Drugs Channel Institute and Pembroke Consulting suggested that half of the available generic drugs in the US had increased in price over the preceding 12 months. One drug in particular—digoxin—had increased in price by more than 1000%, in part because only two companies were manufacturing it. These concerns have rightly triggered investigations by the antitrust division of the US Department of Justice. But equipoise must be found—too much competition could result in a race to the bottom, disincentivising manufacture of low margin chemotherapeutic agents that are nevertheless essential medicines. Indeed, this has been witnessed in the USA in recent years, leading to chronic drug shortages. Competition regulators must remain vigilant of the merger activities of the generic giants to ensure patients have access to the very best health care possible, and at the best possible price. ■ The Lancet Oncology
Robert Brook/Science Photo Library/Corbis
Generic drug market: growing and merging
For more on the Biologics Price Competition and Innovation Act see http://usa.thelancet. com/blog/2015-03-20biosimilars-breaking-ground For more on the regulatory considerations for biosimilar oncology drugs see Review Lancet Oncol 2014; 15: e594–605
595
In late April, 2015, Teva Pharmaceutical Industries (Petach Tikva, Israel)—the largest generic drug manufacturer in the world—issued a US$40 million takeover bid for rival firm Mylan (Potters Bar, UK), currently the third largest generics maker. However, Mylan rejected the bid and instead bid for a smaller rival, Perrigo (Dublin, Ireland), which in turn declined Mylan’s offer. By merging with one of its biggest rivals, Teva estimated that the resulting company could have had an annual revenue of around $30 billion, and could have generated cost savings of about $2 billion, largely by exploiting economies of scale. But what are the implications of such mergers? The market for generic drugs is huge. According to IMS Health, in the US alone unbranded generic drugs accounted for 80% of prescriptions dispensed during the 2013 fiscal year. Oncology represents a particularly fruitful area for generics, with several drugs—eg, bendamustine, neralbine, and liposomal cytarabine— coming off patent in the near future. Additionally, the archetypal targeted agent, imatinib, will enter into the generic market in the USA in 2016, and its patent also expires in Europe in the next couple of years. Mergers between rival generics firms may allow access to previously untapped geographic markets, and will also permit more efforts to be directed into developing complex generics. While conventional generic drugs are structurally and formulaically identical copies of brandname drugs (ie, are bioequivalent), the production of biological agents by living organisms means that identical copies are not possible, and that the resulting complex generic version—biosimilars—are only highly similar to their reference product. In recent years, generics manufacturers have increased investment in the development of complex generics—in part via acquisitions. The potential financial rewards from developing a biosimilar are vast: whilst being the first to market with a conventional generic drug can give a generics manufacturer exclusivity for 180 days, the recent Biologics Price Competition and Innovation Act in the USA grants new biosimilars 12-year marketing exclusivity, with higher margins than conventional generics.
www.thelancet.com/oncology Vol 16 June 2015
Given the inherent differences between biosimilars and their reference products, post-marketing safety surveillance is essential. Nevertheless, biosimilars of epoetin and filgrastim have been available in the European Union for a number of years, and filgrastimsndz became the first biosimilar to be approved in the US in March this year. And beyond these supportive agents, molecularly targeted biological agents such as bevacizumab, trastuzumab, and rituximab will be coming off patent in the near future and offer great potential for companies poised to exploit the biosimilars market. In addition to the savings possible with generic versions of conventional drugs (which can cost as much as 80–85% less than the original compound), the introduction of biosimilars could result in further savings of up to $44 billion in the US alone in the next decade. The ability to purchase cheaper drugs should result in savings for patients, payers, and healthcare systems, allowing greater equity for patients. However, mergers have the potential to curtail these benefits by eradicating the very competition that helps to drive prices down. Indeed, a 2014 analysis by the Drugs Channel Institute and Pembroke Consulting suggested that half of the available generic drugs in the US had increased in price over the preceding 12 months. One drug in particular—digoxin—had increased in price by more than 1000%, in part because only two companies were manufacturing it. These concerns have rightly triggered investigations by the antitrust division of the US Department of Justice. But equipoise must be found—too much competition could result in a race to the bottom, disincentivising manufacture of low margin chemotherapeutic agents that are nevertheless essential medicines. Indeed, this has been witnessed in the USA in recent years, leading to chronic drug shortages. Competition regulators must remain vigilant of the merger activities of the generic giants to ensure patients have access to the very best health care possible, and at the best possible price. ■ The Lancet Oncology
Robert Brook/Science Photo Library/Corbis
Generic drug market: growing and merging
For more on the Biologics Price Competition and Innovation Act see http://usa.thelancet. com/blog/2015-03-20biosimilars-breaking-ground For more on the regulatory considerations for biosimilar oncology drugs see Review Lancet Oncol 2014; 15: e594–605
595
