The New Highway for Generic Drug Companies

Indian Pharmaceutical giants like Ranbaxy, Dr Reddy's Lab, Wockhardt, Glenmark and Sun Pharma are now adopting a careful patent litigation path in the US market to expand their generic business instead of the aggressive patent challenges they pursued few years ago. This kind of adaptation has led to reduction of number of patent challenges by Indian companies in the US in the last few years.

Para IV applications (abbreviated new drug applications (ANDA) notifying to challenge innovator patents) filed by the domestic pharma firms with the US drug regulator have come down to 10-15 annually during the last two years from 20-30, said patent experts. Such kind of strategy of companies has declined the business for freelancer and Law firm specially working in Pharma Field. A source said that now a days many LPOs have shut down their pharma-specialized window and looking for another booming field.

According to source, Dr Reddy's Laboratories challenged 29 innovator patents out of 49 marketing applications by March, 2006-end. The company filed only 19 applications with 10 patent challenges with Para IV certifications in 2007-08, out of a cumulative 122 marketing applications in the US. Lupin, one of the fastest growing companies in the US generics prescription market, filed only 11 ANDAs, out of 62 cumulative ANDA applications till March 2008.However, the company has not revealed how many of these are Para IV certifications. Sun Pharma and its US subsidiary Caraco together have 53 approvals and about 90 products are waiting for approvals. The company filed about 29 applications last year.
Glenmark Generics, the generic arm of Glenmark Pharmaceuticals, has about 40-45 ANDAs pending for approval.

Experts said many companies were now adopting the strategy of not to challenge the patents, which they indicate as a Para III ANDA filing to the drug regulator.

Experts said that the foremost reasons for falling generic business by patent challenge are (i) the introduction of authorised generics (either innovators launch their own generics or allow others to launch drugs before patent expiry to ward off generic competition) (ii) more out-of-court settlements. Moreover there might be other reasons also like declining number of patented drugs going off-patent in future, tight competition, price erosion upon patent expiry and huge costs involved in the patent challenge and failure of domestic companies to win patent challenges to earn business.

"Patent litigation has become a risky game plan and now companies carefully evaluate the potential business benefits. The effort is not worthwhile unless you are sure of gaining at least a $10 million profit by the challenge," said Glen Saldanha, MD and chief executive of Glenmark.

Patent experts said very few of them were known to challenge innovator patents. Similarly, Wockhardt is also following a strategy of less patent challenges in the US market.

Although generic business is a substantial profitable business but since it includes huge cost and risk to win patent challenge, pharma companies need to change their vision to earn good business with minimum risk. These businesses may include developing a NDA (New Drug Application) product under 505(b) (2), to become authorized generics, looking for merging and acquisitions with platform technology based companies, developing innovative technology and license it out, in-licensing the technology patent and developing the product along with licensor. Although these alternative businesses incur a lot of investment and time but are worthwhile once you enter into market.