Welcome to the Pharma World

I had an opportunity to chat with Anand Bayes over a cup of tea. Anand has built his expertise in the pharma space. He is a MBA (Finance) and a graduate from College of Engineering Pune. Though he has a relentless gaze at PEs and prescriptions forecasts, he was ready to contribute to my blog. Below is shared an interesting insight on the market protection strategies employed by branded and Generic companies. Welcome to the pharma world. Read on….

Q:  Hi Anand! Can you throw some light on the market protection a branded drug gets in your sector?

A:  Hi Ankit! There are two forms of market protection. A) Exclusivity and B) Patent Protection

To understand this let me tell you in brief about the approval process of a new branded drug.

The drug approval process is regulated by Food and Drug Administration (FDA). Consider a branded drug company such as Pfizer or Eli Lilly comes out with a new drug and wants it to get market protection. In such a case it would go to Food and Drug Administration (FDA) and file a New Drug Application (NDA). This NDA contains all the data / statistics from at least their two clinical studies. FDA studies the data and approves or disapproves the drug.

When approved the drug has “Exclusivity” which means that the drug has monopoly in the market for defined number of years (usually 5 years). No new generic variant of the drug can show itself in the market during the period of exclusivity.

The patent protection is another form of market protection for the drug that comes into the market. The time period for patent protection is greater than the “Exclusivity” period ( the average period of patent protection is around 12 years from the time it is launched). In US, the patent protection is granted by the US Patent and Trademark office and listed in the FDA Orange Book. The FDA orange book is an agency publication with all the approved drugs along with all the patents associated with the drug. These patents ensure that no generic versions come to the market before their expiration.

Q:  So a generic variant of the branded drug can not come into the market during the time these protections are present?

A:  One needs to understand that “Exclusivity” protection is by law. So there is no chance for the generic to come into the market during the exclusivity period. But when the exclusivity expires the generic company can challenge the patents of the branded company as invalid, unenforceable or not infringed by the generic company’s product. For this the Generic company files Abbreviated New Drug Application (ANDA) with FDA and gets a Paragraph IV certification. If it prevails in the lawsuit, the generic company is granted 180 days of market exclusivity.

Q:  Does challenging the branded drug patent a viable strategy for the generic companies?

A:  The 180-day exclusivity incentive can be significant for a generic company as it would be the only generic version in the market.   So, it can price the product slightly below the branded version for six months, take market share from the branded product, and maintain its price point before other generics enter the market and erode the price and segment margins. The additional profit for a generic firm can be enormous if the product it challenges is a so-called blockbuster or megabrand

Q: Can you tell us about some recent PIV opportunities?

A: The most famous I can think of is the opportunity with Lipitor which was won by Ranbaxy after years of litigation. Ranbaxy being the first company to file a paragraph IV ANDA for Lipitor, won the 180 days marketing exclusivity starting Nov 2011.

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