May 2, 2007

Dr Reddy’s: Indian Generic Rituxan Launch Flashes Warning to Biologics Industry

Dr Reddy's has launched a generic version of Genentech/Biogen Idec/Roche's monoclonal antibody, Rituxan, in India. With plans to market 'Reditux' in other markets, including the US when the product's patent expires, this launch could have far-reaching consequences for the biologics industry, which is currently protected from generic competition.

The generics drugs manufacturer, Dr Reddy's, has launched a generic version of the biologic Rituxan (rituximab) in India. The blockbuster treatment - first launched for non-Hodgkin's lymphoma but now also indicated for chronic lymphocytic leukemia and rheumatoid arthritis and under development for multiple sclerosis - is co-marketed in the US by Genentech and Biogen Idec and in the EU (as MabThera) by Roche, with global company-reported sales of more than $3 billion in 2006.

Monoclonal antibodies like Rituxan are currently insulated from generic competition, primarily due to the high barriers to entry pursuant with their methods of production. Unlike conventional small molecule medicines, which are suffering under the weight of heavy genericization, biologics are produced using living cells, meaning the final composition of a generic version could vary significantly from the branded drug. Effectively then, generic versions are treated as new products, with the extensive clinical testing and years of development involved with this.

These significant barriers to entry, together with the reduced sales costs associated with only being targeted at the hospital market due to their injection-only delivery, has made the biologics sector highly attractive to Big Pharma companies struggling to sustain growth as the traditional small molecule blockbuster business model comes under increasing stress. This has led to a spate of biotech acquisitions by Big Pharma companies, including the recent acquisition of MedImmune by AstraZeneca.

Having launched in India, however, Reditux is now in a strong position to collect safety and efficacy data, increasing the pressure Dr Reddy's will be able to bring to bear on US and EU regulators when it seeks approval in these markets, although the company will still have to wait until the product loses patent protection (estimated to happen in 2015 and 2018, respectively).

The complex monoclonal antibody manufacturing process is also expensive, leading to the sometimes controversially high price of biologics products. For example, a month's supply of Rituxan costs at least $4,200 in the US (USA Today, November 2006). In India, Reditux has been priced 50% lower than the original product. This would translate to a saving of at least $25,200 a year, should Dr Reddy succeed in its plans to bring the product to the US. Although this price level may not be sustainable if the company has to pay for clinical trials to support its case for approval, the scope for large savings with even a slight discount would make a generic version attractive.

Indeed, with moves in the US and EU to introduce 'biogenerics' legislation to ease the path for biosimilars and therefore reduce the financial burden associated with the use of these products, the protection afforded to biologics could be further eroded. Although this sector - worth in excess of $20 billion in 2006 (Datamonitor, April 2007) and expected to grow rapidly - is likely to remain unthreatened by generic incursion for the foreseeable future at least, Dr Reddy's Indian launch should therefore be seen as a warning sign that a battle with biosimilars will one day have to be fought.