Overburdened FDA can scupper a rising bounty

Getting approval of the US Food and Drug Administration to launch a generic version of an innovator drug used to take about 6 months till some time back.

It now takes up to 21 months, said the Generic Pharmaceutical Association (GPhA), a US body.

Naturally, there is a pile-up of applications which threatens to hamper the prospects of domestic pharma companies who hope to benefit from a massive opportunity coming up in the world’s largest pharma market.

Drugs with sales of $157 billion (over Rs 7 lakh crore) are going off patent in the next couple of years in the US.

A generic version of an innovator drug gets sold 40-80% cheaper.
The Office of Generic Drugs (OGD), a unit of the FDA has close to 1,400 applications for new drugs (called ANDA, acronym for abbreviated new drug applications) pending approval.

In 2009, Indian firms won 138 of the 483 generics approved by the FDA.

A Sun Pharma spokesperson said the ANDA backlog can potentially delay generic competition in both set of products— products already genericised, as well as those going off-patent.
“The backlog is quite substantial and can delay approvals for players, including us,” the spokesperson said.

Sun Pharma, which gets 30% of its sales from the US, has 108 pending ANDAs, in addition to 83 that have been approved.
Margaret Hamburg, commissioner, FDA, said no one benefits from a pending-application queue that will soon hit the 2,000 mark.

“This is simply unacceptable. Uncertainty and delays are costly to consumers, costly to you—and hurtful to the public. But the
unprecedented spike in generics applications has simply outstripped our capacity to properly review, which must remain our foremost focus,” Hamburg said at a GPhA annual meeting on February 18.

To boot, mounting pressure on OGD due to resultant cost savings foregone on the back of lagging approval ANDA timelines has led to the change of guard at the OGD.

Earlier last week, FDA replaced incumbent Gary Buehler, head, OGD with Keith Webber. Webber will be in charge of the OGD until a permanent head is named.

In the near term, this two step-transition may further lengthen the median ANDA approval timelines, thereby worsening the ANDA backlog at the FDA’s end, said Nitin Agarwal and Ritesh Shah of IDFC-SSKI Securities in a note last week.

Nilesh Gupta, group president, and executive director of Lupin, said the delay in approvals is compounded by an increased number of filings across the board from companies.

“We used to target 18 months to approval. Internally, we plan for 24 months. So we are preparing and filing ANDAs 6 months earlier than we used to.”

Lupin, which gets 33% of its revenues from the US, has made 105 applications of which 35 have been cleared.

On an average, the ODG receives about 825 ANDAs a year, but is able to grant only about 570 approvals. The number of applications has more than doubled over the past six years - from 361 in 2002 to 830 in 2008, according to estimates by GPhA.

The review timeline has also shot up to 21 months now, more than three times the statutory requirement of 6 months, the GPhA said.

Margins from US range from between 14-20% depending upon the product category, and experts believe the backlog and delayed approvals will lead to revenues being deferred.

Sujay Shetty, associate director of PricewaterhouseCoopers (PwC), said apart from backlog and approvals delay, Indian companies would have to face staunch pricing pressures and fierce competition from global generic players such as Teva (Israel), Apotex (Canada), Cobalt Pharma (Canada), Sandoz (Germany) and Actavis (Iceland).

Gupta says the backlog would not reduce the opportunity as companies are aware of these factors and will plan for them.
“The FDA is also working on ways to better the situation, through additional staffing, adoption of user fees.”