Meenu Grover Sharma, Principal Consultant, BusinessAssociar Consultants, New Delhi, Scholar, Delhi Pharmaceutical Sciences & Research University, New Delhi and Dr (Prof) Harvinder Popli, Dean & Principal, School of Pharmaceutical Sciences, Delhi Pharmaceutical Sciences & Research University, New Delhi write about the ANDA trends seen by the generics industry in 2019
US-FDA continued with its momentum of previous years and granted 833 final ANDA approvals in the year 2019, slightly higher than the 813 final approvals in 2018. Additionally, 146 Tentative Approvals were also granted during the calendar year 2019.
Momentum maintained despite strong headwinds in the US generics industry
US Generics space has been under tremendous pressure for the last few years manifested in the form of significant pricing pressure, eroding profit margins, shrinking number of first-to-file windfalls, consolidation of buyers flexing their buying power, some big players like Sandoz, Teva divesting parts of and reorganizing their portfolio exiting pure generics spaces and continuing woes with negative outcomes of FDA-inspection for several players, especially in India and China.
Despite all these hurdles, the US generics market continues to attract a large number of ANDA filings and approvals, as also evidenced this year. Especially after some of the big players started divesting large parts of their generics portfolio, one might have anticipated a slowdown in numbers as these players with deep pockets were prolific filers in the past.
However, this year’s approval numbers do not show the expected dip as several other smaller and newer players, including some from China, started on the ambitious US-market dream. Another plausible reason could be that the companies that had already invested in development completed and filed the running projects, so the impact on number of approvals is not evident yet and will be seen over the next couple years, the lag is the time taken by companies to respond in terms of adjusting their business models and pipelines. Another hypothesis could be that having invested in the infrastructure, manpower and capacities, there is still no other option as lucrative as the US market, and hence companies that do not have the capability or resources to shift to speciality business are continuing to invest in commodity generics and adapting to the expectation of much-reduced returns. Lastly, of course, the analyst prophesies of rebound to better times in terms of easing pricing pressures is keeping the wheel moving at the same speed, at least thus far.
Regional trend: Indian companies continue to dominate, China registering the presence
In terms of regional trends, Indian companies continued to dominate with 374 or around 44 per cent of final approvals, followed by US, EU and then China. While India has remained at the forefront of the US generics market for several years, Chinese companies, traditionally considered a strong force in API space, are now steadily forward-integrating into the formulation space as well. In the year 2019, Chinese companies garnered 56 ANDA approvals which are 7 per cent of total final approvals. This number includes the approvals obtained by respective subsidiaries such as Nesher for Zydus or Watson and Actavis for Teva but does not include the companies in other regions with significant Chinese investment (such as Gland Pharma of India with 74 per cent stake of Fosun from China).
In addition to the global ambition of the Chinese companies, another reason for increasing participation in the US ANDA space is the domestic policies favouring high-quality products with overseas approval. A generic product that shares the same manufacturing line as the one approved by US FDA can qualify for priority review in the domestic market in China and thus becomes eligible for certain exemptions such as bioequivalence and can receive a much faster approval. Hence, a significant attractiveness for Chinese companies is getting access to domestic market simultaneous with the US market, through a US ANDA targeted development. Although Chinese companies still have a long way to go to come closer to the level of ANDA filing activity in India, the dual benefits are a strong indication that Chinese companies will continue to steadily keep building this capability.
Expectedly, oral solids hold a major share of approvals, but high-value products in complex forms such inhalation and vaginal ring also make a long-awaited appearance
60 per cent of ANDA approvals in 2019 were for oral solid dosage forms, of which 20 per cent were for extended-release or delayed-release formulations. Additionally, 20 per cent of total approvals were for injectable products. For Indian companies, 66 per cent of approvals were for oral solid dosage forms and this number is as high as 78 per cent for Chinese companies. The highlight among dosage forms is the approval for generic for Advair Diskus inhaler for Mylan and Nuvaring vaginal ring generic for Amneal.
Inhalers were one form where development of generics has remained complicated by need for similarity of device confounded by the complex IP scenario. This approval paves the way for similar approvals for more such products and more companies acquiring such capability in the near future. Another area in dosage forms which has traditionally remained lower activity segment has been the oral liquid forms – not because of technical difficulties but mostly because of logistics and cost-efficiency of transportation from distant geographies. This year witnessed over 50 ANDAs approvals for oral liquid products, majority of which were obviously from local US firms, but then again 13 approvals were also garnered by Indian companies, supported by their local manufacturing plants in the US.
Crowded markets becoming a norm, Indian companies have higher exposure to extremely competitive products
A sizeable 29 per cent of total approvals are for the products where there are 10 or more active ANDAs approved (without considering the discontinued ones, if any), pointing to companies continuing to invest in spaces erstwhile ignored for being very crowded. The proportion is even larger for Indian companies, with 35 per cent of approvals being for products with 10 or more active ANDAs. As the industry evolves and the talent-knowledge pool migrates between companies, a larger number of companies are developing technical competence to develop and file even those products that were earlier considered relatively difficult.
While some of these products may be large enough to attract more players, for others the continued filing could either be due to belief of these new entrants in their own cost-efficiency or other technological capabilities that they feel would support their quest for market share or it could just be a miss in their portfolio selection and review process, discovered far too late.
Conversely, there were 21 per cent approvals for products with three or less active approved ANDAs listed. A large proportion of these was contributed by non-oral solid dosage forms. Injectable and topical preparations still contribute a large proportion of these products, followed by Oral Liquids and Ophthalmic as the other significant contributors to the numbers. However, for Indian companies, only 14 per cent of approvals were for products in this low competition space, where also the larger companies dominate, indicating that while in overall numbers Indian companies command a lion’s share, the quality of product portfolio that they are going after needs to improve for better return on investment.
First-time generics: Companies with technical capability focusing on CGT Products, going after associated exclusivity, Indian companies Lag vs. International Peers
There were 108 First-time-Generics approved in 2019. Quite a few of these were for products that had patent expiry due in 2019 and multiple ANDAs got approved simultaneously and all got listed as First-time-generic. The most notable one here were, Pregabalin with 10 approvals listed as First-time-generic, followed by Bosentan with 8. Lurasidone, Ambrisentan, Febuxostat and Deferasirox are some of the other such products with First-time-generic approval in 2019. Interestingly generics for products such as Apixaban and Ticagrelor also saw first-time-generics approvals, however, it is widely anticipated that these products would not launch anytime soon despite final approval due to unresolved IP concerns.
On the other hand, 48 First-Time-Generics approvals were for products with only one Active approved ANDA, of these only 11 were from the Indian Companies. A substantial proportion of these was for products that are listed by FDA under the Complex Generics Therapy (CGT) Initiative – as Off-patent – Off-exclusivity Products with no generic available. These are usually either products with small market size but requiring investment/effort intensive development or are those with a highly complex regulatory path which the industry and the FDA are collaborating to find the best option for. Since this initiative offers 180-day exclusivity to first generic, even a relatively smaller market size products are being perceived as sufficiently attractive for companies to invest in development, which is the whole objective of this program.
However, a significant proportion of the CGT list comprises products that are still too small to invest in generics development. In 2018, only five products received exclusivity under this initiative which has increased to 12 products that have already been reported having received exclusivity and another 5-6 approved in later months that are likely to also get CGT related exclusivity.
A significant number of ANDAs discontinued in the approval year itself, raising questions on portfolio investment decision processes
A striking observation, not quantified in earlier analyses summarizing ANDA trends, is the number of discontinued ANDAs, right in the approval year. A neat 10 per cent of approvals in 2019 is already listed as discontinued. Since there will always be a lag in approval and active status update, if we consider approvals only in the first six months of the year and the discontinuations in the same period, approx. 15-16 per cent of ANDAs have discontinued already before the close of 2019.
This is a significantly high number considering the expense-effort invested on each ANDA and considering that currently the lag between ANDA filing and approval is quite short, so market conditions do not change drastically between filing and approval. Quite interestingly, the list of discontinued ANDAs also includes 17 ANDAs which were listed as First-time generics. A plethora of reasons could be behind these discontinuations, the major one being the questionable commercial viability, with a few also falling prey to technical hurdles in manufacturing on a commercial scale.
If the analysis is extended to include products that are successfully marketed and were able to get at least reasonable return, the numbers would be overwhelmingly large with some experts indicating that over half of ANDAs approved in 2018 were not even launched, again pointing to a significant need to adjust business strategy and portfolio to minimise wasteful investment.
Programme fee has not been a big deterrent, lukewarm response to companies offering ANDA ‘Parking Lot’
In addition to the significant filing fee for each ANDA, FDA stipulates annual program fee from each ANDA applicant based on the number of ANDAs approved (including those discontinued). A company with five or less approved ANDAs is considered small and charged a nominal fee at 10 per cent of full program fee, while that with six to 19 approved ANDAs pays 40 per cent and those with 20 or more approved ANDAs pay full programme fee of $1.6 million every year, irrespective of marketing status of the ANDAs. For small and mid-size companies, especially those dependent on licensing their products to partners for commercialisation, this is a huge expense especially when they migrate from lower slabs to the higher slabs.
Hence, the industry saw the emergence of companies offering ‘parking lots’ where they could rest their ANDAs till they find a suitable commercialisation opportunity. However, trends indicate that even small to mid-size companies are holding on to ANDAs in their own name as they see an advantage being visible with their own name in terms of finding a licensing partner and for their company valuation vs. the tradeoff of saving programme fee and losing visibility but paying the parking lot fee. One such company ANDA Repository LLC has only 57 ANDAs transferred in its name thus far, most being very old approvals. Among the 2019 approvals, only 6 are in the name of ANDA Repository.
12 of the top 20 companies are from India; Sandoz is conspicuous by its absence in the Top 20, consistent with its strategy of exiting generics business
Zydus with 35 approvals topped the overall list of companies (including their subsidiaries) getting final ANDA approvals in 2019. However, very few of the approved products from Zydus this year are in very low competition space, Carbamazepine XL Tablets and Phytonadione tablets being a couple such products. On the other hand, Mylan with 34 Approvals is second in terms of numbers but with several high-value opportunities captured, the most notable of its approvals being Wilexa Inhaler, the generic version of Advair Diskus. In addition to this, Mylan got first-time generic approval for another 8 ANDAs, making a total of nine First-time-generic approvals, second only to Teva that got 15 first time generic approvals among a total of 27 approvals that it garnered during the year.
The other important approvals for Mylan were Everolimus Tablets and Mesalamine ER Capsules (Apriso Generic), each representing significant market opportunity. Amneal with 32 approvals was the third-ranked player in terms of a number of approvals. For Amneal, the most notable approval was Eluring, the generic version of Nuvaring where Amneal pipped Dr Reddys Labs in getting the first approval.
Among Indian companies, Zydus obviously gained the highest number of approvals in 2019, followed by Sun Pharma, Alembic, Aurobindo and Alkem. Novast Labs is the only Chinese company in the Top 20.
Cumulatively, Top 20 companies garnered 48 per cent of total final approvals. In terms of portfolio breakdown, the approvals for top 20 companies spanned all dosage forms, but these companies represented a larger share of the more complex, lower-competition dosages forms such as Inhalations, ophthalmics and oral liquids. Also, in terms of quality of the portfolio, Top 20 companies fare better than the rest, as evidenced in their disproportionately larger share of first-time-generic approvals as well as lower competition products. However, these companies also discontinued approved ANDAs within the approval year at almost the same rate as the overall set of approvals.
Thus, the year 2019 concluded with a positive outlook at least in terms of a number of ANDA approvals, with numbers remaining steady and approval of some of the most complex of products. However, competition continues to intensify even further with each passing year, in not only commodity generics but also several products considered difficult earlier.
Pricing pressure remains intense in general, though the entire industry is hoping for getting some respite soon enough. Discontinuations, after investing and taking ANDAs right up to approval stage and then finding commercial unviability, is a serious concern that will eventually impact the resources and intent to continue to file at the same pace, if not addressed through a thought-through portfolio investment strategy. While large players and those with a willingness to invest have moved towards opportunities in complex generics, attracted by exclusivity granted through CGT initiative, or towards speciality generics, all companies do not have the wherewithal to tread into this territory and thus continue to explore their sweet spots in the traditional generics space.