Dr. Reddy’s Laboratories Ltd. (DRRD), India’s second-largest drugmaker, aims to be among the first three to four companies offering copies of biotechnology drugs, including a version of Roche Holding AG (ROG)’s Rituxan, in Europe.
A partnership the Hyderabad-based company struck with Merck KGaA (MRK)’s Merck Serono unit last year to develop cheaper copies of biologic cancer drugs could yield products in Europe in four years, Dr. Reddy’s Managing Director Satish Reddy said in an interview in Mumbai.
“The game-changer is biosimilars in developed markets, and since we don’t know how to do all that ourselves, we tied up with Merck Serono,” Reddy said. Making a version of rituximab, the ingredient in cancer-treatment Rituxan, is where “the big opportunity is in the developed markets, clearly; that’s where the big sales are,” he said.
Dr. Reddy’s joins larger rivals including Novartis AG and Pfizer Inc. in the race to tap the market for biosimilar drugs, or copies of biotechnology therapies, forecast by IMS Health to grow to as much as $25 billion by 2020. The Indian drugmaker stands to benefit from its choice of partner for the biosimilar business, according to Sanford C. Bernstein & Co.’s Ronny Gal.
“German Merck actually has an oncology project on the market today -- Erbitux -- so they’ve partnered with somebody who knows what they’re doing,” said Gal, a pharmaceuticals analyst based in New York. “If Merck basically says we trust these guys, that they have a good enough product, we’re going to do the clinical trials, it’s reasonable that they’ll succeed.”
The Indian drugmaker aims to tap the biologics market in the European Union where regulators this year approved a biosimilar monoclonal antibody, a copy of Johnson & Johnson’s rheumatoid arthritis treatment Remicade. In the U.S., the world’s biggest pharmaceuticals market, guidelines for approval of biosimilars are still not clear, according to Reddy.
The aim of the partnership with Merck Serono is for Dr. Reddy’s to tap the German company for its knowledge of European drug regulations and clinical trials.
The companies aim to together develop, manufacture and commercialize a portfolio of four biosimilar drugs that Dr. Reddy’s already sells in India: copies of Roche’s blockbuster rituximab and Amgen Inc.’s blood-related therapies filgrastim, pegfilgrastim and darbepoetin alfa.
Rituxan is generally used to treat blood cancers.
Dr. Reddy’s is doing early development of the molecules, while Merck Serono will manufacture the compounds and lead later-stage trials. The companies are sharing the cost of research and development.
“The tie-up should work,” Reddy said. “We should launch a product that should take significant market share. That will completely change the complexion of our playing space.”
The drugmaker, which posted profit of 16.8 billion rupees ($274 million) on sales of 116 billion rupees in the 12 months ended March, is boosting spending on development that includes clinical trials for biotechnology drugs. Generics, or copycat drugs, contributed almost 70 percent of revenue last year and the company has said it plans to make more complex products.
Dr. Reddy’s copy of rituximab, Reditux, has been available in India since 2007. Its approval has been based on smaller clinical trials than are likely to be required in Europe or the U.S, according to IMS Health.
Rituximab, marketed by Roche and Biogen Idec Inc. as Rituxan and MabThera, had sales of $6 billion last year, making it the ninth-largest pharmaceutical product in the world, according to IMS Health.
Roche doesn’t expect a biosimilar of Rituxan to reach the market before 2016, the Basel, Switzerland-based company said in an e-mailed statement.
Shares of Dr. Reddy’s have gained 33 percent this year in Mumbai, while the benchmark S&P BSE Sensex has added 9 percent.
The European Medicines Agency was the world’s first regulatory body to issue guidelines on biosimilars, and the World Health Organization and countries including Canada, Australia and South Africa followed the EMA’s lead.
The U.S. Food and Drug Administration hasn’t yet decided on norms on establishing the interchangeability of a biosimilar product with the original.
The global biologics market reached almost $170 billion in sales in 2012, with the U.S. accounting for 49 percent and the European Union contributing 22 percent, according to IMS Health. “Biologics market growth is still largely driven by mature markets,” Sarah Rickwood and Stefano Di Biase, analysts at the Danbury, Connecticut-based company, wrote in a report.
The market for copies of the costly biotechnology therapies could grow to as much as $25 billion in 2020 from $2.5 billion in 2012, according to IMS Health.
Stada Arzneimittel AG agreed in October to sell under license in Europe Apotex Inc.’s version of filgrastim after the biosimilar received approval from the European Commission.
Still, making a copy of the Roche cancer drug could prove more challenging, Dr. Reddy’s Reddy said. “It is that much more complex compared to the growth hormones or filgrastim.”
South Korea’s Celltrion Inc. postponed a late-stage trial of its biosimilar of rituximab in April, on the advice of some state regulators.
“The development and marketing of biosimilars is quite different from that of generics and pose significant challenges for aspiring players,” IMS Health’s Rickwood and Di Biase wrote. “They require significant investment, technical capability, and clinical trial expertise.”
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