Natco Takes Patent Charge Honed in India to U.S. Market

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Natco Pharma Ltd., the generic drugmaker best known for challenging pharmaceutical patents in India, is setting its sights on the U.S. with products including a copy of Teva Pharmaceutical Industries Ltd.’s blockbuster Copaxone.

Natco expects to be among the first to win regulatory approval for its Copaxone generic, with sales anticipated to start in the next six months, Rajesh Chebiyam, vice president of business development, said in an interview at the company’s headquarters in Hyderabad, India. Revenue could double by 2017 if clearance for the multiple sclerosis infusion and other key products come this year, Chebiyam said.

To vault into the world’s biggest pharmaceutical market, Natco has filed 11 applications with the Food and Drug Administration to market generic drugs before their U.S. patents expire. The products it aims to copy include Celgene Corp.’s Revlimid for bone cancer and Roche Holding AG’s influenza medicine Tamiflu, which garnered combined sales of $6 billion last year. Copaxone alone earned $4.2 billion in 2014.

“These are high-value products that can change where we are,” Chebiyam said. Natco aims to file eight to 10 generic drug applications a year in the U.S., up from three to five previously, according to Chebiyam.

Natco built the biggest cancer business in India by selling cheaper copies of blockbuster therapies, such as Bayer AG’s patent-protected Nexavar and Novartis AG’s Gleevec. It gets only a seventh of its 7.4 billion-rupees ($120 million) in annual revenue by selling drugs in the U.S., where its generic products include an antacid, a migraine pill and a medicine to prevent nausea and vomiting due to chemotherapy.

Science Challenges

Many of the treatments Natco is proposing to sell in the U.S. are complex to copy. Nexavar, also on the list of Natco’s FDA submissions, is a targeted therapy that blocks tumor cell growth in liver cancer. And Copaxone is a random polymer composed of four amino acids that Teva says may require a new set of clinical trials to prove the copy works as well as the original.

“They’ve steadily increased their pipeline, especially in the U.S., in specialized and niche products where there are limited players and require cutting-edge technology,” said Sapna Jhawar, an analyst at Reliance Securities in Mumbai. “They are making good forays into R&D -- similar to some of the large-cap companies.”

Dark Cloud

Natco and its partner Mylan are vying with several others seeking approval for a generic Copaxone. Momenta Pharmaceuticals Inc. and Novartis’s Sandoz unit have filed an application with the FDA, as have Dr. Reddy’s Laboratories Ltd., and its partner Synthon.

The U.S. Supreme Court gave a reprieve to a Teva patent that protects Copaxone from generic rivals until September. Chebiyam’s expectation of an approval soon thereafter is reasonable, said Timothy Chiang, an analyst at CRT Capital Group LLC in Stamford, Connecticut.

“The odds are high that a generic version of Copaxone once a day will be approved around September,” Chiang said. “People have been trying to guess when generic Copaxone is going to arrive for the past 10 years. It’s been like a dark cloud that’s been hovering over Teva.”

Teva, which derives about half of its profit from Copaxone, said in an e-mailed response to questions that it couldn’t speculate on the timing of an approval. Sandoz also declined to comment on timing or strategy, saying it continues to seize opportunities to provide multiple sclerosis patients with “a high-quality, more affordable generic alternative.”

Natco would earn at least $50 million in the first year of selling the drug before a second wave of generics enter the market, Chebiyam said in the interview.

Tamiflu Copy

The biggest drug Natco is looking to copy is Revlimid, Celgene’s $5 billion-a-year cancer therapy. The company is also litigating over its generic version of Tamiflu, the influenza pill developed by Gilead Sciences Inc. and sold by Swiss drugmaker Roche. The likelihood of being able to introduce the first generic around August 2016 is “higher” after a Supreme Court decision last month rejecting Gilead’s bid to extend Tamiflu’s patent protection, Chebiyam said.

Because Natco was first to file its U.S. application for the flu drug, he said, it stands to get six months of exclusive sales along with an FDA clearance to market a generic.

The U.S. Supreme Court ruling on March 9, just a week after Natco signed a licensing agreement with Gilead to manufacture generics of its hepatitis drug Sovaldi for poor countries, drove Natco shares up 43 percent over four trading days to a record, giving the company a market value of 73.7 billion rupees. Roche and Gilead declined to comment about “ongoing litigation” through a spokeswoman.

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