Indian firms eye $2.5-bn US drug market

Indian pharmaceutical majors are set to tap the generic anti-depressant market in the US, the largest pharma market in the world.

The anti-depressant drug market in the US is primarily ruled by Effexor XR (Venlafaxine) of Wyeth (now owned by Pfizer).

The firms -- Aurobindo Pharma, Lupin, Wockhardt, Orchid Pharma and Dr Reddy's Labs -- have received the US Food & Drug Administration nod to launch the generic version of the $2.5-billion Effexor, used to treat depression and anxiety disorders, from June 1. The patent for Effexor expired last year.

However, the major concern for the Indian firms is the lower margin for the copycat version due to high competition.

Teva, the largest generic player in the world, has already launched Effexor generic in July last year, with six-month exclusivity.

According to analysts, about $15-20 million sales revenue can be achieved by each firm through the generic sale once other copycats are launched.

The consumers' reluctance to shift over to generics in such space will be another hit for the firms, said experts.

Two weeks earlier, Wockhardt received US FDA approval to sell the generic version of Effexor's extended release capsules in dosages of 37.5mg, 75mg and 150mg from June 1. Aurobindo Pharma Limited received the final nod from the US FDA for Effexor generic in April.

Muralidharan Nair, partner, health sciences advisory practice, at consultancy Ernst and Young, said: "For anti-anxiety drugs, the US is a significant market and one of the top selling ten drugs in US always will be in that category.

"However, there could be a lesser rate of adoption to the generic space by the consumer. Affluent patients may not immediately shift to cheaper copycat versions of these categories. Also, margins will not be attractive for generic players."

Orchid Chemicals and Dr Reddy's Labs reached an out-of-court settlement

with Pfizer Inc to sell generic Effexor XR. In 2009, Lupin Ltd had settled all patent litigation relating to Effexor XR capsules and was given the right to launch the drug after June 1.

Sun Pharma had launched the generic of Effexor tablets last year.

According to Sarabjit Kour Nangra of Angel Broking, apart from a few players like Orchid Pharma that do not have a strong base in the US market, players will rarely get a prominent margin from the generic Effexor market.

In July 2010, Teva Pharmaceutical Industries received approval for generic Effexor XR, as the company with a first-to-file status.

During the six-month exclusive period, the Isreal-based major made a bulk of the profit from its generic version.

In 2008, Effexor held the largest share in the antidepressants market, at 36 per cent ($3.93 billion).

However, Indian firms will be able to reap another windfall in the near furture.

According to a Standard Chartered Bank report, the next 4-5 years will probably be the 'golden period' for generics given that an unprecedented $75 billion of patented products are to go off patent in the US alone, which will be almost 25 per cent of US sales in 2009.

"On a conservative basis, this could add almost $3-4 billion of additional generic sales (assuming 95 per cent price erosion on branded sales) to the US market (almost 10 per cent of current generic US sales) on an ongoing basis," said the report.

From the highest number of US FDA-approved plants (outside the US) to a large number of abbreviated new drug approvals, Indian companies have a high hand over other generic makers in the US.