Patent Expiries – Time to move beyond the low-hanging generics fruit

It is estimated that over the next 5 years, nearly $300 billion of global drugs will go off-patent. This includes several blockbuster drugs (defined as sales of $1 billion). Why exactly is this news item important for Indian pharma?

Creating generic equivalents for off-patent drugs

One of the biggest contributions that Indian pharma has made is creating generic equivalents of global drugs going off-patent. In India, we recognize process patents and not product patents. All that the Indian pharma company has to do is to clinically analyse the composition of the drug, create a mirror drug with minor changes to the production process and sell it as a generic equivalent. Global pharma has also encouraged generic equivalents as it reduces the price of these drugs substantially and makes it available to the less privileged sections. That has been Indian pharma story over the years.

Understanding the patent cliff and opportunity

When we call it a $300 billion opportunity of drugs going off patent, we are talking of the actual sales of the drug internationally. When the product moves from a patented version to a generic version, the price falls by around 80%. So, the India opportunity is already down to $60 billion. Then India has to compete with other countries like China, Israel, Vietnam, and Brazil; which have strong generic outsourcing franchises. Then there is the IP reformulation that the company does. They use methods like composition-of-matter claims, method-of-treatment patents, manufacturing process claims, and regulatory exclusivity. Still, at $300 billion it is a cliff; the last being $100 billion in 2016.

What Indian pharma must now focus on?

Of course, making the generic equivalents is the low-hanging fruit, which small pharma in India can always capture. The big opportunity is for the big-pharma players who have the balance sheets to take on bigger risks. One way is to transition from basic formulations to more complex generics and Biosimilars. These are more sophisticated and also offer specialized therapies with better margins. Secondly, India is too dependent on China for the supply of bulk drugs. This opportunity can be used by large Indian pharma to integrate backwards through bulk drug parks. With the latest biopharma push, there is also the opportunity for Indian pharma to get into R&D and biopharma innovation.

What should be the specific agenda for Indian pharma?

We have already covered the broad agenda. At a more granular level, Indian pharma needs a fermentation-based manufacturing push to reduce dependence for inputs. Secondly, API and KSM localization is the other big agenda, especially with the very attractive production linked incentive (PLI) scheme available. Clinical trial ecosystem, high-quality healthcare at a reasonable cost, and medtech manufacturing are some of the other specific opportunities for India to explore. Above all, this opportunity of the 2030 cliff can be used to create a scientific body of trained knowledge and manpower, that can become a long-term IP edge for Indian pharma. That is the big gap today!