Mylan announced last Wednesday that it would spend $17.5m to purchase the worldwide rights* to Pfizer’s generic version of GSK’s blockbuster respiratory drug, Advair. In addition, it will take on a group of Pfizer scientists based in Sandwich in the UK, the site of a major Pfizer R&D campus that is in the process of closing down. Along with generic Advair, Mylan also gets a dry powder inhaler (DPI) platform that can be used for other generic drugs and also for proprietary products, some of which it may be able to obtain from Pfizer through subsequent negotiation.
Advair (sold as Seretide outside the US) is a combination of fluticasone propionate and salmeterol that is used to treat asthma and COPD. Global sales of the product were just over £5bn in 2010. Both of the components of Advair are off patent, but the combination still has patent protection in a number of markets and there are also numerous patents around the Diskus dry powder inhaler that Advair is delivered in.
Mylan did not disclose how advanced the Pfizer product is, but the price paid would tend to suggest that most of the expensive clinical trial work is still to be done, at least in the US. As with biosimilars, the regulatory environments of the US and Europe are very different when it comes to respiratory drugs. In Europe, there is a clear pathway to approval but not to substitutability, which is determined on a country-by-country basis. In the US, on the other hand, there are no formal guidelines on how to get a respiratory generic approved, but if approval can be achieved it is possible – at least in theory – to have substitutability as well. There are big obstacles to achieving this, though, because the FDA wants to see a delivery device that is highly comparable to the originator (with the same instructions for use) as well as insisting on clinical trial data that shows some kind of dose-response curve, which is pretty much impossible for an inhaled corticosteroid. Indeed, until the FDA modifies its requirements, it is hard to see how any true generic to Advair can get approval.
In Europe, Mylan is joining a long list of companies that are already known to be working on fluticasone/salbutamol combinations. Elpen has a generic Seretide on the market in Sweden (as well as its native Greece) and expects to roll it out (via partners) in Germany, Italy, Portugal, Hungary and the Czech and Slovak republics, having received approval for these markets via the decentralised procedure in May this year. Meanwhile, Sandoz has a product somewhere in the EU registration process, although it appears to have been knocked back recently as it has disappeared from the list of products pending approval in Finland, where it was submitted. Neither Sandoz nor Vectura (the UK company that developed the product for Sandoz) are willing to comment on why this is, but previous expectations that Sandoz would receive approval imminently are being revised. As a result, Teva, which expects to file a generic Seretide in Europe in 2012, may get a chance to catch up. In addition, sanofi recently bought the rights to a device (plus pre-clinical work to date) from Siegfried, while Meda, Orion and Cipla, to name but three, are also known to have products in development.
Despite an ever-growing line-up of potential competitors, GSK is confident that Advair sales will remain strong for the foreseeable future, and it is probably right. The US is its key market and until the FDA comes up with a workable pathway for generics there, GSK faces only the minor risk of alternative combination products that have not gone down a generic pathway (for instance, Teva intends to file an improved combo product, with lower dosing for the same efficacy, in 2014). In Europe, meanwhile, there are likely to be lots of generics, but since they won’t be substitutable, their sales will be dependent on the marketing strength of the companies that sell them and market penetration is likely to build only slowly. It is notable that in many countries, GSK still has a dominant market position for salbutamol as a stand-alone product, despite the fact that it has been off patent for years and there are dozens of generics. This is testimony to the branded nature of the respiratory market, but presents a big hurdle for companies that are not equipped to detail to specialist physicians. Mylan, of course, has its Dey subsidiary in the US and so should be well placed to market anything that emerges from development there. In Europe, though, it has no respiratory sales force at all, so it would require a major investment to actually sell generic Seretide effectively. Teva, by contrast, has an existing respiratory business in both the US and Europe, while Sandoz could potentially call on the help of its parent company, Novartis. In the US, Sandoz also appears to be taking a different approach to Teva, insofar as it appears determined to get a substitutable product to market, which would remove the need for a sales force.
Given that Mylan’s strategy is to focus on difficult to make products and that it has an under-employed respiratory sales force in the US, entering the race for generic Advair appears to make sense. However, making money out of it is going to be difficult unless Mylan buys an equivalent sales team in Europe, preferably with some existing on-market products, suggesting that the merits of doing this deal with Pfizer may be less obvious than they first appear.
* Mylan has exclusive rights in the US, Canada, Australia, New Zealand, the EU and EFTA. Elsewhere, Mylan and Pfizer will co-promote.
Posted on 12th November 2011