How top Indian drug makers like Sun Pharma, Glenmark are building a brands business in the US


Telling signs of a midlife crisis are apparent among top Indian drug makers as fatigue sets in on a marathon run of two decades selling generics in the US. A long hold by the US FDA on Indian manufacturing facilities has left the industry with sobered expectations. The narrative is moving to “building brands,” “portfolio balancing” and “predictable revenues.”

Sun PharmaBSE -0.36 %, Dr. Reddy’s, GlenmarkBSE -0.33 %, Zydus Cadila, AurobindoBSE 1.03 % and their ilk are embracing a new life. Deploying investments to bolster indigenous research and lapping up late clinical stage drugs or new brands is heralding a seismic shift from churning copies of drugs to the daunting world of innovative or differentiated brands.

Top drug maker Sun Pharma is the first off the block in shaping those ambitious plans. Focusing sharply on ophthalmology, cancer and dermatology products, last month it paid Rs 1,190 crore ($175 million) to Swiss pharmaceutical giant Novartis for rights over Odomzo, a brand approved in 2015 by US FDA, that helps treat a form of advanced skin cancer.

For the home grown drug maker the task, though uphill, is cut out. Odomzo will closely rival the $50 billion biotech behemoth Roche’s Erivedge. It is an odd match, critics say, but Sun has finite choices. Its founder and CEO Dilip Shanghvi is known for strategic manoeuvres that led his company to scale the top slot among the local peers. Moving into new research drugs over the next few years seems top of mind for the man thrifty with words.

“Innovative brands as opposed to supplying generics to distributors is a significant shift. Indian companies are at a stage of maturity where building a pipeline is important,” says Sujay Shetty who heads the Indian lifesciences business for PwC, the global consulting firm. A similar view is expressed in a note from Chirag Talati of Kotak Institutional Equities.

Talati said Odomzo can generate $80 million in sales by 2020-21 with peak potential of $120-150 million. The forecast appears modest against the money shelled out by Sun but the excitement is palpable in adding heft for the future. “Sun’s Levulan drug/device combination for actinic keratosis, a form of pre-cancerous cells, gives it access to dermatologists who account for 70% of prescriptions for laBCC (locally advanced basal cell carcinoma).

Combined with MK-3222 (a drug licensed from Merck and being developed for psoriasis), we believe Odomzo will help raise Sun Pharma’s brand profile amongst dermatologists and help leverage the field force to drive prescription share,” Talati explained.Assets acquired by Sun over the last two years brings further clarity. In 2014, it bought MK-3222, a late stage experimental psoriasis drug from Merck. If approved by the US FDA, Sun will jostle with Janssen, Eli Lilly and Novartis.

Opinion is divided on how well Sun can manage in reaping the rewards from its psoriasis drug against the established giants but it is largely seen as a calculated step. In Sept. 2015, Sun picked InSite Vision, which enabled the recent commercial launch of BromSite, its first branded eyecare drug. In October 2016, the company acquired Ocular Therapeutics for $40 million, digging further into the ophthalmology market. Odomzo could kick start a branded oncology play, as indicated by Kirti Ganorkar, ..

“Going forward, we expect increased R&D spends in development of future product pipeline in specialty and differentiated products,” Sun Pharma told ET. While R&D is considered the engine that helps a company deliver products, brand marketing is an art and numerous examples abound of wayside kills. Sun Pharma is fueling top dollars to rope in talent from global drug firms to embellish its marketing unit in the US. An expert who has studied marketing tr ..

PwC’s Shetty said the moves to grow a branding business is expected and will only intensify. “Profits from generics is cut to the bone except in a few cases. Companies are moving on the maturity curve and cherry pick brands in the next three to four years,” he noted reminiscing how Israeli giant Teva had a head start with its blockbuster multiple sclerosis drug Copaxone that clocked peak sales of over $4 billion. A similar roadmap but one that leans on a differentiated portfolio is being put int ..

The company that reported revenues of $2.4 billion last year has for the past few years devised its differentiated strategy. It has about 85 pending filings (ANDA/NDA). Almost two-thirds of these are complex generics or those that have limited competition. Drilling further, injectables are likely to be a key growth driver accounting for a third of the revenues by 2020, the company told ET.

Abhijit Mukherjee, COO, Dr. Reddy’s said most branded products have evolved out of in-depth research and work with physicians and patients. “We continue to work with physicians to create the Rx (prescriptions) pull and at the same time, collaborate with payers to have enough coverage for these drugs.” Between dermatology and neurology drugs alone, Dr. Reddy’s has fanned out over 100 sales employees in the US. Last year it launched Zembrace SymTouch, a novel drug and device combo to treat acute e ..

With its R&D spend spiraling to 11%-15% of sales, Dr. Reddy’s is hoping to gain further traction in its US brands business. It has identified drugs that require complex characterization, novel regulatory pathway and are approved at the back of large and complex clinical studies. Although its biosimilars ambitions is moving at a slow clip in India, its US filings for cancer drugs rituximab and Peg-GCSF as early as 2014 indicates interest in selling drugs with higher regulatory benchmarks, eve ..

Written by Saheli