Playing Catch-Up: Mylan And Biocon To Team Up On Generic Biologics

U.S. generics giant and Indian biotech hope their collaboration will position them against Teva/Lonza, Sandoz, and other potential competitors.

Strong growth prospects for the global generic biologics space over the next decade are bringing together the world's third-largest generic drug maker Mylan and India's Biocon. The two signed a comprehensive deal June 29, which will divide development and certain other costs to bring bio-generics to the market.

Through the deal, Mylan will hold exclusive commercialization rights in the U.S., EU, Canada, Japan, Australia, New Zealand and the European Free Trade Association countries. Biocon, India's second-largest biotech, will participate in profit-sharing in those markets, while the two companies will share commercialization rights in all other markets.

Mylan CEO Robert J. Coury said the tie-up will combine Biocon's scientific expertise, product development capabilities and "cost-efficient and scalable biologics manufacturing" with Mylan's global commercial footprint and regulatory expertise.

"Generic biologics, especially monoclonal antibodies, are set to become the next great bolus of growth in the generic pharmaceutical industry, and through this alliance, Mylan and Biocon have covered all corners of what any organization would want or need to have secured to offer a highly competitive and distinct generic biologics product portfolio with tremendous growth potential for the coming decade," Coury added.

Mylan is entering the biogenerics fray late, compared to two of its chief generics competitors and now has to catch up. Early this year, Teva, the world's largest generic drug maker, announced a collaboration with Switzerland's Lonza group to co-develop bio-generics (¹ (Also see "Teva Adds To Biosimilars Capabilities Through Partnership With Lonza" - Pink Sheet, 20 Jan, 2009.)).

Israel-based Teva has been slowly building its internal biogenerics capabilities for several years. It already has launched bio-generics in Europe through the EU's established pathway for biosimilars in the recombinant growth hormone, granulocyte colony-stimulating factor and interferon alpha 2b product areas.

Meanwhile Novartis' Sandoz division also has been pioneering the commercialization of biogenerics in Europe, with the launches of generic epoetin alfa and human growth hormone. The latter product, Omnitrope, also has reached market in the U.S. despite lack of a separate FDA regulatory pathway for bio-generics. On June 25, Sandoz received Japanese approval to market the same HGH product as Somatropin , that nation's first approved bio-generic (² PharmAsia News, June 26, 2009).

Ex-U.S. launches to come first

Pittsburgh-based Mylan told "The Pink Sheet" DAILY that it expects initial launches from its partnership with Biocon will occur outside the U.S. "We think it'll be several years from now and we would anticipate launch outside the United States in major markets, and possibly in less-regulated markets, even sooner," the company said.

In a June 29 note on the transaction, Goldman Sachs analyst Randall Stanicky said the collaboration positions Mylan ahead of an anticipated U.S. regulatory pathway, but predicted that bio-generics would not "contribute meaningfully until 2013" to the firm's bottom line.

Mylan and Biocon have declined to offer any details on expected costs or how costs and revenues would be divided between the companies. As for product or therapeutic targets, Mylan said the collaboration's primary focus would be in "monoclonal antibodies and complex biologics."

Stanicky said Biocon's estimate of the cost for bringing a protein product to market ranges between $50 million and $100 million, "with likely need for clinical trials, which is not meaningfully inconsistent with Teva's view on cost." Teva's estimates are slightly higher, he added.

"The complexity and costs involved in developing generic biologics are expected to see only a few players being able to gain entry into the highly regulated markets of Europe and [the U.S.]," a Biocon executive told PharmAsia News. "Bio-generics in the emerging markets are expected to grow from the current estimate of $1.5 billion at a projected rate of 20 percent per annum over the next five years."

Mylan declined to comment on whether it had some catching up to do with Teva/Lonza, Sandoz and other players in the bio-generics space, but said "now we're positioned as a leader in that segment going forward."

Appealing targets to emerge in coming years

Some analysts have estimated that biologics worth $25 billion are set to lose patent protection by 2016, creating a significant market opportunity for protein therapeutics like insulin and its analogs, erythropoietin, HGH and mABs.

"The deal is complementary to both the parties," an Indian financial analyst told PharmAsia News. "Mylan gets a strong partner in the generic biologic space and Biocon will gain from the shared cost structures and global presence of Mylan."

Biocon CEO Arun Chandavarkar told PharmAsia News that his company primarily will target difficult-to-copy mABs and will not chase every biological drug that goes off-patent. "For some semi-regulated markets, the two companies will make an early entry, while for the rest, the time for regulatory clearances will be much longer," he said.

For the U.S. market, Biocon already is working with Abraxis for development and commercialization of a generic form of G-CSF and with another undisclosed company for insulin products.

Biocon also is building an innovative research pipeline and has been scouting for licensing deals for two of its drug candidates (³ PharmAsia News, Dec. 15, 2008).

-Vikas Dandekar ([email protected]) in Mumbai and Joseph Haas ([email protected]) in Washington, D.C.