Sun Pharma's specialty drugs face competition in US

Sun Pharma has invested over $600 million to build a specialty pipeline of seven products in the hope to counter generic drug price erosion in the US market. But, now two key products (Seciera and Tildrakizumab) that account for 70 per cent of specialty pipeline’s value are witnessing competition from rival firms, denting the hope of strong come back.

The Mumbai-based pharma major reported 59 per cent decline in its net profit for the quarter ending September to Rs 912 crore, as it lost exclusivity on generic version of a key cancer drug. The revenue for the quarter was down by 15 per cent to Rs 6,600 crore. 

At a time when the US Food and Drug Administration (USFDA) has increased competition to bring down drug prices, regulatory issues delaying product launches from the company’s Halol plant further affecting its sales.

This put investors’ hope on company’s effort to build a pipeline for specialty drugs in the US which could have pricing power. These are novel drugs for niche therapies needing more funds for development. The company’s specialty pipeline of seven products had estimated peak sales of $700 million as per Credit Suisse report in September. Of this, Seciera and Tildrakizumab had estimated peak sales of $250 million and $300 million.  

Seciera is used for the treatment of dry eyes and its onset of action is much faster than Restasis which has a revenue of $1.8 bn. Sun is looking to file a new drug application with the US FDA this quarter and the launch is expected in the next financial year. However, Restasis patents (running till 2024) have been invalidated by generic-makers lately and a generic launch is possible in 2018. Thus, despite a better product, Seciera’s net present value may turn out to be Rs 10 per share, substantially lower than the base case of Rs 20 a share, according to CLSA.

“Sun needs more late-stage products to boost its specialty pipeline. Its premium valuation to peers could be at risk if the ramp-up in specialty products turns out to be weaker than we expect,” said global brokerage CLSA in its report on the company last week. 

Similarly, its psoriasis drug Tildrakizumab (launch in 1HFY19) is likely to witness strong competition from the US-based rival AbbVie that demonstrated higher efficacy in phase three trial for its drug Risankizumab. 

According to IMS data, psoriasis drugs have a $9-billion market in the US. With the large size of market for psoriasis, Sun may end up delivering Rs 9 per share value for Tildrakizumab, down from Rs 12 estimated earlier by the CLSA. 

BromSite and Odomzo are the other key products in the Sun pipeline that are ramping up in-line with CLSA’s expectations. Sun has seven specialty assets in dermatology, ophthalmology, CNS (central nervous system) and oncology. Two drugs are already in the market. 

The firm acquired branded oncology product — Odomzo from Novartis last year. The product is approved in 30 countries, including the US, Europe and Australia.

Ramping-up specialty pipeline
  • In-licensed Tildrakizumab from MSD for treating chronic plaque psoriasis - Filed with US FDA and EMA for European market
  • Acquired Ocular Technologies – Gives access to global rights for Seciera — for treating dry eye disease
  • Acquired branded oncology product Odomzo in Dec’ 16
  • Launched BromSite, first specialty ophthalmology product in the US in Nov’16
  • Acquired Dusa Pharma in the US – Access to patented drug-device combination for treating Actinic Keratosis, dermatology ailment
  • Acquired InSite Vision — Focuses on developing new specialty ophthalmic products, has three late stage programs
  • In-licensed Xelpros (ophthalmology) and elepsia (CNS) products from SPARC
  • Entered into a joint venture with Intrexon Corporation for developing gene-based therapies for ocular diseases

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