Hyderabad-based Dr. Reddy's Laboratories received the US Food and Drug Administration's (USFDA) approval for the first generic version of $1.8 bn Suboxone sublingual film for the treatment of opioid dependence. This is the first among the three blockbuster products lined up by DRL for US launch over the next one and a half years - Suboxone film, Nuvaring (contraceptive) and Copaxone (multiple sclerosis drug).
Mylan Technologies Inc too has received the FDA nod for the same drug Suboxone (buprenorphine and naloxone) sublingual film in multiple strengths.
DRL's approval though comes with a rider - this is a launch at risk as DRL continues to navigate through ongoing litigations. Innovator Indivior has sued DRL for infringement of its patents and litigation is still on. Further, competition for the drug is also likely to increase.
"Along with Mylan and DRL, we are also expecting approvals for Teva, Endo and Alvogen in the near term. Moreover, it is going to be at risk launch for DRL as litigation yet to be settled. Essentially it means if litigation goes against DRL they have to return the profits generated from this product to innovator," pointed out Amey Chalke, analyst at HDFC Securities.
Analysts also felt that the drug size could be smaller than the street estimates of $1.8 bn. "We believe at manufacture level, size could be much smaller.
Still, it is a substantial opportunity for DRL which was struggling to get quality approvals for last three years with key plant under warning letter," Chalke said. Anshuman Gupta of Investec Capital too felt that as per the Securities and Exchange Commission (SEC) filing by Indivior, the size is around $750 mn versus IMS (prescription audit agency) number of $1.8 bn. Realised sales of the drug (after discounts) may be lesser than the estimated market size of $1.8 bn.
Revenues to the tune of $70-80 mn can come from this drug in 2018-19, felt Chalke. As such opioid addiction is a huge crisis in the US - it is estimated that 115 people died every day due to opioid overdoses in 2016 alone.
"With opioid addiction becoming increasingly prevalent in America, the full approval and launch of our generic equivalent of Suboxone could not have come at a more critical time to help patients," explains Alok Sonig, Chief Executive Officer, Developed Markets, DRL. The FDA too is focussing its efforts to reduce the menace of opioid overuse and make treatments accessible.
"The FDA is taking new steps to advance the development of improved treatments for opioid use disorder and to make sure these medicines are accessible to the patients who need them.
That includes promoting the development of better drugs, and also facilitating market entry of generic versions of approved drugs to help ensure broader access," FDA Commissioner Scott Gottlieb, MD, said in a press statement.
DRL is likely to get Suboxone manufactured at a third party site as it does not have the capacity to make sublingual films, and this may impact margins going forward when competition for the product increases. "With two players in the market, the margins could be around 60 per cent for Suboxone," Chalke said.
Meanwhile, DRL is readying for a revved-up US play as two more blockbuster products are lined up for the North American market. One is birth control device Nuvaring, which might see a launch during the current fiscal, and the other is multiple sclerosis drug Copaxone that is estimated to be launched in H1FY20.
The company's stocks were up by around 4 per cent during day's trade.
Approval for generic Suboxone first among the 3 Star products (Suboxone, Nuvaring, Copaxone) of DRL
This is a launch at risk as DRL continues to navigate through ongoing litigations
Mylan too has received FDA approval for the same drug