Copycats wanted: Pfizer, AZ and more under threat as China solicits generics

fiercepharma | June 20, 2019

Copycats wanted: Pfizer, AZ and more under threat as China solicits generics
The U.S. FDA compiles a list of off-patent drugs without an approved generic to encourage the development of copycats. Now, the Chinese authorities are rolling out a similar initiative, only with some extra incentives. On Thursday, China’s National Health Commission published (Chinese) its first proposed list of 34 drugs (full list below) that the agency says are already off patent or nearing patent expiration but have no generic drug application in the country or lack competition. The plan is to invite drugmakers to make copies—and here comes the key—under drug regulator’s priority review pathway, which was until now only given to innovative drugs. The list covers originators from many foreign pharmas, including Pfizer, AstraZeneca, Merck & Co., Johnson & Johnson, Roche, Bristol-Myers Squibb, Takeda, Eli Lilly, and more. And the drugs span a wide range of therapeutic areas, including HIV, anti-infectives, ophthalmology, cancer, blood and immune disorders, etc. Some prominent names can be found on the list. Teva’s multiple sclerosis blockbuster Copaxone, which just saw its first U.S. copycat from Mylan less than two years ago, is probably the best-selling drug on the list by global sales. Johnson & Johnson subsidiary Actelion’s pulmonary artery hypertension drug Tracleer and United Therapeutics' rival med Remodulin are both included. Roche’s CMV retinitis treatment Valcyte and chemotherapies Faslodex and Ixempra from AZ and BMS, respectively, are also among those listed. China made certain of its intention to make that list in January. At that time, it said the government would update the list at the end of each year starting from 2020. And key small molecules and biologics on the list will also be incorporated into state-backed R&D plans. The initiative is seen as another push by the Chinese government to bring in competition to rein in drug costs. In a recent decree, physicians are strictly not allowed to write brand names on prescriptions, and even if they do, pharmacists could fill them with generics.

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We welcome the members of the IRISYS team to the Recro family and are eager to begin implementing the integration of the companies.” IRISYS is a full service CDMO based in San Diego, CA with capabilities that range from formulation development to commercial manufacturing for various dosage forms including oral liquids, sterile injectables, tablets, topicals, liquid/powder filled capsules, ophthalmic droppers, liposomes and nano/microparticles. IRISYS serves a diverse, global client base within the biopharmaceutical industry with its nearly 40 clients located in six different countries around the world. This includes manufacturing support for four commercial and near-commercial products. Importantly, IRISYS recently added automated, aseptic fill/finish and lyophilization capabilities to its existing facility, offering a new key avenue for significant near-term growth. IRISYS expects to generate $15.4 million in revenue for full year 2021 and has approximately $23 million spanning its contracted backlog and vetted sales pipeline. Strategic Rationale Recro’s acquisition of IRISYS was driven by a number of compelling factors covering the four prongs of the company’s ongoing growth strategy. Enhances Capabilities and Competencies: Expands technical focus beyond oral solid dose to include sterile injectables oral liquids, tablets, topicals, liquid/powder filled capsules, ophthalmic droppers, liposomes and nano/microparticles; Adds new capabilities in the areas of aseptic fill/finish and lyophilization; and Establishes bi-coastal footprint from which to better serve clients within the U.S., as well as globally. Expands and Diversifies Client Base: Adds more than three dozen clients spanning six countries, reducing Recro’s customer dependency risk; Provides greater balance between our clinical and commercial project mix; and Diversifies portfolio from exclusively oral solid dose to a balance of multiple advanced dosage forms and oral solid dose. Fortifies Financial Position: Adds profitable business with IRISYS full year 2021 estimated revenues of $15.4 million, net income of $2.1 million and EBITDA* of $2.8 million; the corresponding anticipated improvement in Recro’s EBITDA will be beneficial to Recro’s debt covenants under its credit agreement. 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The purchase price was paid through: (i) $25.5 million of cash at closing; (ii) 9,302,718 shares of common stock of Recro to be issued in six months; and (iii) a seller promissory note of $6.1 million. The seller note has a three (3) year maturity date from the date of closing and bears interest at a rate of 6% annually. The seller note is expressly subordinated and unsecured in right of payment and priority to Recro’s existing debt with Athyrium Capital Management. Bailey Southwell & Co. served as the exclusive financial advisor to IRISYS. William Blair & Company, L.L.C. represented Recro on the transaction. Non-GAAP Financial Measures Certain financial measures of IRISYS presented in this press release, including EBITDA, were not calculated using U.S. generally accepted accounting principles (“GAAP”). 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Spotlight

Scientists don’t know why we evolved to taste sour foods, but they recently figured out the mystery behind how we taste them. It’s pretty crazy.