Mexican wave to Dr Reddy's GMP woes; US VP departs
This article was originally published in Scrip
Dr Reddy's Laboratories' Mexican facility, which has been under scrutiny for current good manufacturing practice deviations, has been cleared by the US FDA, paving the way for the lifting of a year-long import alert on certain products manufactured there.
In a conference call post its results for the first quarter ended 30 June, Dr Reddy's top management said that the GMP concerns at the Mexican unit had been addressed and that the import alert is expected to be lifted soon. The company, though, gave no specific timeline by which it expects sales from the unit to reach the pre-alert levels.
The Mexican unit was first pulled up by the FDA in November 2010 in view of 'significant deviations' from GMP in the manufacture of active pharmaceutical ingredients (APIs). A warning letter was issued in June 2011, after the FDA found that Dr Reddy's' response to those concerns lacked sufficient corrective actions.
Dr Reddy's' facility at Cuernavaca, Mexico, was acquired from Roche in 2005 and manufactures intermediates and active pharmaceutical ingredients and steroids. Analysts had earlier pointed to the modest contribution of the Mexican unit, which accounted for an estimated $50-60 million in annual revenues and essentially supplied APIs for customers of Dr Reddy's' custom pharmaceutical services business. Naproxen, one the key products manufactured there, was not hit by the regulatory action, these analysts had then said.
Dr Reddy's also indicated that it was gearing towards taking rituximab to regulated markets and that its alliance with Merck Serono, a unit of Merck KGaA, could be the vehicle to take it through in these markets. Dr Reddy's, though, said that it was still in the process of discussing with the regulator in the EU for rituximab. It's not immediately clear if studies have commenced there. The European patent on rituximab (Roche's MabThera in Europe) expires in 2014 and the product could perhaps be one of the first antibodies to face a biosimilar challenge. Dr Reddy's and Merck Serono had earlier this year unveiled plans to co-develop, manufacture and commercialise a basket of oncology biosimilars, primarily focused on monoclonal antibodies (MAbs) (scripintelligence.com 6 June 2012).
Dr Reddy's also added that the next wave of growth for biosimilars would come from emerging markets, depending on when approvals come through. The company has a commercial presence in 13 emerging markets and has filings in 20 other nations awaiting approval, details in its annual report said. It also claims to be the 'cost leader', allowing it to profitably sell biosimilars in emerging markets at discounts of at least 30-50% to innovator prices. Dr Reddy's already has four products – filgrastim, pegfilgrastim, darbepoetin alfa and rituximab – on the Indian market and reported global biosimilars sales of $26 million (+45%) in 2011-12.
For the first quarter of 2012-13, Dr Reddy's reported consolidated revenues of Rs25.4 billion ($457 million), a year-on-year growth of 28%, led by healthy growth in North America, Russia and other emerging markets in the generics segment. Net profits rose by 28% to Rs3.4 billion during the period.
Revenues from the global generics segment increased by 32% to Rs19.1 billion in the first quarter, with revenues from North America at Rs7.9 billion up 27% in dollar terms. Revenues in Russia during the quarter were Rs3.5 billion, the highest ever from this market and representing a growth of 30% in rouble terms. Indian revenues improved by 19% to Rs3.5 billion and the company said that its biosimilars portfolio grew by 15% over the previous year.
US leadership change
Meanwhile, Amit Patel, executive vice president, North America generics, at Dr Reddy's Laboratories, has decided to move on, though it is not immediately clear who will take his place. Mr Patel joined the company in 2003 and his exit comes at a time when the Dr Reddy's has been keen to scale up in the US. Management said that it had "enough leadership bandwidth" in place.