Eisai Sees Generics Opportunity In Japan For Innovator Companies

A push by the Japanese government to increase generic drug utilization is an opportunity for innovator companies to jump into the generics space following Japanese patent expiries, according to Eisai CEO Haruo Naito.

Speaking during a Jan. 30 third quarter earnings call, Naito predicted that generic drugs are "going to be a very important business" in Japan in light of the government's campaign to increase generic utilization from 17 percent of prescriptions to 30 percent by 2012 (Also see "Will Priority Prescription Cards Help Japan Promote Generics?" - Scrip, 14 Jan, 2009.).

The generics opportunity is not limited to Japanese or foreign generic manufacturers, Naito stressed, but is also an opportunity for "people like ourselves who have been engaged in their own R&D activities, and once they see the expiration of the patents of their products, since they are the ones that know the drug the most, they would start selling generics."

"So this is not really a threat but a major opportunity for us," Naito said. "That's how I see this generic business, and that's where we are."

Impact Of Pfizer-Wyeth Deal

Like most of big pharma, Eisai is facing major generic threats on the horizon.

The U.S. patent on its best-selling Alzheimer's treatment Aricept (donepezil) is set to expire in November 2010. In response, Eisai plans to soon submit NDAs for slow-release and once-weekly patch formulations of the drug. Naito declined to provide submission dates, but said he was confident about submitting them in time to meet patent expiration dates. Eisai U.S. business Senior VP Hajime Shimizu said that the company is "working to switch as much as possible to new formulations and the remaining old formulation may be switched to generic."

However, Shimizu would not reveal Eisai's future partnering plans when asked by analysts about the potential impact the recent Pfizer-Wyeth merger might have on Aricept and potential new formulations of the product (Also see "Pfizer/Wyeth Will Produce (Incremental) Growth, Pfizer Assures Investors" - Scrip, 2 Feb, 2009.). In the U.S., Pfizer co-promotes Aricept, but Wyeth has an Alzheimer's drug, bapineuzumab, in Phase III development with Elan. Pfizer also has a deal with Medivation for Phase III Alzheimer's medication Dimebon.

"Basically, we will be seizing every business opportunity to maximize the product value," Shimizu said, "and whether it is good to team up with Pfizer or not, inclusive of all these scenarios, we will be reviewing every possibility."

Third Quarter Results

Despite a strong yen and National Health Insurance drug price reductions, Eisai sales increased 7 percent to ¥598.7 billion and operating income increased 3 percent to ¥95.5 billion. In comparison, Eisai's U.S. subsidiary enjoyed 26 percent growth in the same period, CEO Haruo Naito told analysts, adding that "the majority of this growth was brought about by MGI," which Eisai acquired in December 2007 (Also see "Eisai Strengthens Oncology Position With $3.9 Billion MGI Pharma Acquisition" - Scrip, 11 Dec, 2007.).

Naito also commented on the global financial crisis, saying that, in Japan, at least, Eisai has not seen a decrease in patient visits to doctors due to the economic downturn.

Although Eisai's major products also fared well, they will soon see generic challenges. Aricept saw 25 percent sales increase in Japan, and 15 percent growth in the U.S. Sales for proton pump inhibitor Pariet (rabeprazole) also increased by 19 percent in Japan. In the U.S., where rabeprazole is known as Aciphex , there is more competition from generics in the PPI market but Eisai still sees the possibility of the drug reaching the $1 billion mark.

In 2009, Eisai is planning to file simultaneous NDAs for cancer drug E7389 (eribulin) and sepsis drug E5564 in Japan, the U.S. and Europe.

The company also provided launch updates for two drugs recently approved in the U.S. The triazole anticonvulsant Banzel , launched in mid-January in the U.S., and Eisai hopes to eventually turn the orphan drug into a $100 million product, according to Shimizu. For the intravenous sedative-hypnotic agent Lusedra (fospropofol), approved in December, Eisai expects to receive a controlled substance scheduling within three months, but warned that the launch and uptake of the drug "will take time" (Also see "Eisai Wins Approval Of Sedative Lusedra, But Without Main Marketing Advantage" - Scrip, 16 Dec, 2008.).

- Brian Yang ([email protected])