Cipla Claims Pricing Advantage For Albuterol In US
Executive Summary
Cipla, which expects to enter the US albuterol inhalation market later this year, believes that it has the cost competitiveness to price “significantly lower” than competition and take a “fair share” of a market that recently saw the arrival of authorized generics.
After a strong fourth quarter, Cipla Ltd. has entered fiscal 2020 on an “optimistic note”, gearing for a ramp-up in markets like the US, where it hopes to introduce its first respiratory inhalation generic, albuterol, later this year.
The Indian firm has been expanding its respiratory franchise globally, and management commentary was upbeat on the prospects for its generic albuterol in the US, despite the competitive landscape and arrival of authorized generics.
Cipla’s managing director and global CEO, Umang Vohra, said that the market for the product had just formed recently with three authorized generics, but suggested that there still exists significant opportunity for Cipla to price right and make a significant impact.
“We think that as long as you're albuterol you can take share from any of the other three brands that are available. The launch of these three authorized generics has actually helped doing that, somewhat,” Vohra said on the Q4 earnings call on 22 May.
Albuterol sulfate authorized generic versions of GlaxoSmithKline PLC’s Ventolin HFA inhalation aerosol and Teva Pharmaceutical Industries Ltd.’s ProAir HFA became available in January this year, while in April Par Pharmaceutical said that it had begun shipping an authorized generic of Merck & Co. Inc.'s Proventil HFA inhalation aerosol.
Cost Competitiveness
Cipla indicated that the current market for albuterol is estimated at around 55 million units, with the unit price of the generics significantly higher than $20.
“Right now the three authorized generics are by themselves and they are priced higher than the $20 mark, and our math says that we have cost competitiveness to price this significantly lower than that and possibly take a fair share of the market,” Vohra said in response to an analyst’s query on the potential for worsening pricing dynamics.
At the time of announcing the availability of the authorized generic of Ventolin HFA, GSK said that the products will have a wholesale acquisition cost (WAC) of less than $36. “This represents at least a 35% reduction to the current WAC price of branded Ventolin and potentially a lower cost alternative to the patient, depending on a patient’s insurance coverage,” GSK said.
Generic Sensipar Drives US Growth
Meanwhile, Cipla indicated that it expects to file two respiratory products in FY2020 – trials for its generic Advair (fluticasone/salmeterol) are underway. Cipla had earlier maintained that it was targeting one “sizeable” respiratory inhalation launch in the US every year, starting with albuterol.
For the fourth quarter ended March 2019, Cipla’s North America business grew 41% year-on-year and 38% on a sequential basis to $163m, driven by a ramp-up of existing products and the launch of generic Sensipar (cinacalcet). Overall revenues for the quarter stood at INR44.04bn (+19%; $632m), with net profits at INR3.67bn.
Jefferies said that Cipla’s results were “far ahead” of expectations. “Revenue +6% and margins +670bps versus estimates. The beat though was largely driven by high sales of at-risk generic Sensipar launch. Ex of this, revenues were in line with expectation and margins c100bps ahead,” Jefferies equity analyst Piyush Nahar said in a note dated 22 May.
A US federal judge recently denied Amgen Inc.’s request to block Cipla’s sales of a generic version of Sensipar, ruling that Amgen is not likely to succeed on the merits of its breach of contract claim against the Indian firm. (Also see "Amgen Fails To Block Cipla’s Generic Cinacalcet In US, And It May Change How Patent Settlements Are Drafted " - Pink Sheet, 6 May, 2019.)
Biosimilars Opportunity
Cipla also expects to continue to invest in expanding its biosimilars franchise. During the quarter, the company added pegfilgrastim into its portfolio for the markets of Australia, New Zealand, Colombia, and Malaysia.
“We expect biosimilars to become an important growth driver for the business in the near to medium term,” Vohra said.
Cipla, which in 2017 recalibrated investments in the “resource-intensive” biosimilars segment, shifting more towards an in-licensed approach, believes it is competitive in the sector in rest of world markets because “it’s not solely about price it’s also about your reach in the market and what you can do with the product.” (Also see "Cipla Cuts Down In-House Biosimilars Plans" - Scrip, 26 May, 2017.)
“We’ve seen that in India. We’re likely to see that in several of the other markets where we made these filings. So, I think that we stand competitive,” CEO Vohra said, adding that the company was currently focusing on completing its portfolio offering for emerging markets.
In January, Cipla struck an in-licensing deal with China’s Bio-Thera Solutions Ltd. for its late-stage bevacizumab biosimilar (BAT1706). (Also see "Deal Watch: Celgene Makes Alliances With Kyn, Obsidian After Bristol Buyout" - Scrip, 21 Jan, 2019.)
The Indian firm also has a similar deal with Singapore-based Prestige BioPharma for its biosimilar version of Roche’s Herceptin (trastuzumab). In India, Cipla has a partnership with Roche for a second brand of Avastin (bevacizumab) and the IL-6 inhibitor tocilizumab (Actemra). (Also see "Roche Primes New Push Via Cipla For Avastin, Actemra In India " - Scrip, 28 Feb, 2018.)
Separately, Cipla also said that it had recently entered into a partnership with Korean group LG Life Sciences Ltd. and in-licensed its portfolio in India. The partnership marks Cipla’s foray in the high growth and specialty segments of infertility and the human growth hormone business, it said on the Q4 earnings call.