Brave new world

A whole new branch of the pharmaceutical industry is opening up, that of generic biopharma- ceuticals. Graham Lampard met Paul Edwards, ceo of GeneMedix, to discuss this emerging market

The market for generic drugs, which are therapeutically equivalent to their brand-name counterparts but are cheaper, is worth about $9bn in the US alone and is expected to more than double to some $20bn by 2006. During that time, patents covering nearly $36bn in US brand-name product sales will expire.Some of those patents cover several of the first generation biopharmaceutical products. These include alpha interferon, erythropoietin(EPO), granulocyte colony-stimulating factor (GCSF), human grown hormone (HGH), and human insulin, each of which could annually be worth $1-2bn in worldwide sales. Also included are granulocyte-macrophage colony-stimulating factor (GM-CSF) and some of the interleukins, which each year individually generate global revenues of several hundreds of millions of dollars.

Paul Edwards, chief executive officer of pioneering UK generic biopharmaceutical company GeneMedix, said: 'In our portfolio we have six proteins (table 1) in a world market worth something like $15bn, all of which are coming off patent in Europe from 2005 onwards.'

The company was founded through a collaboration and joint venture back in 1997 with the Shanghai Institute of Biochemistry. 'From this tie-up we acquired a range of high yielding cell lines to enable us to produce generic versions of first generation biodrugs, and the jv still gives us access to new protein molecules.'

The product range includes GM-CSF, which is used in the treatment of neutropenia in cytotoxic chemotherapy, acceleration of myeloid recovery following bone marrow transplantation and neutropenia in patients treated with ganciclovir in AIDS-related cytomegalovirus retinitis. It was approved for sale in China in 2001, and indicates the way Edwards sees GeneMedix evolving the market. 'We acquired a manufacturing plant in China to allow us to produce GM-CSF, and we have achieved the product launch there.

'Although our target is really the European market - we started in Asia because that is where the science came from, we are looking at opportunities of getting product to market ahead of any European launch.'

Insulin is a fine example of that - GeneMedix will almost certainly focus its insulin products exclusively on the Asian market because of the huge potential with the growth in reported diabetes in this region. The bioavailability of insulin as an injected versus other forms is high. While the number of diabetic patients in India has doubled in the last 10 years, and is expected to do so again in the next 10, 'unless you have a good delivery device you don't get to market,' which is why GeneMedix has a deal with Antares Pharma for Antares' current and future needle-free injection devices, which are likely to be used to support Gene-Medix's insulin products in the wealthier Asian markets.

western standards

Returning to production possibilities in Asia, Edwards said: 'We have to be aware of whether the market size is large enough and whether the prices will hold because the dilemma is if you are manufacturing a product to Western quality standards, you've not necessarily got Asian costs. We are trying to get a balance by having very high yielding cell lines meaning we only need small plants. Where we can put these plants in fiscally attractive places, we obviously will do so', hence China and, because of the tax incentives, Southern Ireland.

Edwards said the company also has a jv with Antibioticos in Spain to develop bacterial fermentation facilities, and has plans for an insulin plant. 'We are developing high quality cell lines in relatively small but flexible plants. The plant we have in Ireland uses new bag technology so there is very little hard pipe, which means it's very flexible.

'What we've basically got in Ireland is a series of rooms with holding tanks and the bioreactors. For the rest of it the media will come in sterilised bags, and we'll also use bags to collect, and quickfit hoses, which is great if you want to make it a multi-purpose plant for campaigns. It reduces the amount of cleaning validation and because the reaction is very efficient, we are not talking massive bioreactors, especially with proteins like EPO.'

legal framework

The lead EU product is EPO and Gene-Medix hopes to get agreement with the EMEA, and the CPMP, with whom it is currently in discussion, by early 2004 as to the sort of regulatory package it will have to submit. And here is the difficulty, as there is no 'rulebook' as yet for biogeneric products.

Edwards says: 'There has been a lot of discussion about this whole area. The EMEA has said it will review each product on a case-by-case basis. There is a legal framework, but the product isn't just a straight small generic molecule where you can do some bioequivalence studies and some chemical data: you will need to prove you have a comparable product, which will require a clinical study.

'I guess it will depend on the protein as to the size of the study. For instance a non-glycosolated microbial product such as GCSF would probably be the easiest one, whereas at the other end of the scale beta-interferon, for example, which is a glycosolated mammalian product, will require a very different study altogether.'

The other thing that is very much part of GeneMedix's strategy is that while there is a window for first generation generics, 'what we are seeing from the innovators is the second generation products, such as Aronesp and peg-interferon from Amgen and Schering-Plough, which is why we have done a deal with SkyePharma to develop a slow release second generation interferon-a. These second generation alternatives will still be 'me-toos', but when on the market we hope they will be at least as good, if not better than anything already there.

'While it's a bigger target for us, the downside is that it needs a full clinical trial, although we hope it will be a shorter study. The goal at the end is obviously a very, very big market, and EPO, 2nd generation interferon, GCSF, and beta-interferon are primarily Western drugs.'

So, the broad strategy is to get the cell lines, build the plants to get the products, or certain products in the first generation generics and behind that bring on the second generation products. It is also to find commercial partners, initially in Europe, but long term in the US and, where appropriate, launch them earlier into the Asian market, as mentioned with insulin.

All these products show that GeneMedix has a market-led strategy . 'We base our company around natural proteins and so we are a market-led company rather than therapy-led,' stressed Edwards.

'With huge value markets available we decided to be specialist protein manufacturers and we will manufacture the proteins that have the large markets. Having said that, there are therapy areas that may be of interest, such as oncology, so we do talk to the producers in those fields.'

second generation

One problem that GeneMedix needs to overcome is the competition from companies that already have the primary product and are converting those sales to second generation drugs. Probably the best example is Schering-Plough, which has converted something like 75% of its market in the first generation a-interferon-2b product, Intron A, to the second generation product.

'This is soon likely to rise to 90%, and where this happens there is unlikely to be any interest in a straight generics market,' says Edwards, although he adds enigmatically, 'We may take the view that in major markets like the CIS, it may make sense.'

Realistically he is concentrating on the second generation markets in Gene-Medix's collaboration with Skyepharma. 'We are about identifying where the markets are, but we are not about marketing the product. We will do that in partnership: there are companies out there who are very good at marketing, and there are certainly some very clever generic companies, who have not got biologics, so that would make the perfect match.'

big players

The biogenerics market still has relatively few players, and GeneMedix certainly has the widest range of products in the pipeline. And as it also has the plants: 'I would say we are certainly one of the market leaders, if not the market leader', Edwards says.

However, when asked whether GeneMedix sees iteslf in 5-10 years time as the GSK of the biogenerics market, he cautioned: 'We have to be realistic in what we can achieve; anyone who has a strategy to be the next GSK is fooling themselves. We have to be focused on doing what we do well.'

But he didn't rule out a joint venture or even a merger with one or more other companies, possibly a drug delivery company with a number of platforms or a generics company. 'On a deal-by-deal basis we'd be looking for quite a lot of money from them, so it might reach the point, from both companies' view, to decide to go in together.

'There are two ways of continuing: either we build bilaterally, or we become part of a bigger company that already has facilities in place.' However, Edwards stressed that GeneMedix does not have pretensions towards big company status.

'We will position ourselves to maximise our shareholder potential, and if we are accelerating a series of second generation products, that will require funding. If you are doing this before there are products on the market, then you require funding urgently, and the most likely way is through partnership.'

The question of funding is still largely unanswered in the biotech industry, however Edwards thinks there may be signs of an upturn. 'Six to nine months ago, I would have been incredibly gloomy about the funding situation in the biopharm industry, but today I am less so. It's clearly still a very, very tight market, but there is more optimism and a company like ours benefits from having an Asian shareholding because the market is not the same as in London or New York; it's not as buoyant as it has been, but there is still money available. As we go forward, we need to maximise the opportunities in terms of licensing products, and be creative in the way we use our technology.'

major player

'I believe GeneMedix will be a major player in the market in five to ten years' time. What form we will be in at that stage is debatable.

We may still be an independent company, but there will be mergers and acquisitions in the industry, and the growth rate required to sustain the product needs cannot be done organically, so if you are a small company you latch on to a bigger company, usually under the bigger company's organisation,' Edwards concludes.

'However, the concept of what we are trying to do - making generic versions of first generation and second generation protein based drugs - will be the cornerstone of whatever is done, and wherever it is done.

The key thing is that until you have the method of manufacture and the proteins in your hand, you cannot do anything. And we have both.'

Terminology

Neutropenia - There are various types of cells in the blood. Neutrophils are those white blood cells that are first line of defence to fight infections. Neutropenia is reduction of the number of these cells. It is the most important complication of chemotherapy, and is almost always due to impairment of bone marrow to produce cells and normally occurs a few days to a few weeks after chemotherapy. It is most severe in patients who receive aggressive treatments. Cytomegalovirus (CMV) is related to the herpes virus and is present in almost everyone. Normally, most people's immune systems are able to fight the virus, preventing it from causing problems in their bodies. However, when the immune system is suppressed because of disease (HIV), organ or bone marrow transplant, or chemotherapy, the CMV virus can cause damage and disease to the eye and the rest of the body. CMV is the most common type of virus that infects those who are HIV positive. It affects the eye in about 30% of the cases by causing damage to the retina. This is called CMV retinitis.