Tuesday, May 29, 2012

Ranbaxy gets USFDA nod for Cip-Isotretinion - Peak Sales of $200million

Ranbaxy has received USFDA nod for selling CIP-ISOTRETINION  in the US market.  The current size of the  Isotretinoin generic market  is around $500 million in sales in the U.S.
Ranbaxy was earlier selling a branded generic version of Isotretinion under the brand name Sotret, but had to later recall the same due to manufacturing issues. Sotret attained peak sales of $120 m in 2008.  The isotretinion market is currently dominated by two un-promoted branded products, Mylan's Amnesteem and Teva s Claravis. Amnesteem posted sales of $136 million in 2010, while Claravis posted sales of $330 million in 2010

Isotretinion is a branded generic market, as sale of drugs have to be made under a risk management program ( Isotretinion has severe risk for pregnant ladies). Cip Isotretinion has a compliance advantage when compared to existing versions of isotretinion on the market. With a compliance benefit and field force back up, we expect the Cip-Isotretinion to reach peak sales of $200million.   

 About Isotretinion
Isotretinoin is a highly effective treatment for severe cystic acne and prior to patent expiry, it was marketed  in the U.S in 2002, it by Roche as Accutane. Clinical studies demonstrated powerful efficacy, unmatched by any previous treatment. Roughly 85% of patients who take Accutane achieve full remission after a typical course of treatment (about five months). Accutane reached peak U.S. sales of over $750 million in 2000, while on a worldwide basis, Accutane achieved peak sales over $1.2 billion.   

Cip-Isotretinion is a novel formulation of isotretinion - a acne treatment.  Isotretinion  is generic name of Accutane (owned by Roche)  whose patent expired in 2002. Prior to patent expiry Accutane the reached global peak sales of $1.2 b  ($750m in the US).  As Isotretinion is associated with severe side effects (dangerous for pregnant ladies), its use is managed under a risk management program launched by the USFDA called I-PLEDGE in order to avoid exposure in pregnant ladies. Even generic versions have to adhere to these program guidelines and hence traditional generics are not available. Three geneic brands - Sotret (Ranbaxy), Claravis (Teva), and Amnesteem (Mylan) are available in the U.S.   The market is currently dominated by two un-promoted branded products, Mylan s Amnesteem and Teva s Claravis. Amnesteem posted sales of $136 million in 2010 on 386K scripts. Claravis posted sales of $330 million in 2010 on 670K scripts.
Ranbaxy was already selling a generic version of Isotretinion in the US market under the brand name Sotret and attained  peak sales of $120m in 2008, but  had to later withdraw the drug to manufacturing warnings.

 Cip-Isotretinion has an edge over existing players
Ci-Istotretinion is a $200m opportunity for Ranbaxy / Cipher. Cip-Isotretinion is a novel formulation and will be marketed under the brand Absorica. Cipher s CIP-Isotretinion is based on the same oral Lidose drug delivery system used with CIP-Fenofibrate.  Lidose facilitates a precise, consistent, and uniform dosage delivery with an absorption characteristic consistent with or without food versus traditional generic Isotretinoin. A major issue for existing  isotretinion products is patient compliance, as the active ingredient should be taken with a high-fat meal to ensure consistent absorption. Current generic Isotretinoin products have an estimated 70% variability in absorption depending on dietary intake causing inconsistency in dose a major issue when dealing with teenagers.
Cipher s product offers more consistent absorption day-in and day-out over the course of a typical 3- to 5-month treatment period. We think this will be a significant marketing advantage for Cipher / Ranbaxy upon launch. There are currently no promoted branded Isotretinoin products in the U.S. The three branded products listed above rely on previous patient and physician experience with the product to drive sales.

Peculiarity of  Isotretinion generic market
Isotretinoin has been known to cause serious side-effects, most notably birth defects when used by pregnant women. It is among the most dangerous drugs that can be used by pregnant women. Despite these side effects, the drug remains in high demand due to its powerful efficacy in treating nodular acne. 
 In order to prevent exposure of the drug to pregnant women, The U.S. FDA in March 2006 with a program called iPLEDGE, a mandatory distribution program intended to prevent the use of the drug in women who are currently pregnant or may become pregnant during use.
Generic manufacturers are also expected to  comply with the iPLEDGE program and hence because of this requirement there are no traditional generics, but. Instead, companies have launched version of their own branded Isotretinoin to help cover the cost of the added surveillance and iPLEDGE program. Sotret (Ranbaxy), Claravis (Teva), and Amnesteem (Mylan) are currently available in the U.S. These products are AB rated for Accutane.
  In June 2009, Roche discontinued sales in the U.S. due to low market share versus generic equivalents. 

Potential  Market Opportunity for Cip-Isotretinion
Despite strict FDA monitoring around prescriptions of Isotretinoin, the market remains quite robust. Generic (multiple providers) Isotretinoin does around $500 million in sales in the U.S., and that is with no promotion.
We estimate that in terms of a branded opportunity, the Isotretinoin market is nearly $1 billion in size.   We believe that Cipher/Ranbaxy CIP-Isotretinoin product, being the only promoted branded Isotretinoin on the market, could achieve peak sales in the $200 million.  As discussed Ranbaxy  has a isotretinion product already on the market and marketed under the brand name - Sotret.  In 2009, Sotret  annual sales plummeted 66% to reach  $41 million from $120m in 2008 in the U.S due to manufacturing issues with Ranbaxy plant.
The market is currently dominated by two un-promoted branded products, Mylan s Amnesteem and Teva s Claravis. Amnesteem posted sales of $136 million in 2010 on 386K scripts. Claravis posted sales of $330 million in 2010 on 670K scripts.

Economics of CIP-Isotretinion for Ranbaxy
Cip-Isotretinion is patent protected till 2022.  In August 2008, the company entered into a distribution and supply agreement with Ranbaxy Pharmaceuticals Inc., under which Cipher granted Ranbaxy the exclusive right to market, sell and distribute CIP-Isotretinoin in the U.S. We think this is an interesting partnership for Cipher considering Ranbaxy has experience in the Isotretinoin market already with Sotret. 

The agreement provides for additional pre- and post-commercialization milestone payments of up to $19 million (USD).  Ranbaxy is committed to a dedicated a 60-person sales force and to promote CIP-Isotretinoin  for a minimum of three years.  Cipher is also entitled to receive a royalty in the mid-teens on net sales.

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