Friday, November 30, 2012

Cip-Isotretinoin ( Absorica ) US launch is an under appreciated opportunity for Ranbaxy

Ranbaxy recently announced that they have launched Cip-Isotretinoin  in the US market.  The current size of the  Isotretinoin generic market  is about $500 million in sales in the U.S.  This infact is a relaunch by Ranbaxy in the US, as it was earlier selling a branded generic version of Isotretinoin under the brand name Sotret, which it had to later recall due to manufacturing issues.  Before Sotret was recalled it attained peak sales of
$120 m.  

Potential Market Size - Cip-Isotretinoin

The isotretinoin 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.  We forecast peak sales of $200 million for Absoric (Cip-Isotretinoin)

About Isotretinoin

Isotretinoin is a highly effective treatment for severe cystic acne and prior to patent expiry in 2002, it was marketed  in the U.S by Roche under the brand name 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.   

Ranbaxy may have an edge over competitors - Teva and Mylan

Cip-Isotretinoin is a novel formulation of isotretinoin and will be marketed under the brand Absorica.  A major issue for existing  isotretinoin products is patient compliance, as the drug  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. CIP-Isotretinoin is based on the oral Lidose drug delivery system whihc facilitates a precise, consistent, and uniform dosage delivery with an absorption characteristic consistent with or without food. Compared to traditional generic Isotretinoin. 
Cip-Isotretinoin 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.

Isotretinoin generic market will continue to be low competition

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  Peak sales 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.

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.

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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