Manufacturers of biopharmaceuticals now face the loss of commercialisation rights presented by their drug patents. The earliest biopharmaceuticals such as recombinant human insulin have lost patent protection, and many other drugs such as the blockbuster anaemia treatments incorporating recombinant erythropoietin will follow suit between 2005 and 2007.
With multi million dollar revenues at stake, pharmaceutical companies are fighting back by reformulating existing products to improve efficacy, implementing more efficient delivery systems, and engaging in high-level intellectual property (IP) battles.
"To overcome challenges laid down by these companies - the originators of biopharmaceuticals - participants in the biogenerics market may need to establish their own manufacturing systems to manufacture biogeneric products without infringing existing patents on active ingredients or manufacturing processes," commented Frost & Sullivan's industry analyst, Himanshu Parmar.
Until now, the pharmaceutical industry has seen generics as more of a threat rather than an opportunity for development. The branded drugs industry has increasingly been striking deals with generic firms to allow them to manufacture the drugs earlier which has made the market more competitive and hurt the generic drug firms' sales over the past year.
In February this year, Novartis acquired two companies as it aimed to expand its generics drug portfolio and increase its presence in the generics sector.
The Swiss drugs firm has taken an unprecedented step into the usually hostile territory of generic pharmaceuticals agreeing to pay €5.65 billion in cash to buy German firm Hexal AG and just over two thirds of Eon Labs Inc of the US.
The merger of these firms made Novartis the world's largest manufacturer of generics, overtaking Teva Pharmaceuticals of Israel, which had been the world's biggest generic-drug producer, with $4.8 billion in annual sales.
The report, entitled "Strategic Analysis of the World Biogenerics," said that given the manufacturing costs for biogenerics were much higher than those of conventional, small molecule pharmaceuticals, developing proprietary expression systems could help minimise costs. Manufacturers would also need to ensure that their products were bioequivalent and produced at full cGMP standards.
Novartis' deal is likely to accelerate the trend that may see an increasing number of big pharmaceutical companies creating a larger role for them in the generics sector.
Novartis' French rival Sanofi-Aventis, the world's third largest seller of branded drugs has equally followed suit and established its own generics division, Winthrop Medicines. Winthrop is planning to launch at least 30 generic medicines, including copycat versions of Sanofi-Aventis brands about to lose their patents.
Other pharmaceutical companies have been more wary of the impending generic threat and have implemented a more defensive-minded strategy. In October 2004, Pfizer began selling a generic version of its own $2.2 billion epilepsy pill, Neurontin, to limit the damage of generic rivals
GlaxoSmithKline, on the other hand, has struck partnerships with generics companies to sell copies of a number of its products losing patent.
"As regulatory guidelines are introduced over the next two to three years and some of the biggest biopharmaceutical blockbusters lose patent protection, the biogenerics market is expected to see exceptional growth and rapidly reach billion-dollar levels," said Parmar.
"The markets in Europe and the US have the potential to generate sales of $16.39 billion (€13.06 billion) by 2011," he added.
Regulatory issues have been the biggest challenge to the development of the biogenerics market in North America and Western Europe.
This challenge is now showing signs of easing, particularly in Western Europe where the European Agency for the Evaluation of Medicinal Products (EMEA) is now accepting Market Authorisation Applications (MAA's) for biogeneric products, which show proven biosimilarity in place of clinical trials.
The report added that a reduction in clinical requirements has the potential to speed the progress of biogeneric products to market by bypassing lengthy clinical trials.
However, regulatory agencies are focusing their attention on developing tools and procedures to assess biosimilarity without compromising drug safety.
However, reductions in clinical requirements for biogeneric products have the potential to significantly reduce the cost of finished products compared to those of the original patented products.
Costs incurred through drug discovery and development may be redirected to product reverse engineering and process engineering.