The consumer goods company Reckitt Benckiser spoke about its plans to demerge its specialised pharmaceuticals segment – led by its heroin addiction drug Suboxone (buprenorphine/naloxone) – whilst reporting half year 2014 results yesterday.
For the six months to June 30, Reckitt Benckiser Pharmaceuticals (RBP) business clocked in sales of £344m ($585m), down 8% on the same period 2013, whilst operating profit dropped 20% and operating margin declined 380bps to 53%.
CEO Rakesh Kapoor said it had been clear the pharma business was not core to RB since January 2012 and thus the company will list RBP as a separate entity, though Kapoor told investors the firm had not ruled out selling the division.
However, Kapoor said RBP "has actually created a global leadership position in the world of addiction treatment which is a fast-growing underserved market” and though generic competition has eroded sales of Suboxone in tablet form - two generics were approved last year – the sublingual film version “has strong defences” despite being under competitive pressure.
Resilience
RBP partnered drug delivery firm Monosol Rx to market the anti-abuse film, which is a similar size to a postage shape and dissolves through the lining of the mouth. It received US Food and Drug Administration (FDA) clearance in 2010.
“We saw by March of last year that the film share had grown to 70% and the tablet business had come down to 15%,” said Shawn Thaxter, CEO of RBP yesterday (transcript here). “We then withdrew the tablet at the same time that we experienced the launch of two generic competitors to the Suboxone tablet,” he continued, adding the Suboxone film showed a surprising levele of resilience.
Furthermore, last September the branded competitor Zubsolv made by Orexo entered the market but Thaxter said RBP “saw a relatively small impact in the first few months” though the company awaits an impact from a third generic tablet competitor, recently announced.
“So overall two years ago, we had a film share of 55%, tablet share of 30% to no generic. And two years since then, when all the uncertainty over the future of the business in the US was in question, we have actually grown our film share from 55% to 61%,” he said. “Not only have we grown it, but we’ve grown it in the context and presence of some pretty aggressive competition.”
IP and manufacturing
Thaxter presented data showing both patients and physicians prefer the drug delivery of the film, but also explained a strengthening level of protection around the film would be important in growing Suboxene going forward.
“We had protection to 2023, we have subsequently had two orange growth formulation patents approved which now extends the IP to 2030,” he said. “We’ve got good process patents to support the formulation patent. And we are relentless in our pursuit of creating new IP and we have got 15 pending process on formulation patents at the moment.”
RB is also currently involved in litigation with generic manufacturers to ensure competitors’ manufacturing process delivers the right product performance.
“First of all, the elasticity of the film needs to withstand the rigors of transport and yet, dissolve very quickly under the patient’s pump,” he said.
Secondly, “you don’t make one film at a time in this slide, as you can imagine, you make a large roll of film and you cut out into small pieces,” he continued.
“It’s absolutely critical that you got the uniform distribution of the active ingredients across the film so that each patients who take a film from whichever part of the world it came from is guaranteed of a consistent performance.”