Natco Pharma said it plans to utilise the cash flows generated by the launch of generic versions of Teva’s multiple sclerosis Copaxone 20 mg/ml and 40 mg/ml by its partner Mylan in US towards strengthening balance sheet and investing on business expansion.
“It makes our balance sheet much stronger than we are at the moment and gives us ability to spend more aggressively on interesting things,” said Rajeev Nannapaneni, the Vice-Chairman and Chief Executive Officer in an exclusive interview to Moneycontrol over phone.
Nannapaneni declined to give specific details on the company’s future plans, but said he would be focusing on expanding company’s toehold in Indian formulation business among other things.
Shares of Natco rose as much as 30 percent in the last three trading sessions from the day of the USFDA approval of two Copaxone copies.
Copaxone was the second major generic product for Natco in the US in less than a year.
In December last year, the company launched generic Tamiflu capsules through its partner Alvogen, used for treatment of influenza, in the US market after an out-of-court settlement with Gilead and Roche. The exclusivity of generic Tamiflu fetched Natco Rs 400 crore profit in FY17.
Copaxone is by far the biggest ever generic approval in 2017 for Indian generic pharma industry in US.
The drug is the most prescribed multiple sclerosis (MS) treatment for relapsing forms of MS in US with brand sales for the 20 mg/ml dose of approximately USD 700 million and for the 40 mg/ml dose of approximately USD 3.64 billion for the 12 months ending July 31, 2017, according to QuintilesIMS.
Natco's partner Mylan also indicated that the 40 mg/mL generic version of Copaxone may be eligible for 180 days marketing exclusivity as it was one of the first applicants to submit a substantially complete Abbreviated New Drug Application (ANDA).
The USFDA hasn’t yet made a formal determination on exclusivity. However, with no other generic entrant Mylan as on date enjoys exclusivity for Copaxone 40 mg.
Analyst estimate Natco to reap potential profits to the tune of Rs 700-1,000 crore in the second half of FY18 from two Copaxone copies.
Nannapaneni was tight-lipped about the share of profit he’s going to get from Mylan, citing confidentiality.
Analysts tracking the sector say Natco will receive 30 percent profit share from Mylan for the 20 mg product and much similar or even little higher profit share for the 40 mg version.
“It will be a good share, I think it will be a good amount (referring to profits),” said Nannapaneni.
To be sure, the patent litigation is not yet settled for the 40 mg version and Mylan launched the drug at risk. In January 2017, a District Court in the US had found all the asserted claims of four out of five patents related to Teva’s Copaxone to be invalid for obviousness. However, the case related to the fifth patent is still ongoing in the District Court.
Nannapaneni expects the final ruling in 2018.
There are five ANDAs filed by Sandoz-Momenta, Dr Reddy’s, Amneal, Synthon and Biocon-Apotex were pending before US FDA, but none were close for approval.
Sandoz-Momenta already have generic approval for Copaxone 20mg strength, lost out to Mylan-Natco combination in the race for 40 mg version due to a pending warning letter at their partner formulation site.
The 40-year old, 6 feet 6 inches tall second generation entrepreneur Nannapaneni considers the journey in terms of Copaxone as a long and difficult one.
“Copaxone didn’t happen for many years, people were unhappy,” Nannapaneni said.
Mylan and Natco saw several ups and downs in the lengthy patent battle, on regulatory front there were several missed target action dates as the agency found some missing piece.
“What is difficult, the outcome will always be good in the end,” said Nannapaneni on a philosophical note.
Natco, despite being a late entrant in the US market, has 43 niche ANDA filings including 20 Para IVs.
To remain relevant in highly competitive generics market, Natco channelized all its development capabilities towards complex generics years ago.
Natco follows a low-risk partnership model, wherein the company enters profit sharing pacts with larger established players in the generic space. The partners typically take care of the litigation and filing costs in addition to marketing, while Natco develops and supplies the drug.