The loss of exclusivity for some iconic pharmaceutical brands is bringing in a new wave of innovation. Earlier this month, Ranbaxy Laboratories announced that its US subsidiary has received an approval from the American drug regulator, US Food and Drug Administration (FDA) to manufacture and market the generic formulation of Eisai?s blockbuster drug Aricept with 180 day market exclusivity. Total annual market sales for Aricept tablets (5 mg and 10 mg) are estimated at $2.6 billion and these medicines are indicated for the treatment of dementia of the Alzheimer?s type, and in patients with mild to moderate and severe Alzheimer?s disease.

According to the Alzheimer?s Association, 5.3 million Americans of all ages have Alzheimer?s disease. ?Since the incidence of dementia has increased, while the costs associated with treating dementia continue to rise, the launch of a generic formulation of donepezil tablets will provide patients with a cost effective alternative. The end result will be a significant reduction in healthcare costs for those individuals suffering from Alzheimer?s disease,? says Arun Sawhney, managing director, Ranbaxy Laboratories.

Sun Pharmaceutical Industries too announced that the American drug regulator has granted its subsidiary in the US approval to market a generic version of Aricept, donepezil hydrochloride tablets. The company also got the go ahead to market a generic version of Eli Lilly?s Cymbalta capsules, which have annual sales of approximately $3 billion in the US market. These medicines are indicated in the treatment of major depressive disorder, generalised anxiety disorder and diabetic peripheral neuropathic pain.

Ranbaxy Laboratories and Sun Pharmaceuticals are not alone in tasting success in the US market?Dr Reddys, Glenmark, Natco, Aurobindo, among others, too have made impressive strides in the US generics market in recent months. It is obvious that that after a brief lull caused by the slowdown, the $35 billion US generics market is back in the spotlight for Indian pharmaceutical companies. And with the impending loss of exclusivity for some iconic brands from Pfizer, Novartis, Astra Zeneca, GlaxoSmithKline, Sanofi-Aventis, Merck and Roche, the US is throwing up a major market opportunity for Indian drug companies.

Moreover with the alarming rise in the US healthcare expenditure, various reforms and efforts are being undertaken to promote generic usage and create a pro-generics environment that would benefit the consumers at large and facilitate the availability of high-quality drugs at a cost effective price.

Glenmark Pharmaceuticals CEO and managing director Glenn Saldanha says, ?The US holds a lot of potential for Indian pharmaceutical companies particularly because of the impact generics medicines have had in lowering healthcare cost for the country. Moreover with a huge number of products going off-patent, Indian pharmaceutical companies have another significant opportunity. However one must remember that the market size shrinks significantly after a molecule goes off patent and competition for blockbusters is very intense. So, one would have to strategically tap products going off-patent.?

Glenmark?s US operations contribute around 30% to the company?s overall revenue. This has increased from virtually no sales around five years ago. ?Indian companies are well placed to capture this huge potential that off-patent drugs will provide. However one would have to be strategic in their approach because a huge number of companies will vie for market share of products going off patent,? Saldanha cautions.

Muralidharan Nair, healthcare leader, Ernst & Young?s life sciences practice says, Indian pharmaceutical companies have a strong foundation in generics. Their growing significance in the global value chain is evident in the strategic alliances between Indian companies and MNCs, which have chosen India to pursue their generic ambitions. But Indian drug companies aren?t the only ones in fray. There is bound to be stiff competition from global generic players such as Teva (Israel), Apotex (Canada), Cobalt Pharma (Canada), Sandoz (Germany) and Actavis (Iceland).?

As competition in the generic space intensifies, more and more Indian companies are looking beyond the traditional plain vanilla generics market at niche segments such as dermatology, ophthalmology, oncology, etc. As per IMS Health, in 2011, products with sales of more than $30 billion are expected to face the prospect of generic competition in the major developed markets. In the US alone, Lipitor, Plavix, Zyprexa and Levaquin?which together accounted for more than 93 million prescriptions dispensed in the past 12 months and generated over $17 billion in total sales? likely will lose market exclusivity. Between 2010 and 2015, drugs worth a whopping $157 billion are set to go off patent. Indian pharmaceutical companies are expected to corner a large chunk of this pie, healthcare analysts reckon. Sun Pharmaceuticals vice-president (investor relations) Uday Baldota says, ?For 2009-10, the US generics contributed 30% to Sun Pharmaceuticals total revenues. Now counting together with Taro, the US generic revenues contribute 45% of total revenues. We have a total of 363 products filed in the US , of which 146 are awaiting approval from the FDA. Ours is the largest pipeline among all Indian companies.?

Among others, Lupin has become the first Asian company to make it into the top-five in the US generics market in terms of number of prescriptions. Lupin Pharmaceuticals, a wholly owned subsidiary of Lupin, is now the fifth-largest company in the US generics market, according to IMS Health. The company?s president (finance and planning) Ramesh Swaminathan comments: ?We now have a product basket of 28 generic products in the US out of which 14 are market leaders, ranked No.1 by market share. Lupin also holds the Top 3 positions in terms of market share for 26 of these 28 generic products. We continue to post the highest per product revenues amongst our Indian peers. Lupin also emerged as the largest Indian player in the US by revenue during FY 2010.? A lot of opportunities exist for the Indian drug companies as opposed to the challenges in the US market considering the impending patent cliff that is expected in the next few years, he adds.?The US today amounts to nearly 50% of the total pharma sales by Indian companies. We foresee a tremendous opportunity for us within the $100 billion worth of patent expiry opportunities that would come up in the next couple of years. Moreover, the Obama administration?s healthcare bill provides for affordable healthcare to millions of hitherto uninsured Americans, which would mean increased use of generic drugs due to their cost viability factor. This translates into more opportunities for Indian companies, who are already catering to the US market,? Swaminathan informs.

Similarly, Dr Reddy?s Laboratories expects its US revenue to more than double to about $1 billion by fiscal 2013. The US market happens to be the core area of growth and about a third of the company?s revenue from generics drugs comes from US. In its Q2FY11, Dr Reddy?s has reported that its revenues from North America at Rs 4.4 billion. It reported a sequential growth of 13% which was largely led by new products of Tacrolimus and Amlodipine benazepril.

Over the years, India has emerged as one of the top generic drug suppliers globally and it is expected that in the years to come, India ?s foothold over the US generics market is poised to get stronger.