Inside, scientists at U.S. generics maker Barr Pharmaceuticals Inc. are working on copycat versions of some of biotech's biggest hits, drugs that cost the American health-care system billions of dollars a year. Their goal is to sell them someday in the U.S., reads a cover-page article in The Wall Street Journal on Wednesday.
The article, headlined "For Booming Biotech Firms, A New Threat: Generics", says that the biotech industry is at a critical turning point.
Companies such as Amgen Inc. and Genentech Inc. have recorded spectacular growth over the past decade. One reason for their lofty stock prices: Unlike the pills from traditional drug makers, biotech drugs almost never face competition from generics even after their patents expire, say the authors of the article.
That's likely to change. Europe has already cleared the way for copycat biotech drugs, and the U.S. Congress, now in the control of Democrats, is gearing up to do the same.
Global spending on biotech drugs totaled more than $60 billion last year, according to an estimate from IMS Health, double the 2002 figure. In lobbying for the bill, the pharmacy benefit manager Express Scripts Inc. has told Congress that generic biotech drugs could save Americans $71 billion over a decade, reads the article.
Traditional drug companies mostly make "small-molecule" drugs, typically in the form of pills. Most can be cooked up by mixing chemicals in a series of well-defined steps. Biotech drugs, also called biologics, are proteins manufactured in living cells. Scientists typically splice genetic material into bacterial, yeast or mammalian cells, which then produce the proteins.
In 2004, the pan-European drug regulator, the European Medicines Agency, released a paper describing its stance on approving generic biologics. The agency followed up with specific guidance on four top drugs including erythropoietin, or EPO, the product sold as Epogen by Amgen. Two EPO copies are already on the EU market, and in 2008 the first such European generic is expected to enter the US market.
Development of generic biotech drugs requires great expertise which Barr has found in the Croatian pharmaceutical company Pliva, reads the article.
Founded in 1921, the company is known for discovering a top-selling antibiotic licensed by Pfizer and sold in the U.S. as Zithromax and as a major supplier of raw materials for generic drugs.
In October 2005 Barr bought Pliva at a price of USD 2.5 billion.
Pliva has also been working on a version of EPO, but it is behind European rivals. The Barr chief executive, Bruce Downey, says Barr is studying how to proceed with generic EPO and may focus on the U.S. market.
To oversee Barr's biotech initiative, Mr. Downey dispatched Christine Mundkur, a senior vice president, from the company's Woodcliff Lake, N.J., headquarters to Zagreb. The futuristic glass building where she works is shared with a giant of the traditional pharmaceutical business, GlaxoSmithKline PLC, which bought Pliva's new-drug development business last year. The Barr operation in Zagreb has about 150 employees.
The Wall Street Journal also describes the process of drug manufacturing in the Zagreb laboratories.
Pliva has a factory capable of making test batches of biotech drugs, but it is far too small to serve the European or U.S. markets for major products. Barr recently broke ground on a USD 25 million biotech factory about half an hour from Zagreb, due to be finished in 2009.
Mr. Downey says that if Barr proceeds to develop EPO for the U.S. market, even that facility won't be enough. "We have every confidence that we can do these products," he told The Wall Street Journal.