Advair is GSK's largest selling drug. It sells around $4.6b annually worldwide. The drug is currently facing generic competition in Europe, however the impact not been very painful until now as
1) Copy-cat versions launched by generic companies are not substitutable
2) EU approval is a decentralized process and companies need to apply for separate approval across countries in Europe
3) It takes time to build and train a sales force to market non-substitutable generic products.
But over the next few years the pace of erosion in Advair sales will gather pace as
- Generic companies roll out Advair copies across Europe.
- Increased critical mass around marketing efforts
- Entry of new competitors for Advair in Europe will lead to price erosion and market share loss. Teva should reach the market by 2017/2018. Cipla and Mylan are close to market wide roll out of Advair HFA generics in Europe.
- Pricing pressure because of growing competition from therapeutic and generic substitutes - Therapeutic substitutes include Chiesi - FosterNexthaler, Mundipharma - Flutiform, Merck's Dulera and AstraZeneca's Symbicort. Generic competitors include Elpen, Mylan, Sandoz and Cipla. Teva should enter the market around 2017/18.
- Entry of substitutable generics in the US around 2H-2017
- Differentiated generics of Advair too should enter the market around 2018.
- Generic competition in Japan and China is expected in 2018.
I expect Advair sales to reduce from $4.6b annually to $1.2b in 2018 and $500m in 2019.
Forecasting Advair sales in the US
Advair sells $2.3b annually in the US. Generic players should launch fully substitutable copies of Advair diskus in the US around 2017. The patent on the active ingredient has already expired, and it is only the device patent that protects Advair currently.
Advair is sold in the US as Advair diskus (Dry powder inhaler) and Advair HFA (metered dose inhaler). Advair diskus comprises approximately 90 percent of Advair US sales and will lose patent protection in 2016. Patent on Advair HFA expires in 2023.
From 2017 onwards, we will see competition for Advair diskus in the US from two fronts
- Substitutable and interchangeable generic copies
- Differentiated generics
Generic companies are well prepared to launch substitutable versions
Generic companies have officially announced their intention to launch fully substitutable generic in the US. These include Sandoz, Mylan, Actavis. Cipla and Teva. But not all of these players are prepared to make a timely launch.
Among the first companies that should reach the market with a substitutable version could be Sandoz and Mylan. These companies may be able to grab majority market share from Advair in the US (60%-80%)
Sandoz and Mylan should launch Advair Generics in the US by 2017
It is now a long time since Sandoz has been working to launch a substitutable generic for Advair in the US
Way back in 2010, Sandoz acquired a respiratory company - Oriel therapeutics with an intention to launch a fully substitutable generic copy of respiratory drugs. At the time of acquisition, Oriel therapeutics had an Advair generic substitute in Phase 3 development phase.
I foresee a good chance that Sandoz will meet the USFDA regulatory requirement successfully:
1) Dr. Fuller, the CEO of Oriel therapeutics was previously the head of GSK's global regulatory team that brought to market GSK's most successful respiratory products - Advair, Serevent, Flonase and Flovent.
2) Oriel therapeutics had developed the Free path drug delivery technology that had the potential to address the key regulatory hurdles facing the development of a substitutable generic of Advair.
3) Sandoz is the sole generic company with regulatory experience of launching a bioequivalent (not substitutable) copy of Advair diskus in the Europe. Mylan, Teva and Cipla have launched a metered dose inhaler (Advair HFA -MDI device), but not a copy of Advair diskus which is based on a dry powder inhaler (DPI) device).
4) Sandoz has completed the clinical study as per USFDA requirement in May 2015; hence it is fair to expect that ANDA filing would have been done in 2H-2015. Assuming standard review timeline (15 months) an approval for generic Advair should come in by 1H 2017.
5) Sandoz has the expertise of its parent Novartis for development of respiratory drugs and hence it is unlikely for Sandoz going wrong in its quest for Advair generic.
Mylan as well should reach the market around the same time as Sandoz
Mylan has recently announced that they have made a USFDA filing for their substitutable generic version of Advair diskus. Like Sandoz, Mylan too has concluded the clinical trial as per USFDA proposed guidelines for generics to prove bioequivalence to Advair diskus. Mylan had acquired the global development and commercialization rights to Pfizer's dry powder respiratory drug delivery system way back in 2011. The intent was to develop a substitutable generic of Advair and also develop other products based on the same technology. Mylan paid just $17.5m upfront for this technology, but the deal is more back loaded as Pfizer stands to earn milestone payments and also a profit share from the sales.
Other Players should reach the market 2018 and beyond
- Actavis is looking at launching generic copy of Advair HFA and not Advair DPI - Actavis is focusing on launching a generic copy of Advair HFA and hence it is not expected to compete with Sandoz or Mylan for a market share. Besides, Actavis has initiated bioequivalence trial only in 2016, which will complete by year-end 2017. Hence assuming a filing in late 2017, the drug should reach the market either by YE 2019 or early 2018.
- Teva will file generic Advair in 2017 - Teva has indicated it will file an AB rated Advair in the US by 2017. An approval can be expected in 2018.
- Cipla has not made any announcement regarding a US launch for Advair generics. It seems they are still in early stages. The existing DPI device (multihaler) that they are currently marketing is not comparable to the Advair diskus device.
Timeline for Differentiated Generics
Apart from companies that are looking to launch substitutable generics, there are companies that are looking to launch differentiated copies of Advair in the US and EU both.
Teva, Vectura,Adamis pharmaceutical and SPARC are in fray to launch differentiated copies of Advair Generic.
Teva - Apart from a substitutable generic, Teva's is also prepared to launch a differentiated generic copy of Advair. The drug has completed Phase 3 clinical trials and an NDA filing should be around the corner. Teva generic copy is differentiated in the sense that it provides the same efficacy as Advair, while it uses only half the dose of salmeterol used in Advair diskus. Teva has indicated a 2016 filing, which implies, the product should reach the market in late 2017 or early 2018. A lower dose that offers the same efficacy has an important value proposition as it is likely to reduce potential side effects. Teva is a well established player in the US respiratory space and hence marketing won't be a hurdle. I foresee a 15% market share for Teva.
Vectura - Vectura is developing a copy of Advair in collaboration with Boehringer ingelheim subsidiary Roxane laboratories. Phase 3 trials have been completed and a filing is expected anytime now. Vectura's device may not be identical to Advair diskus and hence it would need to be marketed. Since Boehringer Ingelheim is already an established player in the respiratory space, this won't be a hurdle for Vectura to get a fair share of the market. I foresee a 15% market share for Vectura's copy of Advair.
Adamis Like Teva, Adamis too is developing a low dose version of Advair. It has successfully completed PK studies and a Phase 3 study should be initiated soon. A filing can be expected in 2H-2017 and the product should reach the market by 2018.
Likewise SPARC too is preparing to launch a differentiated copy of Advair. SPARC's generic version is expected to provide the same efficacy as Advair by deploying only half the dose of both salmeterol and fluticasone. SPARC will do a EU fling in 1H 2018, while US filing timelines remain uncertain.
Forecasting Advair Sales in Europe
Over the next two years Advair pace of decline will aggravate in Europe as competition will intensify leading to market share loss and also affect pricing power. Among the prominent names that market a generic version of Advair in Europe include Cipla, Mylan, Sandoz and Elpen. It is just 1 to 2 years since Sandoz, Mylan and Cipla have entered European market. For most part of 2015, these companies were occupied in the process of gaining approval across European countries. In 2016 and onwards, we will see their efforts gaining fruits as they will begin to substitute Advair sales in a more impactful manner. Besides we will also see entry of additional players - Teva and UK based Circassia..
Teva was expected to file for a generic version of Advair HFA in 2015 and Advair diskus in 2016. So by 2017, Teva should also reach the European market.
Apart from Teva, UK based Circassia is also prepared to do a MAA filing for Advair substitute in Europe in 2016.
Overall, I expect a 30 percent hit to Advair sales in Europe by 2018 on account of generic competition. An additional 20 percent hit by newer therapeutic substitutes which are fast gaining market share. The major therapeutic substitutes includes Chiesi's Foster Nexthaler and Skyepharma/Mundipharma's flutiform.
Potential Impact on Advair Global sales
To sumarize we will see four generics (Mylan, Sandoz, Teva and Vectura) hitting the US market by 2H-2017 or early 2018. With four generic players on the market, Advair sales should slip anywhere between 60-80 percent from current levels by 2018. Additional generic players should hit the market by 2H-2018 / Early 2019 and lead to further sales erosion
In Europe, existing generic players will gain foothold and new players too will enter. I expect 30 percent erosion in Advair sales because of generic competition in EU by 2018 and another 20 percent because of competition from therapeutic substitutes.
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