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Vishal Manchanda
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Over 10 years of experience as a sell side analyst covering Big Pharma names. Specialise in contrarian calls with a very good success rate. Now working as buy side analyst with a proprietary fund.
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  • Respiratory Generic Opportunity In Europe

    The respiratory market is considered to be a lucrative opportunity and biggies in the generic space are targeting this space. Due to high entry barriers, a successful entry in this market is expected to deliver megabucks. Sandoz (NYSE:NVS), Teva (NYSE:TEVA), Cipla and Sun Pharma in India, Elpen and several regional players in Europe (Orion) are targeting a pie of this potential $6b branded market . While the route for generics in the US is longer, but the EU has guidelines on respiratory generics and we should see a couple of generic players entering the European market over the next two years

    But the important question to ponder for generic players is whether they would be able to justify the high cost of development and marketing considering four branded players marketing twice daily LABA/ICS formulation (Advair, Symbicort, Dulera, and Flutiform) and two once daily LABA/ICS combination (Relovair and QMF149), expected to enter soon.

    The EU Respiratory Geneirc Opportunity

    AstraZeneca's (NYSE:AZN) Symbicort ($2.3b in EU) and GlaxoSmithKline (NYSE:GSK) Advair ($4 billion in EU) are two major drugs that are being targeted by generic players. Advair is sold in two formats in EU - Advair Diskus ( Dry Powdered Inhaler) and Advair HFA ( Metered dose inhaler), with Advair Diskus comprising majority of the sales. Advair HFA is protected by patent expiring until 2012-2017 in EU, while the patent protecting Advair Diskus has expired. Another 25-30% of Advair sales is still protected by a combination patent in some of the EU territories and generics are unlikely to enter for the next two years. Hence the entire $4b opportunity is not immediately available, but would gradually open up.

    Which players are targeting the Respiratory Generic Space

    So far in the Europe, among the generic players targeting a pie of the respiratory generic market, Elpen is most advanced and has initiated approval for its generic Advair through the Decentralized Procedure in April 2010. Elpen has already been able to launch Advair generics in Sweden and Greece, in Greece the Elpen version of Advair have hit Advair sales by about 35%.

    Device is the key for successful penetration in the respiratory generic space

    It is widely believed Teva and Sandoz has a better device compared to Elpen and would be in a better position to grab the share of the market. Sandoz is expected to hit the EU market by early 2013, while Teva is expected to reach by early 2014. There is not enough information about the other generic players and their current status.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Tags: AZN, GSK, TEVA, NVS, long-ideas
    Sep 04 8:43 AM | Link | Comment!
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