CEOs Say 505(b)(2) Pathway Will Drive Growth in Generic Industry

To better understand where the generic market is heading, a panel discussion was held with CEOs of top generic pharmaceutical companies and key financial analysts at this year’s Generic Pharmaceutical Association (GPhA) annual meeting. This year, Ronny Gal, Ph.D., senior analyst with Sanford C. Bernstein, and Randall Stanicky, managing director for equity research with RBC Capital Markets, met with the CEOs of Mylan, Hospira, Teva, Apotex and Momenta.

Much of the discussion focused on the financial ramifications of fewer and lower-value small-molecule drugs coming off patent and being available for generic development. The consensus among the CEOs present seemed to be that 505(b)(2) products would fill an important role in their financial future. All of the CEO’s indicated a willingness to explore in-licensing where warranted.

Although product differentiation is a key requirement, the 505(b)(2) application process allows companies to file new drug applications utilizing some pre-existing data — unlike the traditional 505(b)(1) pathway. Depending on the extent of the change to the previously approved drug and the type of clinical data included in the new drug application, the 505(b)(2) applicant may qualify for three, five or even seven years of market exclusivity.

“The comments by these CEOs validates the important and increasing role of 505(b)(2) products. Small development-stage companies will find these generic companies to be willing partners” said Ken Phelps, president and CEO of Camargo Pharmaceutical Services, a 505(b)(2) expert. “Generic companies are exploring all the options available to them, but this discussion confirms there is significant interest in 505(b)(2).”

Phelps and Gal will be revisiting these industry trends and 505(b)(2) in a session at the upcoming Drug, Chemical and Associated Technologies Association’s DCAT Week 2014 on March 11 in New York City.