Generic programmes — A large and untapped US market with few new entrants into this complex space

A generic drug is a medication that has exactly the same active ingredient as its equivalent brand-name drug and yields the same therapeutic effect. It has the same dose, safety, efficacy and quality. Developing products for the generic respiratory market has additional complexities as it involves complex interactions between the drug, the formulation and the delivery device.

Pricing pressures in global healthcare systems

Expanding patient populations and growing unmet medical need are contributing to higher demand for healthcare services and are leading to increased cost pressure within global healthcare systems. Steadily rising healthcare costs have also led to increased scrutiny on drug pricing by governments, the media and consumers, particularly in the US. In this context, it is understandable that extending the use of generics is considered an important element in most prescribing strategies to achieve substantial savings without impacting patient care. Switching from branded inhaled drugs to lower-cost generic inhaled drugs represents an opportunity to reduce the cost of drug treatments in asthma and COPD.

A complex development process with multiple variables and challenges

Given the inherent complexity associated with developing inhaled generics, we believe that there are only a handful of companies who have the necessary capabilities to successfully develop these programmes.

Copying an oral small molecule drug or an injectable is simple and many hundreds of generics companies are able to do it. Copying an inhaled therapy is more challenging. Sourcing the drug is similar to simpler dosage forms. However, from this point in development the complexity of inhaled product development rapidly increases due to the need for the product to be formulated, combined with a specific delivery device and manufactured at a commercial scale, all requiring specialist capabilities, IP and know-how.

The approval of a generic is litigious, particularly for inhaled therapies where multiple overlapping patents are typical. Even after all the patents expire, a generic cannot infringe design copyright or trademarks relating to the device.

Development of non-inhaled or injectable generics typically does not pose the same IP challenge; as an example of a modern tablet product facing generic competition in the US, rosuvastatin calcium (CRESTOR®) tablets have four patents listed in the Orange Book, whereas GSK’s inhaled product Breo® Ellipta® (ICS/LABA) has 14 patents listed(1).

(1) Orange Book – accessed 22 February 2018.

The formulation of inhaled generics has many variables, all of which need to be understood and managed. The way in which these variables interact can change over the lifecycle of the product meaning that product performance changes throughout shelf life or as a result of shipping or seasonal factors. This variability must be successfully matched to demonstrate bioequivalence.

Once the technical legal and formulation challenges are overcome, regulators must then be convinced that the generic is an accurate copy by proving "bioequivalence". This is relatively straight forward for simple oral generics, but is significantly more challenging for inhaled therapies. For example the US FDA requires clinical evidence of equivalence for inhaled products, not just reliance on single-dose pharmacokinetic studies.

Our current generics pipeline

Our partnering model allows us to access high-volume generic opportunities whilst managing the significant costs associated with their development. Typically our involvement will include both device and formulation development and, as a result, Vectura earns development services revenues as well as milestones and mid-teen royalties on net sales of the final marketed products. This type of programme sits squarely within our “sweet spot” of capabilities and potential returns.

We currently have eight generic products in development, including VR315 (US), a generic version of Advair® Diskus®, partnered with Hikma, for the treatment of asthma and COPD in adolescents and adults, and programmes targeting the Symbicort® and Spiriva® opportunities in the US market.

Future opportunities

Vectura has a family of devices, protected by intellectual property rights, which can be used to deliver respiratory generics and the required formulation and regulatory expertise to successfully develop these complex programmes. Following positive US FDA interactions, Vectura is progressing further development of its Open-Inhale-Close (OIC) device which has the potential to be an AB-rated substitutable drug-device combination for the GSK Ellipta® portfolio. This programme offers a very significant opportunity for Vectura, with analyst projections for the branded revenue opportunity of these products at approximately $6bn by 2023. Pharmaceutical development has commenced, in parallel with partnering discussions.