GenericsWeb's Industry Newsletter March 05

Comprehensive data for patent families relating to Ondansetron, based on professional patent searching, may be accessed by subscribing to GenericsWeb Pipeline Developer reports which include twelve monthly updates to keep you abreast of recently published patents and applications. During the month of March, GenericsWeb are pleased to offer a 20% discount on the standard price of a Pipeline Developer subscription to Ondansetron.  Click here for more info.

Leighton Howard
March 2005

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Recent Actions

This month, we had a Court of Appeal judgment in the case of Mayne Pharma v Pharmacia[1] concerning epirubicin hydrochloride (‘Ellence’), and the infringement action brought by Servier against Niche Generics[2] relating to perindopril (‘Coversyl’) came to trial, and was almost immediately settled by the parties. Few details of the Niche/Servier action have been made public: the short hearing was partly in camera, since it related to confidential formulation processes. Both cases raise interesting issues in relation to applications for non-infringement and infringement actions.

Application for Declaration of non-Infringement

S 71 of the UK Patents Act 1977 allows the Court or Comptroller to grant a Declaration of non-Infringement of a patent if it is shown

            a) that the applicant has applied in writing to the proprietor for a written acknowledgement for a declaration of non-infringement and has furnished full particulars in writing of the act in question and

            b) the proprietor has refused to give such acknowledgement.

Since the judgment of Jacob J in SmithKline Beecham v Generics[3], generic pharmaceutical companies have found themselves in the position of having to ‘clear obstacles’ in the way of their marketing of generic products wherever  they know ‘perfectly well [that] the issue of infringement is likely to arise’.  In such circumstances, if they are to avoid the risk of injunction, they must apply for revocation of the patent, apply for a declaration of non-infringement, or invite action for infringement by the patentee.  There are many difficulties with the last course of action : patentees can delay, may not take action for infringement and may claim that they do not have sufficient information on which to make a decision, so that they are still entitled to an injunction when the generic product is launched.  And in many cases, an action for revocation may not be appropriate or desirable. 

Mayne Pharma v Pharmacia

The Mayne/Pharmacia case illustrates the speed with which the English courts can act. In May 2004 Mayne began an action for a declaration of non-infringement of Pharmacia’s UK patent no  2,178,311. Pharmacia counterclaimed for infringement. In November the Patents Court (Roger Wyand, QC, sitting as Deputy Judge) decided that there was no infringement, and in February the Court of Appeal overturned that decision.  

Both Pharmacia and Mayne manufactured ready to use anthracycline glycoside solutions.  Pharmacias’s patent claimed solutions ‘which [have] not been reconstituted from a lyophilizate’ (freeze dried preparation).  Mayne’s product was manufactured from a lyophilizate which they bought and then dissolved in water.  In other words, the lyophilizate was an upstream product.  The question was whether the final product was nevertheless covered by the patent, and it was decided that it was, because the ‘man in the art’ (by whose standards the patent should be evaluated) would have understood that the heart of the invention was an injectable ready to use solution, and the form of the starting material was irrelevant.  Prior to the invention, anthracycline glycoside had been sold in the form of vials containing lyophilized cakes of active ingredient and excipients which had to be reconstituted, and the man in the art would read the patent in that context.  The decision seems to me correct, and it illustrates the importance of reading patents from the point of view of the ‘man in the art’: the fictional person or team working within the relevant area and having the knowledge that a person in his field would normally have.  A different person, not familiar with the field, might well have construed the words of Pharmacia’s patent otherwise: indeed, it seems to me that the construction which would be put on them by the man in the art differs from ordinary meaning.

So much for the fact of the case.  It is also interesting for what it demonstrates in relation to procedure, given the obligation on generic companies to ‘clear obstacles’.  Mayne began by applying for a declaration of non-infringement.  In such a case, the obligation to show non-infringement (burden of proof) lies with the applicant.  The applicant has to give full details of its process (or that part of the process for which it seeks a declaration) and must therefore have good information and a good relationship with its upstream supplier.  It is no good applying for a declaration of non-infringement and then finding that one’s supplier has cold feet when asked to disclose the minutiae of the process. 

Scope of application for a declaration of non-infringement

An application for a declaration of non-infringement relates to the product or process for which the declaration is sought, and no other. There is no warranty that the applicant will manufacture according to the process disclosed, no indemnity for the applicant based on the assertion of the manner of production. The purpose of such an action is to clear out of the way issues of construction ands substantive law so that the only future issue between the parties is the process used for manufacture.   That was made very clear in the Niche v Lundbeck citalopram (‘Celexa’/’Cipramil’) case[4], when, having given the requisite declaration of non-infringement at trial, Lundbeck was refused samples of product : any product made in future and considered to infringe would have to be the subject of new separate proceedings by the patentee. 

Inspections

In an infringement action the burden of proof in showing infringement lies with the patentee. This may have an effect on whether or not an inspection is required.  Inspections are expensive, particularly if the relevant part of the process occurs far away and is lengthy.  In the Niche v Lundbeck citalopram case the relevant part of the process took place in India, over 15 days, and several experts and lawyers attended around the clock.  The judge, Pumphrey J, found that the purpose of the inspection was to test the question of infringement. Had it revealed matters which assisted the patentee’s case these could have been put in evidence and used to attack the adequacy of the description provided. The judge required the patentee to pay Niche’s costs of the inspection as well as the other costs of the case.  The relevance of an inspection will depend on the product and process for which a declaration is sought, and it may be easier for a generic company to resist an inspection in an infringement action (such as the Servier/Niche action) where burden of proof is on the patentee than on an Application for a Declaration. 

Conclusion

It may be a wise move for a generic company to invite litigation if it cannot obtain confirmation of non-infringement, but if it cannot persuade the patentee to initiate proceedings, with the law as it is in the UK, it must consider applying for a declaration or risk injunction.  It is likely that patentees will object wherever possible to the marketing of generic versions of successful products even if they ultimately concede (as in Niche/Lundbeck) or settle (Servier/Niche), but they may not do so with the timing that best suits the interests of their generic competitor.

Anna McKay

March 2005

www.annamckay.com

[4] [2003]EWHC 2590 (1) Niche Generics (2) Wessex Fine Chemicals and Lundbeck A/S

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India, in pharmaceutical terms and even more in generic pharmaceutical terms has enjoyed some major advantages over its Western competitors. A combination of a large pool of skilled personnel and low labour costs has meant that India can manufacture many things cheaper than the West and this extends to the pharmaceutical area too.

Add to this the non-existence of protection for product patents and all the key ingredients are present for providing Western generic companies with low cost generic APIs (Active Pharmaceutical Ingredients) for their formulations.

Within the EU, chemical manufacturers based in countries such as Italy, Portugal and Spain had filled this role for a long time. These countries too had benefited from similar advantages to India – skilled personnel and relatively low (by EU standards) labour costs but also the crucial factor of the absence of product patents, which are now allowed in these countries.

It was the loss of this advantage and the growing confidence and sophistication of Indian companies throughout the 1990’s that led to this gradual transfer of the API supply business away from Europe and over to South East Asia.

India was not alone in this, as API manufacture has also grown in other Asian countries and in China in particular. India, though, continues to enjoy an advantage over China in terms of the huge number of English speakers, which greatly facilitates their international trade.

The Indian role grew as Western firms, particularly those in the UK which has a special tie to India, realised that Indian companies could develop future new generics for them even during the period when the original was still protected by patents in Europe. This allowed the British companies to have the generic developed, registered and manufactured ready to launch immediately on Day-1 after the expiry of the patent.

The other reason for the particularly strong UK-India ties on product development was the fact that most other European countries, with the exceptions of Germany and the Netherlands, had no generic industry of any size. The reasons for this will form the subject of another article in a future edition.

This possibility of developing future generics in India was also not so attractive to US generic companies because the “Roche-Bolar” clause of the Hatch-Waxman legislation of 1984 allowed them to develop generics in the US even while the original was still under patent protection.

The next step in this evolutionary process was the transfer of some generic contract manufacturing from western manufacturers to the Indian companies who had carried out the product development for the western client.

As part of this process, some of the Indian companies acquired the skill of generating not just raw regulatory data on behalf of their Western clients but also of creating the full registration file needed to satisfy Western Authorities in both Europe and the USA.

This in turn has led to some of the Indian generic producers deciding to create a presence for themselves in the West and so companies such as Ranbaxy, Dr. Reddys and Wockhardt to name just three have either set up US and European subsidiaries or bought into specific markets. In the UK market in particular, this has increased what was already very vigorous price competition. In cases where price competition becomes very intense, they and other Indian producers enjoy a great advantage in manufacturing both the finished formulation and the API that goes into it. In price sensitive markets where every penny or cent can make a difference, having a lower raw material cost than competitors who buy their API on the open market can have a critical influence on sales success.

Whether Western companies should see this increased level of Indian competition as a threat or an opportunity depends on their own philosophy and growth strategy. For those who concentrate on manufacture of low margin commodities, India is a threat.

For those who want to move to higher added value products or brands, India offers an opportunity to contract out manufacture of low margin commodities and concentrate on higher margin preparations.

An interesting footnote, though, is the observation that Indian companies will probably find themselves in a similar position, perhaps 10 years in the future, of having lower cost competitors trying to take away their generic business. The reference here is to the large body of Chinese pharmaceutical manufacturers who already compete vigorously with India on API supply. They are likely to do the same with finished formulations as their expertise, professionalism and readiness to comply with GMP standards grows.

Peter Wittner
24 February 2005

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Infarma 2005
3-5 March, Barcelona:  OTC and Para-pharmaceutical show, including OTC pharmaceutical products, dermopharmacy, nutrition pharmacy, phytotherapy, homeopathy and health products.

ManuPharma 2005
3-5 April, Marriott Cambridge:  Exploring the best practices in manufacturing operations within the pharmaceutical industry.

Generics, Supergenerics and Patent Strategies Conference
6-7 April, London:  The latest developments in the generics industry.

3rd Annual Generic Drug Conference
11-12 April, North Bethesda:  Strategies for product selection and market entry, navigation of approval processes and regulatory guidance, risk based approaches for generic drug manufacture, business development opportunities and strategic partnerships, generic biologic and increasingly complex therapy development.

Interphex Asia 2005
Conference 17-19 April, Exhibition 19-21 April, Singapore:  Conference will feature biotechnology issues in addition to API and secondary manufacturing topics.  Exhibition will bring together international suppliers, industry regulators and pharmaceutical professionals from multinational and regional manufacturers in the region.

CPhI Japan 2005 
20-22 April, Tokyo:  Business meeting place for the leading Japanese and international pharmaceutical ingredient manufacturers and traders.  Featuring ISCE for the first time. Expecting +15,000 attendees. 

Interphex USA 2005
26-28 April, New York:  Find partners in research, development, laboratory and manufacturing. Contract service providers in every important industry sector, bringing together potential outsourcing partners in analytics/testing, manufacturing/packaging, research, engineering/construction.

If there is a generics-relevant event of significance that we have missed, please email us and we will consider its inclusion in the next newsletter.

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GenericsWeb has identified the following recently published commercial reports as relevant to the generics industry:

"Benchmarking Best Practice at Patent Expiry in Europe - Maximizing Return on Investment of Late-Stage Lifecycle Management" Piribo, December 04.
Successfully managing the lifecycle of molecules within marketed portfolios is an essential capability for the pharma industry.  With R&D productivity stalling, and profit margins increasingly eroded by cost containment inititatives, maximising the return on investment of in-line brands, by extending the time on the market without generic competition, is a key objective for pharmaceutical companies.

“Growth Strategies in Generics - Innovative and aggressive strategies and their impact on branded pharmaceuticals” Piribo, July 04.
A report which assesses the growth prospects of generic drugs in Europe and the US. The report gives a detailed analysis of the impact of new legislation, the strategies of the key players and market pressures on the generic and branded drug sectors.

Generic Market Reports from Espicom Business Intelligence
Generics Market Reports provide detailed information on the market for generic pharmaceuticals, including projections and market outlook to 2009. Reports on: Australia; Brazil; Canada; France; Germany; Hungary; Italy; Japan; Russia; Spain; Switzerland; UK and USA

"The World Generic Markets Report 2005" Espicom Business Intelligence, December 2004.
A wealth of market, forecast, company and product intelligence on this high-growth industry sector; 424 pages.

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