Skip to main content
  • Saved

made a Post

'Endemic' Coronavirus: Cipla Defines Sustainability Of Gains

'Endemic' Coronavirus: Cipla Defines Sustainability Of Gains

Source : 'Generics Bulletin'

An endemic coronavirus appears to be the premise that leading Indian firm Cipla Limited is factoring into its business, at least for now, and that in turn could mean a sustained revenue stream for its COVID-19 therapies in the immediate future.

Cipla saw strong growth of its prescription business in India in the second quarter of fiscal 2021, driven by continued traction in its COVID-19 portfolio, with management indicating that more understanding of the virus suggests that it “is going to be endemic and will continue”, though possibly not at the “same level as right now.”

About a quarter of revenues from the firm’s COVID-19 therapies could hence stick with the virus expected to stay prevalent. ()

“We're seeing this pattern of cases go up and down and the rest of the world is now going through a huge outbreak again, so I think it [the business] will be responsive to those two. But I clearly see, at least from a current level, at least 25-30% staying in the [revenue] mix due to the endemic nature of this pandemic,” global CEO and managing director Umang Vohra said on the firm’s earnings call.

Infectious disease experts have recently warned that the development of a vaccine may not suffice to prevent the virus becoming effectively endemic. Earlier this year, World Health Organization officials noted that SARS-CoV-2, which causes COVID-19 disease, may well become just another endemic virus in communities and “never go away.”

The UK’s chief scientific advisor, Sir Patrick Vallance, was recently reported as telling the National Security Strategy Committee in London that with a “truly sterilizing” vaccine for COVID-19 unlikely, the disease will potentially circulate and become endemic.

Cipla has catered to over 150,000 severe COVID-19 patients with supplies of tocilizumab, remdesivir and favipiravir, and these therapies accounted for around 5% of the firm’s revenues in the first half of fiscal 2021. The firm has a promotion and distribution agreement with Roche Holding AG for Actemra (tocilizumab) and is among the numerous Indian licensees of Gilead Sciences, Inc.’s remdesivir, now approved by the US Food and Drug Administration for the treatment of COVID-19 requiring hospitalization. ()

In July, Roche said that Actemra did not meet its primary endpoint of improved clinical status in hospitalized adult patients with severe COVID-19 associated pneumonia, but in September the Swiss firm noted its Phase III EMPACTA study showed the interleukin-6 receptor-targeting drug reduced the likelihood of needing mechanical ventilation in hospitalized patients with COVID-19-associated pneumonia. ()

In late October, Cipla also commercialized antibody detection kits for COVID-19 in India in a partnership with manufacturer Karwa Ltd. The Indian Council of Medical Research has provided to approved manufacturers the requisite technological know-how and process for developing the kits.

“We will be supplementing this with new launches in the diagnostics space for COVID-19 as well,” Vohra added on the call.

Cipla’s India business stood at INR20.90bn ($282.5m; +17%) in the fiscal second quarter ended 30 September, also aided by traction in chronic therapies and a modest recovery in the hospital portfolio, which offset subdued demand in the acute business. Overall revenues from operations for the quarter were INR50.38bn (+15%), while net profits increased by 41% to INR6.65bn.

Cipla’s US business also saw continued momentum with new launches, namely albuterol, esomeprazole oral suspension and DHE nasal spray, supporting the base business. The company said that its US business profitability trended close to company level in the first half of FY2021.

Cipla’s generic of Merck & Co., Inc.’s Proventil HFA (albuterol sulfate) metered dose inhaler now has a prescription share of 84% of the Proventil market, as per IQVIA data for the week ended 2 October 2020. Across the three albuterol products - GlaxoSmithKline plc's Ventolin HFA inhalation aerosol, Teva Pharmaceutical Industries Ltd.’s ProAir HFA and Proventil – the Indian firm has over 8% of the weekly total prescriptions share in the total market and over 11% of the generic market.

“We continue to monitor our market share given the evolving competitive landscape in the larger albuterol market. Our respiratory pipeline which includes generic Advair [salmeterol/fluticasone] and other complex inhalation assets is progressing well,” Vohra maintained.

The executive also fielded a plethora of questions from analysts around its plans to ramp up albuterol supplies and market share in the US amid changing dynamics, though a gradual and steady supply approach appears to be the game plan for now.

“We have adequate capacity. I don't think the issue is our capacity. I think the issue is how sustainable we want to see our production going forward. We can produce at a much higher pace but I would always like to keep relatively high share of inventory in a category of a market like this,” Vohra said.

The CEO explained that a “blip of a missed week or two weeks of production” is not easy to recover for products such as albuterol and sustainability of supply and products is more important than just how quickly you reach a targeted market share. 

“The same linearity doesn't happen because these are devices and everything else. I think the biggest problems happen when you produce too fast and at the same time don't have adequate inventory of materials.”

Currently there are seven competitors on the US albuterol market: authorized generic versions of Ventolin HFA inhalation aerosol, ProAir HFA and Proventil, two brands and two generics including Cipla’s product and the other being Indian peer Lupin Limited’s albuterol.

Perrigo Company PLC  had to recall its generic ProAir after the US FDA indicated that “several thousand complaints” pertaining to the product had been received. () () 

To an analyst’s query around the competitive behavior of the authorized generics, Vohra said that they were functioning pretty much like “proper” generic competitors.

“Actually the way we look at it there are five generic players in the market already because of three authorized generics plus two generic players now. And when the third one who's exited comes back, then there would be almost seven players who are non-brand in this market already,” he added.

Analysts noted that Cipla's US margins had turned around due to albuterol and were now in line with broader company margins. Jefferies noted that albuterol had provided the company with sustainable profitability, even after factoring in R&D costs.

“Albuterol HFA inhaler is a fairly competitive category and the re-entry of Perrigo will place six generics in the market. This will possibly deter further competition given the upfront costs of project including capex and R&D,” the equity research firm said in a note on Cipla’s Q2 results.

While there is no definitive timeline for Perrigo’s re-entry with its albuterol, Jefferies said previously that it “sounds to as if” it will be 2021 at the earliest. “From that perspective, it makes sense for Cipla to avoid a market share scramble with Lupin and Perrigo ramping up over next quarters,” it stated in a 6 November note.

Cipla closed the fiscal second quarter with US sales of $141m (+4%) and expects the momentum on new launches to continue.

By Anju Ghangurde