Recipharm paid as much as $42.8 million in cash and about $10 million in shares to pick up the remaining 26% of the shares in Nitin Lifesciences back in January. The price, proportionately, looked way higher than the $105 million the Swedish firm spent on acquiring the 74% majority stake in the Indian sterile injectables contract manufacturing organization (CMO) two years ago, leaving an option to purchase the rest of the shares by the end of 2017.
Headquartered at Karnal in the northern Indian state of Haryana, Nitin has been performing contract manufacturing services for clients in both India and abroad. The sterile injectables producer has three factories specialized in manufacturing small volume parenterals such as liquid ampoules, liquid vials, dry powder and lyophilized vials across various therapeutic areas.
While purchasing the remaining minority from the family-controlled CMO, Recipharm said the company was particularly pleased with the way Nitin has developed since it became part of the group. The contract development and manufacturing organization (CDMO) expected the transaction would allow it to combine and better exploit operational synergies with the company’s other Indian business.
The lure of low-cost manufacturing always commanded a premium for Indian buys. Indian CMOs who have perfected the know-how of cost-effective processes, are now extending the same expertise to the manufacturing of complex generics too. Unlike oral solids or liquid formulations, sterile injectables are tough to produce. The skill-sets required are also not quite as abundant as injectable makers are hard to come by. Since they have less competition in the marketplace, injectables usually enjoy huge margins. This explains why injectables are the most sought-after.
Most of the top Indian generic makers have an injectable portfolio. Injectables are a significant contributor to their total earnings, even though orals solids continue to be the centerpiece of their export revenue model. However, companies have been fostering injectables in such a way that these products claim a major share in their overall business.
Dr. Reddy’s Labs, which launched generic neostigmine methylsulfate injection in the U.S. market in September, says the Hyderabad-based company has scaled up its U.S. injectable business to $280 million in three years. The company acquired OctoPlus, the Netherlands-based developer of long-acting injectables and liposomal formulations in 2013, in order to expand in complex injectable generics.
Injectables accounted for 20% of Dr. Reddy’s U.S. revenues in 2018 with generic decitabine and liposomal doxorubicin grabbing 46% and 39%, respectively of the total market in May 2018. The company launched thiotepa injection in the U.S. in 1Q19. Enhancing its focus on injectables, Dr. Reddy’s expects more than 50% of revenues to come from injectables, topicals and other complex dosage forms by 2021 in North America, according to an investor presentation in June 2018.
Setting its sights on complex products like auto-injectors and NDDS, the generic major is building an inventory of devices to support a future portfolio of injectables. Dr. Reddy’s had 20 complex sterile injectables and 16 injectables pending filing, as of March 31, 2018.
Drug-device combos like self-injectors and auto pens are in vogue as automated delivery devices ensure better compliance. Seeing the rapidly growing market for complex injectables, leading players including Lupin and Sun Pharma started investing heavily in the segment. Lupin, which reported $1.2 billion in revenue from U.S. sales with 38% growth in FY2017, says specialty injectables are high on the company’s priority list. The Mumbai-based generics maker bought the Dutch firm Nanomi BV in 2014 for developing depot injections.
The company, which plans to file for such complex injectables from its facility by 2019, is looking to become a leading generics player with a significant complex generics mix post-2020.
Difficult to develop product categories are under-penetrated and offer large opportunities. Generic injectables and their long-acting versions have huge volume share in the U.S. market.
As part its strategy to boost its presence in the injectables space, Sun Pharma acquired Pharmalucence in the U.S. along with its sterile injectable manufacturing capability in 2014. In July, Sun Pharma received FDA clearance for ready-to-administer gemcitabine injection. The pre-mixed injectable is the first approval from the FDA for a product manufactured in the company’s Halol, India facility, which received a FDA warning letter in December 2015 for manufacturing deviations.
S. Harachand is a pharmaceutical journalist based in Mumbai. He can be reached at firstname.lastname@example.org.