C&EN: Niche generics manufacturers and the DPT

From this week's C&EN, a report by Rick Mullin on "niche generics": 

Priced at a premium and sometimes offered via exclusive contract to drug and biopharmaceutical companies, niche generics have much in common with exclusively synthesized, patented APIs. Although they are not protected by patents and in principle can be manufactured by anyone, many niche generics require innovative chemistry of the sort that may elude Asian competitors. 

Several API producers in the U.S. and Europe say niche generics have increased in importance in recent years, given the drop in exclusive synthesis business following the financial meltdown of 2008. But taking advantage of opportunities in niche generics requires companies to embrace process development and regulatory approval challenges that dissuade newcomers from jumping into the fray. 

Industry watchers shrug at the notion that niche generics are a cure for what ails the pharmaceutical chemicals industry. “This year has seen a bumper crop with drugs coming off patent,” says Jan Ramakers, director of the fine chemicals consulting firm that bears his name. But most of the new generics, he adds, are “blockbusters” that will attract many API producers and be sold for rock-bottom prices. When it comes to niche generics, “it’s a lot more difficult to track what is happening,” he says. “They are often so small that they disappear under the radar.” 

James R. Bruno, president of the consulting firm Chemical & Pharmaceutical Solutions, agrees. “There is this perception that niche generics will be great products,” he says. “But there are a lot of companies making smaller volume products.” Given the technology requirements and the need for long-term relationships with customers, Bruno says, new opportunities will likely present themselves to companies already in the business. “I get calls every day from people saying they want to get into [niche generics] for oncology,” he says. “I tell them they may have already missed the boat.”

I think it's interesting that the last three companies mentioned (PCI Synthesis, IRIX Pharmaceuticals and Cambridge Major Laboratories) are all veterans of the Daily Pump Trap. What does IRIX do, exactly?:

Irix Pharmaceuticals has taken up niche generics more recently, with a focus on prostaglandins and vitamin D chemistry. “We are using our expertise to create new technology or processes for molecules to counteract and balance the efficiencies companies would realize going to India and China,” says Panos Kalaritis, the firm’s chief operating officer. Much of that expertise stems from work he and Irix’ chief science officer, George Yiannikouros, did earlier in their careers at Roche. 

Irix, which operates two facilities in South Carolina, markets niche generics via both exclusive and nonexclusive contracts, Kalaritis says. In vitamin D chemistry, the company offers products including calcitriol, calcipotriol, maxacalcitol, paricalcitol, and alphacalcdol. It was able to develop a 26-step process for paricalcitol, achieving commercial-scale production in three months, he says. Yiannikouros holds a patent for the manufacturing process for calcitriol.This process is still used by Roche. In prostaglandins, Kalaritis says Irix was late to the generic API market but was able to position itself with an efficient process. “We have a unique penultimate intermediate that is crystalline,” he says. “A majority of products out there have oils [at that step], and the only way to purify them is through chromatography.” 

Two years into production, prostaglandins represent 10% of the company’s sales, Kalaritis says. He sees niche generics becoming increasingly important to Irix as a way to counter the whims that bedevil exclusive synthesis. 

“The reality is that over the years, we had focused on proprietary products, with 75% of the business coming from new and emerging companies,” he says. “A number of products advanced to late-stage clinical development, some fell out, and some were acquired. But we had limited success in garnering a portfolio of products. As a company you need that base load.”

Base load is an interesting concept in the chemical manufacturing business, especially since it seems to have been copied from the electric generation business.