Christopher Adams

The Business Herald’s markets and banking reporter.

NZ firm targets US acne market

Sir Graeme Douglas (left) and his son Jeff have gained approval to sell their generic drug in the United States. Photo / Greg Bowker
Sir Graeme Douglas (left) and his son Jeff have gained approval to sell their generic drug in the United States. Photo / Greg Bowker

When it comes to pharmaceutical markets the United States is the promised land with pill-popping Americans consuming more prescription drugs than any other nation.

They spent almost US$308 billion ($374 billion) on medications in 2010, according to the IMS Institute for Healthcare Informatics, accounting for 36 per cent of the US$856 billion spent globally that year.

But it's a tough market to enter, given the hoops the US Food and Drug Administration forces pharmaceutical firms to jump through to gain its approval.

Auckland company Douglas Pharmaceuticals knows the challenges all too well.

It took the Henderson-based company about 10 years to get the thumbs-up from the FDA to sell its New Zealand-developed generic formulation of the acne drug isotretinoin in the US.

The company last week announced it had finally gained approval and would dispatch its first orders to the US next month.

Director Jeff Douglas says the company has sold VersaPharm - a Marietta, Georgia-based firm - the exclusive rights to market in the US its isotretinoin, which will be manufactured in Auckland.

The US company has its eyes set on grabbing a 20 per cent share of the US$400 million acne medication market in that country, where Douglas Pharmaceuticals' product will be up against two other generic isotretinoin brands, he says. Isotretinoin - which is derived from vitamin A and works by reducing the amount of oil excreted through the skin - is Douglas Pharmaceuticals' biggest export product, which it already sells in a number of overseas markets including Spain, Austria and Germany.

In New Zealand it's sold under the brand name Oratane, but will be marketed in the US as Myorisan, as the FDA thought the former name sounded too similar to another drug on the market, says Douglas, whose father Sir Graeme Douglas founded the company in 1967 and remains its managing director.

Having to find a new brand name was just one of the challenges of the FDA approval process.

"We had to do new clinical trials on the product - there's a lot of extra information they [the FDA] require," Douglas said.

Isotretinoin is far from a new medication, having been developed and first marketed by Swiss pharmaceutical giant Roche in the early 1980s. Its patents on the drug lapsed in 2002.

Douglas says creating a generic version of the drug was not a straightforward process.

For a start, he says, isotretinoin must be delivered in a soft gel capsule - rather than in a tablet - and the Kiwi company had never manufactured soft gel capsules before.

"We had to emulate the originator [Roche] so it gives the same effect ... then you're registered as being bio-equivalent and interchangeable with the original brand," Douglas says.

Roche has a chequered history with isotretinoin, which it marketed in the US under the brand name Accutane.

In June 2009 the Basel-based company announced it was immediately stopping its sales of Accutane in the US because of falling market share (following the entrance of generic brands after 2002 patent lapse) and the mounting costs of personal injury lawsuits related to the drug.

Accutane has been linked to severe bowel disorders, depression and suicides, and is proven to be teratogenic, meaning it causes birth defects and should never be used by pregnant women.

Douglas says the drug's links to suicides and bowel disorders have never been proven, but the company is legally covered in the US against lawsuits related to all the possible side-effects by official warnings given to users of the medication.

Douglas Pharmaceuticals, he adds, is also required by the FDA to have "significant insurance" against any lawsuits that might occur.

DOUGLAS

* Founded in 1967 by Sir Graeme Douglas.
* Based in West Auckland, with manufacturing facilities in Henderson and Fiji.
* Export turnover has grown to more than $85 million from 15 different generic products sold to 60 companies in 35 countries.
* Earns more than $57 million in domestic revenue and employs around 470 staff.

- NZ Herald

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