Not everyone is worried in times of epidemic. Matthew Vella explores the side-effects of A-H1N1 on pharmaceutical companies’ market-share
Despite the worldwide scare over swine flu, business has been sweet for medicinal multinational Roche, which has seen its share price sky-rocket thanks to its anti-viral drug, Tamiflu.
The medicine generated $2 billion in revenue for Roche last year, and Roche’s share price started a steady climb to the top after a plunge in March (see graph).
Tamiflu became one of the anti-viral drugs of choice when governments stockpiled the medicine after the Severe Acute Respiratory Syndrome (SARS) outbreak in 2002, and again during the avian influenza outbreak a year later.
Last year, however, sales of Tamiflu plummeted by 68% compared to 2007, reflecting the waning attention paid to pandemic preparation by governments worldwide and the emerging competition from Relenza and pandemic influenza vaccines.
Then came H1NI, and a problem soon struck governments when faced with the latest outbreak, due to whether there was enough availability of stocks for patients.
The main obstacle was the fact that Roche had warned it would take up to eight months to complete the production process – from drug synthesis to packaging. And that prompted panic buying by governments. Tamiflu is expensive to produce and for governments to purchase, but an outbreak of global flu sparks the need for mass production, and with that comes a decrease in costs.
Earlier this year, Roche started exploring ways to offer Tamiflu over longer periods and at higher doses, which could further boost sales of the medicine. Clinical trials are already underway.
But the advent of H1NI brought it with a new tactic: increasing the expiry date of the Tamiflu medications. In 2003, the emergence of avian flu sparked large orders for government stockpiles at lower bulk prices. Suddenly, the new longer shelf-life – increased from five years to seven years – and the arrival of the swine flu, combined to help persuade governments to begin purchases for new stockpiles.
For example, Roche even offered, for a fee, to take back older batches of Tamiflu from governments for reprocessing and re-issue, further increasing sales.
And while richer countries have purchased substantial quantities of the drug, Roche this month also unveiled fresh discounts and deferred payment terms to stimulate sales to poorer countries, which have almost no stockpiles. The Swiss drugmaker will charge as little as €2 for a 30 milligram-dose package of 10 pills and as much as €6 for each 75 milligram-dose package. The price will depend on the period of storage requested, the company said. Until now, prices have ranged from €4.80 for the lowest dose to €12 for the highest in such countries.
Even more interesting was the forewarning to investors in the 2008 annual report of Chugai Pharmaceuticals – which owns 51% of Roche – that sales of Tamiflu would increase by 531% in 2009. According to Chugai Pharmaceutical’s annual report, the reason for this spike in sales would be due to “expected resumption of government stockpiling… and the ongoing recovery of the prescription rate for seasonal influenza.”
And indeed, production has risen sharply in recent weeks to respond to surging demand. The rise means Roche is again selling the drug directly to companies and private clients, after initially reserving all new supplies for government pandemic orders until they had been fulfilled.
The Maltese health division bought 1.1 million 75mg capsules in 2005, 2006 and 2007. The expiry dates are May 2010, June 2010, August 2010 and June 2011. Negotiations are currently underway for the purchase of a further 480,000 capsules. The expiry date of this stock will be in 2015. The Health Division said it does not have any expired stock of Tamiflu.
As announced in May 2009, the shelf life of all stocks of Tamiflu has been extended by two years. “All Tamiflu dispensed through government outlets is within the expiry dates prescribed by the European Medicines Agency,” a spokesperson for the health division.
In 2009, the division also purchased 10,000 courses of Relenza, which is produced by GlaxoSmithKline (GSK).
As explained by a health expert who spoke to MaltaToday, a product expires when its chemical components break down to a point where the product is either unsafe, or not effective enough for its medical purposes.
“When a product is labelled with an expiry date, the date itself will only be an estimate of when it is expected to reach that stage. The only way to find out exactly if a medical product has broken down is to carry out expensive laboratory testing. If the World Health Organisation has extended the expiry date for Tamiflu, it would certainly have conducted this test first.”
The same expert also points out that a product does not need to be 100% effective to be authorised for use. “The way these products are designed is to be more than 100% effective upon release. This means that upon expiry after five years, it would still be up to 80% effective – which is enough for an anti-viral.”
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