The Thomson Reuters quarterly report on the U.S. generics industry uses strategic intelligence and competitive analysis information from Newport Premium™, the critical product targeting and global business development system from the industry authority on the global generics market.

MOVERS AND SHAKERSA PHARMA MATTERS REPORTA REVIEW OF OCTOBER – DECEMBER 2010. PUBLISHED FEBRUARY 2011.

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The Thomson Reuters quarterly report on the US generics industry using strategic intelligence and competitive analysis information from Newport Premium™, the critical product targeting and global business development system from the industry authority on the global generics market.

In this quarterly report, we look at a few of the companies beginning to make their marks on the US generics market with their finished dose products or active ingredients, and analyze trends and statistics relating to the market as a whole.

PHARMA MATTERS | MOVERS AND SHAKERS

PHARMA MATTERS | MOVERS AND SHAKERS

WHAT IS An AnDA?

An Abbreviated New Drug Application (ANDA) is the first step for a generic drug in the U.S. It is submitted to the FDA to prove that the generic version is bioequivalent to the innovator drug in question. On approval, the generic version is added to the Approved Drug Products List (“Orange Book”) and the company may manufacture and market it. An ANDA may be submitted before the patent on the innovator drug expires. However, in that case, the ANDA must include a certification indicating that the filer does not seek to market the product before the expiry of the Orange Book-listed patents (“paragraph III certification”) or that the filer believes that its product does not infringe the Orange Book-listed patents or that the Orange Book-listed patents are invalid (“paragraph IV certification”).

WHAT ARE “A” RATED DRUgS?

“A” rated drugs are considered therapeutically equivalent and can be substituted for each other. “A” rated drugs are designated as AA, AB, AN, AO, AP, and AT in the Orange Book.

SECTIOn I: InTRODUCTIOnIn 2010, the generics industry continued to thrive in the United States. Despite challenges, such as long approval timelines, companies from 18 countries received a total of 412 final ANDA approvals, down from 2009 when companies from 15 countries received a total of 448 ANDA approvals. As in 2009, US-based companies received more approvals than any other country (159 approvals going to 46 groups). Indian companies continued to make inroads into the US generic market with 23 companies receiving 132 approvals.

It is worth noting that at the end of 2010, the first Chinese company – Novast Laboratories – received a final ANDA approval. An additional three Chinese companies have acquired final ANDAs from existing players in the US market and other companies are awaiting approvals for their filings. Huahai of China is already manufacturing benazepril for the US market. We anticipate that, over time, manufacturing for a number of Chinese owned ANDAs will move to China and regulated market players may move manufacturing to China to take advantage of lower costs. However, the backlog at the FDA will likely slow this transfer significantly.

In 2010, companies launched generic versions of several blockbusters, among them sanofi’s anti-thrombotic Lovenox™ (enoxaparin sodium), Merck’s antihypertensive Cozaar™ (losartan potassium), and Boehringer Ingelheim’s benign prostatic hyperplasia treatment Flomax™ (tamsulosin HCl). Additional blockbusters were exposed to Paragraph IV patent challenges, among them Viread (tenofovir disoproxil fumarate), Gilead’s antiviral drug. During 2010, 33 molecules or combinations were first exposed to patent challenges, down from the previous year, when more than 60 molecules or combinations received their first Paragraph IV patent challenges. We believe that the decline in the number of products first exposed to challenges is the result of a diminishing number of products open to challenge and not an indication that generics companies are becoming less aggressive.

One of the key topics in the US generics market in 2010 was follow-on biologics. At long last, in 2010 the US market got the abbreviated pathway for approving biosimilar products. However, it will be a while before we know how many companies will use the new abbreviated pathway rather than continue to use the BLA route.

PHARMA MATTERS | MOVERS AND SHAKERS

Positioning for the follow-on biologics era was the driving force behind several acquisitions and deals in 2010, such as Mylan’s acquisition of Bioniche Pharma. However, in 2010, M&A activity wasn’t limited to biologics. The generics industry continued to consolidate in pursuit of scale and diversification, both in terms of geographic reach and product portfolios. Big Pharma continued its interest in generics, both in established and emerging generics markets. Among others, Pfizer announced collaboration agreements with Strides Arcolab of India, sanofi-aventis announced a joint venture (JV) with Japan’s Nichi-Iko, GlaxoSmithKline expanded its business in Latin America by acquiring Laboratorios Phoenix in Argentina, Abbott acquired Piramal’s Healthcare Solutions Business, and AstraZeneca signed a deal for a portfolio of branded generic products to be supplied by India’s Torrent Pharmaceuticals. To subscribe to our white papers covering deal making in the generics industry and the US follow-on biologic market, click here.

That was a brief recap of happenings on the generics stage in 2010. Now, let’s take a closer look at developments in the fourth quarter.

SECTIOn II: AnDA APPROVALSTOTAL ‘A’-RATED AnDAS BY COUnTRY OF ORIgIn OF APPLICAnT FOR OCTOBER TO DECEMBER 2010

WHAT IS A U.S. DMF?

A DMF (Drug Master File) is a confidential document covering a specific manufacturing facility, process, or article used in the manufacturing, processing, packaging, or storing of a bulk drug. A DMF is reviewed by the FDA only if an ANDA or NDA referencing that particular DMF is filed. An ANDA or NDA will not be approved until any issues with the DMF are resolved.

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PHARMA MATTERS | MOVERS AND SHAKERS

In the fourth quarter, 48 companies from 13 countries received a total of 109 approvals. US-based companies again received the most final ANDA approvals, with 38 approvals going to 21 different corporate groups. The numbers were slightly down from the previous quarter, when 24 different US-based companies received a total of 41 approvals.

As during the third quarter, Indian groups were in second place during the last quarter of 2010 with 34 approvals going to 15 groups. Both the number of Indian groups with approvals and the number of approvals were up from the third quarter when 29 final approvals went to nine Indian groups.

gROUPS WITH THE MOST ‘A’-RATED AnDA APPROVALS FOR OCTOBER TO DECEMBER 2010

In the fourth quarter of 2010, Novartis of Switzerland (parent of Sandoz) topped the list with seven final ANDA approvals, followed by Watson (US) with six approvals. A number of companies received five ANDA approvals.

In the third quarter, Novartis also received seven final approvals. However, during that quarter, seven was enough to earn only the third spot. During the third quarter of 2010, Mylan (US) was on top of the list with nine ANDA approvals, followed by Glenmark of India, with eight approvals.

WHAT IS A BIOSIMILAR ACCORDIng TO U.S. REgULATIOnS?

A biosimilar product is defined in the Act to mean a biological product that is both “highly similar to the reference product notwithstanding minor differences in clinically inactive components” and for which “there are no clinically meaningful differences between the biological product and the reference product in terms of the safety, purity, and potency of the product.” Interchangeability is defined as a biological product that “may be substituted for the reference product without the intervention of the healthcare provider who prescribed the reference product.”

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Alembic Limited

Actavis Group Hf

Watson Pharmaceuticals Inc

Novartis AG

PHARMA MATTERS | MOVERS AND SHAKERS

SECTIOn III: PARAgRAPH IV CHALLEngESIn the fourth quarter of 2010, we learned of first Paragraph IV patent challenges on five new active ingredients or combinations, down from eight during the previous quarter.

gROUPS WITH THE MOST PATEnT CHALLEngES On RECORD AS OF DECEMBER 2010

Teva continues to be associated with more patent challenges than any other company. At the time of this writing, we continued to link the company to challenges on 157 products. Mylan, with associations to 95 products with patent challenges, stayed in the second spot and increased the lead over Novartis, with whom we associated 87 challenged products.

WHAT IS A PARAgRAPH IV CHALLEngE?

Bioequivalent generic versions of drugs that are not protected by patents can be produced and marketed in the U.S. by any company, subject to FDA approval. However, a generic company may obtain FDA approval before patent expiry if it certifies its product does not infringe the listed patents or the patents are invalid (paragraph IV certification). Patent holders may then sue the ANDA filer for patent infringement. If the patent holder sues the ANDA filer within 45 days of notification, the FDA may not approve the ANDA for 30 months from the date of notification. If no suit is filed within 45 days, the FDA may approve the ANDA at any time.

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PHARMA MATTERS | MOVERS AND SHAKERS

PRODUCTS FIRST ExPOSED TO PARAgRAPH IV CHALLEngES, AS REPORTED BY THE FDA BETWEEn OCTOBER AnD DECEMBER 2010

ACTIVE IngREDIEnT: darunavir ethanolate

POSTED BY FDA: 04 October 2010

BRAnD nAME: Prezista®

nDA HOLDER: Tibotec

• Lupin and Mylan have submitted ANDAs with Paragraph IV certification for generic versions of Prezista (darunavir ethanolate) tablets.

• The Orange Book lists several patents covering Prezista tablets, expiring between August 25, 2012 and December 26, 2026.

Tibotec’s suit against Lupin and Mylan alleges infringement of US Patent 7,700,645, which claims a novel ethanolate form of darunavir useful for the treatment of HIV infections. That patent will expire on December 26, 2026.

In another suit against Lupin and Mylan, The United States of America and the University of Illinois have alleged infringement of US Patent 7,470,506. That patent is directed to the treatment of HIV infection in adults and pediatric patients over the age of 6 years and will expire on June 23, 2019. Tibotec holds a non-exclusive license to US Patent 7,470,506 through an agreement with the University of Illinois.

• At the time the first ANDA with Paragraph IV certification was submitted for a generic version of Prezista tablets, Cipla, Hetero, and Matrix held DMFs for darunavir.

ACTIVE IngREDIEnT: dastinib

POSTED BY FDA: 04 October 2010

BRAnD nAME: Sprycel®

nDA HOLDER: Bristol-Myers Squibb

• Apotex has submitted an ANDA with Paragraph IV certification for a generic version of Sprycel (dasatinib) tablets.

• The Orange Book lists four patents covering Sprycel tablets. US Patent 6,596,746 claims dasatinib specifically as well as

its uses for the treatment of cancer and a protein tyrosine kinase-associated disorder. It will expire on June 28, 2020.

US Patent 7,125,875 concerns cyclic protein tyrosine kinase inhibitors and includes claims to their use in the treatment of chronic myelogenous leukemia. It will expire on April 13, 2020.

US Patent 7,153,856 also concerns the use of cyclic protein tyrosine kinase inhibitors for the treatment of cancer. It will expire on April 28, 2020.

US Patent 7,491,725 includes both drug substance and drug product claims directed to Sprycel and will expire on October 12, 2025.

In its suit against Apotex, BMS has alleged infringement of all four patents.

• At the time the first ANDA with Paragraph IV certification was submitted for a generic version of Sprycel tablets, Hubei Haosun held the only DMF for dasatinib reported by the FDA.

PHARMA MATTERS | MOVERS AND SHAKERS

ACTIVE IngREDIEnT: doxepin HCl

POSTED BY FDA: 18 October 2010

BRAnD nAME: Silenor®

nDA HOLDER: Somaxon

• Actavis, Mylan, and Par are among the filers of ANDAs with Paragraph IV certification for generic versions of Silenor (doxepin HCl) tablets.

• The Orange Book lists eight patents covering the method of use and formulation of Silenor tablets.

According to the Orange Book, the six patents directed to the drug product will expire on January 9, 2015. Two patents concerning the treatment of insomnia will expire on March 26, 2013 and February 17, 2020.

Although the Actavis, Mylan, and Par ANDAs included Paragraph IV certification to seven of the eight patents, Somaxon has alleged infringement of only US Patent 6,211,229. That patent concerns the treatment of transient and short-term insomnia and will expire on February 17, 2020.

• At the time the first ANDA with Paragraph IV certification was submitted for a generic version of Silenor tablets, Dipharma Francis, Sifavitor, and Teva held the only active DMFs for doxepin HCl reported by the FDA.

ACTIVE IngREDIEnT: hydromorphone HCl

POSTED BY FDA: 18 november 2010

BRAnD nAME: Exalgo®

nDA HOLDER: Mallinckrodt

• Watson has submitted an ANDA with Paragraph IV certification for a generic version of Exalgo (hydromorphone HCl) extended-release tablets.

• The Orange Book lists two patents covering Exalgo extended-release tablets.

US Patent 5,702,725 and US Patent 5,914,131 include claims directed to the Exalgo formulation and its use in the management of pain. Both patents will expire on July 7, 2014.

Mallinckrodt’s suit against Watson alleges infringement of only US Patent 5,914,131.

• Several companies hold active DMFs for hydromorphone HCl.

PHARMA MATTERS | MOVERS AND SHAKERS

ACTIVE IngREDIEnT: sodium oxybate

POSTED BY FDA: 04 October 2010

BRAnD nAME: xyrem®

nDA HOLDER: Jazz Pharmaceuticals

• Roxane Laboratories has submitted an ANDA with Paragraph IV certification for a generic version of Xyrem (sodium oxybate) oral solution.

• In a suit against Roxane, Jazz alleged infringement of all five patents listed for Xyrem oral solution in the Orange Book at the time the ANDA was submitted.

US Patent 6,780,889 and US Patent 7,262,219 include drug product claims directed to Xyrem oral solution and will expire on July 4, 2020.

US Patent 7,668,730 concerns a method for distributing sodium oxybate under the control of a central pharmacy. It will expire on March 7, 2024.

US Patent 7,765,106 and US Patent 7,765,107 concern methods of controlling the distribution of prescription drugs using a computer database. They will expire on June 16, 2024.

In December 2010, Jazz announced that a newly issued patent related to Xyrem had been added to the Orange Book. US Patent 7,851,506 includes claims directed to the treatment of cataplexy in patients with narcolepsy. It will expire on December 22, 2019. Jazz later sued Roxane alleging infringement of that patent along with US Patent 6,472,431, which does not appear in the Orange Book listing for Xyrem.

• Johnson Matthey submitted a DMF for sodium oxybate in August 2010.

PHARMA MATTERS | MOVERS AND SHAKERS

SECTIOn IV: nOTABLE DEALSIn the fourth quarter, both generics and innovators alike continued their expansion into emerging markets, including Latin America. Watson, for example, expanded its presence in Brazil by agreeing to pay $30 million for Moksha8, which supplies both original drugs and branded generics. Under the agreement, Moksha8 will market and distribute in Brazil and Mexico products manufactured by Watson. Pfizer, meanwhile, acquired a 40-percent stake in Brazil’s Laboratorio Teuto.

At the same time, emerging market players made acquisitions in the United States. Hikma Pharmaceuticals (Jordan) has agreed to acquire Baxter’s injectables business and through it will gain a manufacturing facility and significant foothold in the US injectables market. Dr Reddy’s Laboratories of India, meanwhile, entered into a deal with GlaxoSmithKline to acquire the latter’s US penicillin business and a penicillin manufacturing facility in Bristol, Tennessee. According to Dr Reddy’s spokesperson, the company has aspirations to significantly increase its North American generics business.

In the fourth quarter, we continued to see examples of companies expanding their presence in the value chain. Cambrex, a US-based API manufacturer and drug delivery company, paid $20 million in Q4 for a 51-percent stake in Zenara Pharma in India to gain access to Zenara’s formulation and finished dosage capabilities. And Aceto, a company that only a few years ago was primarily known as a distributor of APIs and chemicals, announced that it was paying $80M for Rising Pharmaceuticals, based in New Jersey.

There continued to be considerable interest in niche products in the last quarter of 2010. For example, Zentiva, now part of sanofi-aventis, announced its acquisition of an inhaler franchise from Siegfried, allowing Zentiva to become a player in a market that is expected to develop rapidly after 2013 when a number of respiratory products will lose patent protection. Meanwhile, Teva acquired Théramex, a player focused on the gynaecological market, from Merck KGaA, and Amneal expanded into the dermatology market by taking control of Quinnova Pharmaceuticals. The latter markets a number of products for dermatitis and eczema treatments.

We also continued to see deal-making in the biologics arena. Actavis, which has aspirations to become a major player in the biologics arena, is planning to acquire Bioton, based in Poland.

Not to be outdone by generics, Big Pharma kept the pressure on with their own generics industry-focused deals involving both large and small molecules. In October, Pfizer signed a deal with Biocon under which Pfizer will have the right to commercialize several recombinant insulins developed by Biocon. And right before New Year’s, Pfizer entered into an agreement with Akorn-Strides, a JV between US-based Akorn and Indian Strides Arcolab, to purchase 16 approved and six pending ANDAs from the joint venture.

SECTIOn V: OPEnIng MOVESBased on our research of ANDA filings and Paragraph IV challenges, we highlight some of the companies making significant game plays in the US generics industry.

ALKEM LABORATORIES, LTD.

Alkem Laboratories, based in Mumbai, India, was founded in 1974. The US FDA, UK MHRA, Brazil’s ANVISA, and other authorities approved the company’s dose manufacturing facilities, and the company claims to export its products to more than 40 countries.

Alkem’s formulations have been in the US market since 2009. The company currently holds final approvals for three products and a tentative approval for one, lamivudine. This tentatively-approved product was reviewed under expedited review provisions for the President’s Emergency Plan for AIDS Relief (PEPFAR). The tentative approval made the product eligible for purchase outside the United States even before US patent expiry.

At around December 1, 2010, Alkem informed Shire that it had filed an ANDA with Paragraph IV certification for a generic version of Fosrenol (lanthanum carbonate) chewable tablets. We believe that this is the first Paragraph IV filing by Alkem.

Alkem is also acting as a contract manufacturer and is making amlodipine besylate finished dose product for a number of companies, including Breckenridge and Ascend.

PHARMA MATTERS | MOVERS AND SHAKERS

PHARMA MATTERS | MOVERS AND SHAKERS

STASOn PHARMACEUTICALS, InC.

Stason Pharmaceuticals, based in Irvine, California, is a privately held pharmaceutical company involved in developing, manufacturing, and marketing both generic and branded products. Its primary area of development is oncology.

The company was founded by Harry Fan and has a strategic alliance with Standard Chemical and Pharmaceutical Company of Taiwan, which was founded by his father and is today managed by his brother. While in the beginning the two companies worked separately, today Stason and Standard are closely collaborating and have a joint pipeline in the United States. Stason currently holds five ANDAs, but is geared to file four to five or more ANDAs per year, mostly in the areas of oncology and CNS.

The two companies also have their eyes set on biopharmaceuticals. They jointly created Stonsa Biopharm, Inc., a new spin-off biopharmaceutical company, based in Southern California. In December 2010, Stason and Lonza announced that they had signed an agreement granting Stason a worldwide license to use Lonza’s GS (glutamine synthetase) Gene Expression System.

Stason is also a player in the contract manufacturing arena and provides both non-high containment and high containment manufacturing services to a number of companies, including Par, Cypress, and Heritage. Stason is capable of manufacturing both solid and semi-solid dosage forms, including immediate and delayed-release tablets and capsules, fast-disintegrating tablets, creams, and lotions.

HAnDA PHARMACEUTICALS, LLC.

Handa Pharmaceuticals, based in Fremont, California, is a specialty pharmaceutical company founded by Dr. Fangyu “Bill” Liu in 2005. Liu previously served as Chief Operating Officer and Vice President of Product Development and Operations at Anchen Pharmaceuticals. Handa is focusing on difficult-to-formulate, controlled-release formulations. In July 2009, Fosun Pharmaceutical of China invested in Handa; today they own about 10 percent of the company. Handa and Fosun have announced that they will cooperate to jointly develop generic drugs and challenge patents both in the United States and in Europe.

In July 2008, Handa announced that it had filed an ANDA for AstraZeneca’s Seroquel XR (quetiapine fumarate extended-release tablets). The company claimed that it was the first to file an ANDA with Paragraph IV certification for several strengths and should be entitled to 180 days of marketing exclusivity. In December 2010, Handa received tentative approval of its ANDA. According to the Chinese media, this was the first time that a company with Chinese ties has received a tentative approval for a patent challenge product and could be entitled to the 180-day generic exclusivity.

Image CopyrIght: REUTERS/Petr Josek

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