Multi-Million Dollar Deal To Tackle Gaucher's Disease

BMI View: The revenue stream from Protalix and Pfizer's newly developed orphan drug Elelyso/Uplyso (taliglucerase alfa) will be enhanced by an agreement with the Brazilian government. Partnerships with multinational pharmaceutical companies are not new for the Brazilian government, as a means of maximising its technological resources, strengthening its domestic industry and improving its competitiveness in the biotechnology sector. We assert that foreign drugmakers must deepen their integration with local forces if they are to capitalise on the strong growth of the biological drug market.

Protalix BioTherapeutics and Pfizer have entered into a supply and technology transfer agreement with Oswaldo Cruz Foundation (Fiocruz), an affiliate of Brazil's Health Ministry, to supply a minimum of US$280mn worth of Uplyso (taliglucerase alfa) for the treatment of Gaucher's disease. Gaucher's disease is a rare lysosomal storage disorder that affects approximately 10,000 people worldwide. Uplyso is known as Elelyso outside of Latin America. Elelyso was first approved by the United States Food and Drug Administration (FDA) in May 2012 and by Israel's Ministry of Health in September 2012. Brazil's National Health Surveillance Agency (ANVISA)'s approval of Uplyso in March 2013 comes after the approval by the Ministry of Public Health in Uruguay in November 2012. By April 2013, Uplyso was also approved in Mexico and Chile.

The technology transfer is expected to take place over a seven-year term. Under the agreement, Fiocruz is committed to purchase at least approximately US$40mn worth of Uplyso per year during the technology transfer period. The agreement may be extended for an additional five-year term, as needed, to complete the technology transfer. Protalix intends to transfer the capacity and skills to Fiocruz to construct its own manufacturing facility produce Uplyso. Once the technology transfer is complete, the Brazilian government will be the sole source of this Gauchcer's disease treatment in the country. Pfizer, Protalix's commercialisation partner for Uplyso, returned commercialisation rights in Brazil to Protalix, for a US$12.5mn payment from Protalix's net profits generated in Brazil per year of the agreement.

Strong Competition In The US And Europe For Elelyso

We note that although the absolute number of patients is relatively small, therapeutics for rare diseases can be extremely lucrative for multinational drugmakers, which seek to command very high prices for their products. In the US and EU it is comparatively easy to gain marketing approval for an orphan drug and there are additional financial incentives, such as extended exclusivity periods (seven years in the US and 10 years in EU).

Sanofi's Cerezyme (imiglucerase) was approved by the FDA in September 2009 for the treatment of Gaucher's disease. Since then the product has generated steady sales worldwide and in Q312 revenues for Cerezyme reached EUR163mn (US$207.5mn). Following the FDA's approval of Elelyso in May 2012, Pfizer stated that it would be priced at a 25% discount to Sanofi's Cerezyme in the US. Vpriv (velaglucerase alfa), developed by UK-based drugmaker Shire for the same purpose, was approved by the FDA in February 2010, and granted a 10-year market exclusivity in the EU in August 2010. Following market exclusivity, sales of Vpriv in Q310 increased by 72% compared with Q210. As both Vpriv and Elelyso are enzyme replacement therapies targeting the same disease, the EU Committee for Medicinal Products for Human Use (CHMP) rejected the marketing authorisation for Elelyso, intended for the treatment of Gaucher's disease in July 2012.

Lost Initiative In Developed Markets
Revenues For Cerezyme And Vpriv (US$mn)
Sales Of Vpriv Rose After Granted EU Market Exclusivity
Revenues For Vpriv (US$mn)

Win-Win Situation In Brazil

We note that Pfizer, Protalix has negotiated the deal with the Brazilian government before the drug's market approval, [1] gained their market exclusivity in Brazil and secured at least US$40mn revenue per year for the next seven years from the robust growing Brazilian drug market. Both companies under the protection of the market exclusivity deal have also avoided stringent market regulations, competition and government cost containment policies during the technology transfer period. On the other hand, the Brazilian government has exercised its single payer power and secured a sustainable, high quality, and cost effective supply of Uplyso. More importantly, the Brazilian government, always eager for technologies, will acquire (after the full term of the deal) a unique plant cell-based expression system from Protalix.

[1] Business Monitor Online - Industry Trend Analysis - Pfizer To Sign Orphan Drug Deal With Government - November 20, 2013.

This article is tagged to:
Sector: Pharmaceuticals & Healthcare
Geography: Brazil, Brazil, Brazil, Brazil

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