By Kim Tae-gyu
Celltrion may be considering ditching its partnership with Pfizer on the sale of its biosimilar products in the United States if the latter opts not to sell its drugs. The Korean firm has officially denied the possibility, though.
In a recent investor call, a transcript of which was acquired exclusively by The Korea Times, a Celltrion official said that it might find another partner to sell Inflectra, a biosimilar of Remicade, an anti-inflammatory treatment for autoimmune disorders made by Johnson & Johnson.
“There are quite a large number of big bio pharmaceutical companies that are willing to sell Remsima for us,” said the official at the company’s investor relations team. Remsima is Inflectra’s brand name in Europe.
The remarks came in response to an investor inquiry on how Celltrion is dealing with the potential risks of Pfizer sticking to its own Remicade biosimilar that is under development.
He said, “The contract between (Celltrion) Healthcare and Pfizer is, I believe, not that strong. It is, we believe, based on their own interest.”
Celltrion produces drugs that are copied from well-established medications that are off-patent and Celltrion Healthcare buys them to sell outside Korea. Pfizer is the latter’s marketing partner in the U.S.
Celltrion and Celltrion Healthcare don’t have shares in each other but Celltrion founder Seo Jung-jin is the largest shareholder of both.
The official expected Pfizer and Celltrion to make efforts to introduce Inflectra in the U.S. this year.
But he was somewhat cautious about the outlook. He said that Pfizer was given two weeks to give notice this August whether it would go for the right to sell Inflectra in the world’s largest pharmaceutical market or return it to avoid any risks.
Johnson & Johnson filed two patent complaints against Celltrion, and Celltrion won one, while the other is still pending.
“A big pharmaceutical company that’s out there tries to get a detailed, I’m saying, condition to finalize in the near term,” he said. “And, there are a few more pharmaceutical companies actually waiting for any chance at the moment because it’s an ongoing process.”
He said that the bottom line is “we have a number of big names trying to get a contract with us” but he did not specify whether the negotiations were geared toward the replacement of Pfizer or for other purposes.
A Celltrion executive said that the companies at issue are those who want to buy the rights to sell Celltrion products other than Inflectra, which were returned by Pfizer last year.
He also said that there was no problem in its partnership with Pfizer and the two outfits will cooperate closely to introduce Inflectra in the U.S. in the near future.
“Celltrion is in the process of finalizing a launch date (for Inflectra),” he said. “We cannot confirm the actual facts in the transcript, but that is not an official statement from Celltrion.”
Another controversy in the investor call was the shelf life of Celltrion Healthcare’s large inventory, which was purchased from Celltrion and worth 1.4 trillion won ($1.2 billion) as of the end of last year.
Unlike the market norm of a drug’s shelf life of two years with a maximum of three, the Celltrion official said the life of Celltrion Healthcare’s drugs is more than five years because Celltrion sells drug substances, not final products, to Celltrion Healthcare.
In other words, Celltrion ships a drug substance, the interim stage of a medicine before it is bottled, and Celltrion Healthcare puts it in final formulation for end products.
Should the shelf life of Celltrion Healthcare’s inventory be as short as two years, its corporate value would go down substantially since drugs made 25 months ago should be scrapped.
“For a drug substance, it’s 60 months and for drug products it’s 60 months, so it’s been more than 108 months so far. And the expiry date of both drug substance and drug product are increasing if they show that those drugs are safe,” he said.
He claimed that regulatory agencies of the U.S. and European Union, not Celltrion, decide the expiry date through a periodic on-site check and the amount of the stock is not too much.
“Given the market share increase in the Euro market, which is almost half of the U.S. market, we had about a 30 percent market share early this year and we are expecting that that this will be up to 40 percent sometime later this year,” he noted.
“And once we have sales in place in the U.S. market, I guess $1.2 billion worth of inventory is not much of an issue.”