Generic Biotech Drug Approval in Japan, Implications in U.S. and Abroad (NVS, PFE, AZN, AMGN, GENZ, GILD, CELG)

Novartis AG (NYSE: NVS) shares are at session highs and well of the lows of the day in the early afternoon Thursday after Japan okayed one of the company’s human growth hormones, the first approval in Japan of a generic biotech drug.  With the recent talks of President Obama wanting generic biologics, the approval process in Japan is probably not an isolated event and should not be ignored for broader implications.

Japan regulators approved the Novartis generic of Somatropin to treat growth hormone deficiency in children and growth disturbance associated with Turner’s syndrome. It’s most similar to Pfizer Inc.’s (NYSE: PFE) brand name drug Genotropin.

The announcement is a score for high-end generic drug companies that are seeking to expand the reach of biosimilars, or generic biotech drugs. The drugs made from living cells are more expensive to duplicate than traditional medicines designed from chemical compounds.

Few companies are capable of making biosimilars today, and Novartis is one of them. Another is AstraZeneca plc (NYSE: AZN), which recently began targeting the market.

Brand name biotech drug makers such as Amgen Inc. (Nasdaq: AMGN) are in the direct line of site as Obama mentioned ‘particularly anemia’ generics in a recent speech.  Genentech Inc., Genzyme Corp (Nasdaq: GENZ), Gilead Sciences Inc. (Nasdaq: GILD) and Celgene Corp. (Nasdaq: CELG) are all fighting against biosimilars in many treatment areas to protect exclusivity for their products.

But federal legislation was proposed back in March that seeks to define the length of time brand-name biotech drugs would have market exclusivity. Shortening that time frame and promoting biosimilars is part of  Obama’s health care strategy.

Mike Tarsala