Generic Biologics? Fugheddaboudit!

I am tired of reading breathless reports about the coming onslaught of generic biologics. It ain't gonna happen!

The recent legislation reauthorizing the FDA (sort of) -- I'm trying to be brief -- started out with a clause to create a regulatory pathway for generic biologics, also called biosimilars, and it did not make the final cut of the bill.

This pathway is critical for it lays out what procedure a company could use to file a biologic drug as a generic without doing a clinical trial. In Europe, the regulator is the European Medicines Agency (EMEA) and it's much farther along.

The lack of development of biosimilars just for Europe shows how important the U.S. market is -- and now that market is another few years away as this issue will not be revisited on Capital Hill until 2009, at the earliest.

Why is this all going on? Why can't a generics manufacturer just go ahead and clone an off-patent biologics? Biologic drugs have a very-high level of complexity, especially at the molecular level -- and this means complex, patented and secret manufacturing processes. A generics manufacturer is on its own trying to copy the drug and if it is just off bit, the drug may be off a bit -- a real safety and regulatory roadblock. Another way of looking at it is a different manufacturing process may mean a different drug, which may mean a different safety and efficacy profile for the generic.

In Europe, regulators have approved some protein-based drugs, which the regulators termed "similar biological medicinal products." The manufacturer must show a very-high level of similarity. In the U.S., the FDA has approved (by using regulatory sleight of hand) a generic of Human Growth Hormone and that's about all.

If and when the pathway in the U.S. emerges, watch Teva (TEVA). Although highly secretive about this market, the company is generally believed to be ready to rock with a slew of generic biologics. While investors and patients will just have to wait to see for sure, if you want to invest in traditional generics companies, Teva is the biggest and the best and the opportunities are growing.

And if you want something really out there -- hidden plays Wall Street may not have seen -- check out companies involved in generic radiopharmaceuticals.