Pharma major Gilead on May 12 signed non-exclusive licensing agreements with five companies based out of India and Pakistan for their investigational drug remdesivir, to treat COVID-19 patients.
Gilead signed licenses with Cipla, Jubilant Lifesciences, Hetero Labs, Mylan, and Ferozsons Labs. The license agreement allows these five companies to manufacture both the active pharmaceutical ingredients (API) and formulation of the drug and distribute it in 127 countries including India. The drug was given emergency use authorization (EUA) by the USFDA for treating COVID-19 patients, but is yet to be formally approved by the drug regulator.
This is the second voluntary license agreement that Gilead has signed. The earlier instance was in 2014-2015 for Gilead’s antiviral drug sofosbuvir branded as Sovaldi amongst other names, for treating Hepatitis C .
Gilead licensed the drug to over 10 companies who could sell it across 100 countries. Gilead transferred details on how to manufacture the active pharmaceutical ingredients (API) and finished formulation to the partner companies. They in turn had to pay Gilead a royalty fee of around 5 to 10 percent on sales of the drug.
Under the agreement for remdesivir, Gilead will transfer its technology on how the API and formulations are developed to the companies as well. These companies can then in turn either manufacture the API or both the API and formulation, price it accordingly, and sell it. The license, unlike sofosbuvir is royalty free, which means Gilead will not receive any money on sales until one of the two conditions are met – either the WHO declares COVID-19 ending as a public health epidemic globally or there is a vaccine or drug developed to treat it.
The deal, pharma heads say, is to ensure accessibility and affordability of remdesivir in especially lower income countries with poor health infrastructure. Besides India, this license agreement extends to countries such as Afghanistan, Bhutan, Cambodia, South Africa and Egypt to name a few. It does not extend to larger and more developed countries such as US, UK, Europe, China, Australia amongst others.
Heads of pharma companies, who have licensed Sofosbuvir in the past from Gilead expect more such agreements to be signed, as early as the next week.
For sofosburvir, there were eventually 11 companies that signed licensing agreement for the drug to distribute it in 101 countries.
The reason for licensing to multiple companies is to bring down costs. In the case of remdesvir, like sofosbuvir, the price of the drug depends on the manufacturer. However, the key issue is remdesivir is more expensive to manufacture due to reasons such as it being an injectable, which always makes it more difficult to scale up and generate large volumes. Sofosbuvir prices eventually halved within a year. In some countries the price fell as low to $10 per pill versus $1000 per pill in the US and much lower than the initial 12- day treatment of close to $100,000 in the US. Higher number of licenses will help, but the costs are unlikely to reduce as significantly point out experts.
Experts also expect limited usage, hence lower volumes of Remdesivir. sofosbuvir which was approved by the US in Dec 2013 was considered to be a breakthrough treatment for Hepatitis C, and went on to become the first line of treatment for the disease. To put it into perspective, in 2014, the first year of launch, Gilead sold $10 billion worth of sofosbuvir.
Remdesivir, experts point out is only used for a small pool of patients who are hospitalized and severely impacted by COVID-19. The number of patients who use the drug is unlikely to be large according to experts. Also, after the initial enthusiasm and emergency approval by the USFDA to use against COVID-19, there is some caution building around the drug. The latest was Dr Anthony Fauci, the current director of the National Institute of Allergy and Infectious Diseases in US, in a testimony to Congress on May 12 said results from Remdesivir while being ‘statistically significant’ but ‘modest’.
In terms of financial impact, company heads point out that generally such cases of licensing are more as social responsibility and less for the finances. Especially for low income countries, licenses become important to ensure accessibility and affordability of key drugs, overshadowing the chase for margins. Also, multiple companies in the fray, make the drug competitive hence diluting the margins and ability to generate large profits. While analysts are working out the math, preliminary estimates are that Jubilant Lifesciences can make up to $40-50m in peak sales from Remdesivir. However, sales of companies can be pushed up if they sell their APIs to third party manufacturers. An example was Laurus Labs that only manufactured the API for Sofosbuvir, sold it to third parties and final formulation manufacturers such as Natco Pharma.