Post Patent Report: Choosing the Right AIs

Nigel Uttley, Enigma Marketing Research,Trade Summit

The loss of patent protection does not necessarily result in immediate generic competition because many issues, including secondary patents (mixture, process, formulation patents) and registration systems, restrict entry.

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In many articles and presentations, I have used the analogy of navigating a minefield in order to reach the land of milk and honey: the market.

Innovation in the agrochemical industry reached a peak in the mid-1980s and early 1990s, resulting in many active ingredients (AIs) now entering the off-patent phase. Since 2000 our reports have profiled more than 130 AIs representing very significant opportunities for the generic sector. There is no shortage of opportunities – the difficulty for the distributor is how to choose the right AIs for its market.

In our latest report, 24 active ingredients are profiled. We examine the data that needs to be generated when assessing which AI to develop and the barriers facing the generic manufacturer. In reality, the process is very involved, costly and takes considerable time before market launch is possible. One of the main problems, which is often not fully addressed by distributors, is the security of supply of the AI. Distributors invest significant sums of money to register products, but they do not always sufficiently delve into the details of where and how the AI and its intermediates are manufactured and how secure is the supply. The main reason for this is that distributors tend not to have the knowledge of organic chemistry and the processes involved in AI manufacturing.

Usually, there is not a problem in finding a source of the AI as it is well known that there has been a massive proliferation of AI manufacturers in China and, to a lesser extent, India during the last 15 years. However, since Enigma Marketing Research has been involved in identifying opportunities, it has become apparent that only a limited approach by distributors to supply chain management (SCM) exists. Their main focus is on technical specification, documentation required for registration purposes (for example, five-batch analysis) and delivery schedule for timely market entry once the registration has been achieved, but does not look in depth at security of supply. I have over the years heard many irate distributors discussing poor service from suppliers at various events.

Inventor companies and the larger generic/off-patent companies outsource the manufacture of some of their AI and intermediate requirements and have teams of experts making sure that their supply chain is in place to secure the huge investment made in R&D and registration development. Likewise, small companies also spend considerable amounts of money (as a percentage of turnover probably more than the big companies) on getting a product to market but spend very little effort on SCM. They are at great risk that the supply might be disrupted for a variety of reasons including:
■ Lack of access to a key raw material
■ Restrictive process patents
■ Supplies being bought out by inventor companies
■ Closure of plants for environmental reasons

Audit systems need to be put in place and AI suppliers must have a more transparent system that the distributor can understand to underpin the investment they have made.

Here, I highlight the security of the supply aspect of SCM with practical examples.

Process Patents

Flufenacet offers a good example where SCM must explore the details of the process of manufacture to ensure security of supply, and in particular to assess whether process patents might be restrictive and whether key intermediates will be available in order to guarantee security of supply.

Flufenacet was discovered by Bayer CropScience. It controls a wide range of annual grass weeds, sedges and some small-seeded broadleaf weeds. Flufenacet is intended primarily for soil application and can be used pre- and post-emergence. It is used in a wide range of crops and is an excellent mixing partner with metribuzin, metosulam, diflufenican, pendimethalin and isoxaflutole. The European patent to the active ingredient expired in June 2009; however, Supplementary Protection Certificates exist that extend patent protection in a number of countries.

The chemistry and technology involved in the manufacture of flufenacet involves many separate steps, some require special handling equipment, such as phosgenation. Overall, it is likely to be an expensive active ingredient to manufacture.

The final step in flufenacet manufacturing involves two key intermediates and a relatively simple condensation process step. However, Bayer has a process patent, whereby the process conditions and solvents used result in an improved yield. This reaction step can be carried out using different conditions and solvents without infringing the patent, but may result in a lower yield.

Any distributor seeking to source flufenacet needs to ensure that the process used by the generic manufacturer does not infringe Bayer’s patent.

The key intermediate, acetic acid [(4-fluoro-phenyl)-isopropyl-carbamoyl]-methyl ester is synthesized from para-fluoroaniline which is used in the manufacture of a number of other agrochemical active ingredients such as benthiavalicarb, bixafen, picolinafen and quinoxyfen. Thus the source of this intermediate should not create difficulties in the SCM process.

The other key intermediate 2-methanesulphonyl-5-trifluoromethyl-1,3,4-thiadazole is not used in the manufacture of any other agrochemicals, and secure sourcing of flufenacet from generic manufacturers may be difficult. At least two Chinese companies claim to manufacture the chemical, but any distributor seeking to enter the generic flufenacet market needs to understand how this key intermediate is manufactured and how secure supplies will be.

The converse of this is that any AI manufacturer of flufenacet wishing to establish long-term relationships with distributors needs to:
■ Ensure that the process it uses does not infringe patents
■ Secure the supply of key intermediates
■ Provide consistent quality of product at an affordable price now and in the future
■ Provide the distributor with a transparent cost reduction program.

Editor’s note: Dr. Nigel Uttley’s expert analysis on how to enter new markets appears regularly in FCI. Visit our archives for his articles on azoxystrobin, mesotrione, picolinafen and more.