By Robert Keith-Reid

SUVA, Fiji (Islands Business Magazine, Feb. 14) - Douglas Pharmaceuticals, the last New Zealand-owned pharmaceutical company, is pleased and proud of what is emerging from the smart research laboratory it runs in Nadi, Fiji.

[PIR editor’s note: Nadi is located on the southwest coast of Fiji’s Viti Levu island.]

Douglas Pharmaceuticals plans to enlarge its Nadi lab and equip it for commercial manufacturing.

"Our latest product is in a class of a-typical anti-psychotic drug used for psychotic disorders but in particular schizophrenia," says Andrew Van Breugel, an Australian chemist and managing director of Douglas Pharmaceuticals' Fiji arm.

"We are working on other drugs for other disorders such as Alzheimer's. We are developing some competency in central nervous system drugs, particularly drugs for mental disorders. We are expanding this research and all of those products are being researched on the Fiji side," said Van Breugel.

Last November, the company scored a historic Fiji achievement and probably the Pacific Islands' first.

Authorities in the Netherlands, after extensive assessment, gave a green light for the schizophrenia drug - the first pharmaceutical product from Fiji to win such recognition.

Douglas Pharmaceuticals, which established a sales beachhead in Europe five years ago, is now working towards certification of its Fiji establishment by the European Union as a quality manufacturer of pharmaceuticals, thus opening the huge European market to its products.

The company is in the business of making generic pharmaceuticals. That means copying drugs that already exist.

It seeks to replicate as closely as possible drugs on which patents have expired, or which will soon expire.

This is not a simple copycat process. It is one that may take up to six years to complete at a cost of NZ$1 million-NZ$2 million [US$679,540 - US$1,359,080].

"We are not into drug development. We are into drug product development," Van Breugel explains. "The difference is we are not investing in chemical entities with therapeutic activity. We are actually producing generic versions of existing pharmaceuticals. That means the safety of the drug is fairly well known and there is already a market in place because the originator would have been selling the drug for five or ten years. You run a series of trials to see if we can mimic the drug release properties of the original. We do trials to try to get the ingredients in the right portion and manufactured in the right way so we end up with a tablet that behaves the same way as the original. Then we do trials to see if the drug is going to be stable, because the impurity profile is very tight and making a product that degrades it is not acceptable. Once we've got a good feeling-when you're doing tests with drugs that cost tens of thousands of dollars a kilogram, you can't do an infinite number of tests-you build up a good relationship with the drug supplier who wants to sell you as much as he can. Eventually, we produce something that looks good and we start producing pilot scale versions. The irony is you try to produce something as close to the original as possible because the more different it is the more difficulties you will have registering it. The health authorities and consumers expect the generic drug to be identical to the original. We try to copy the size, shape and color of the original tablet because if we don't, doctors won't prescribe it," says Van Breugel.

Patents run for 20 years - a period during which the originator of a drug has a monopoly that enables high prices to be charged for its product. This enables the producer to recover the investment, which is probably one of hundreds of millions of dollars put into developing the drug.

Actual production costs tend to be low, so having cheaply produced a copy of the original, a generic producer can pitch his prices way below the cost of the original.

"When a drug is protected by patent, it carries a very high branding and that's fair enough because the company has to recoup its costs," Van Breugel says.

"Effectively the cost is high because there is no competition, but it does not really cost that much to make that product, so generic competitors produce the product at less cost. That appeals to governments and consumers. The developers are comfortable with 20 years because they still retain the market share generally because doctors and patients are comfortable with their product. The sorts of drugs we are interested in are very high cost, almost niche products, prescribed by specialists, psychiatrists and dermatologists. There's a push all over the world to move to generics because all governments are complaining about the cost of drugs. Why pay FJ$300 [US$203] for a box of pills when you can pay FJ$100 [US$67]?" asks Van Breugel.

Outside New Zealand, Douglas Pharmaceuticals operates in Australia, Europe, and Fiji with annual sales that now exceed NZ$100 million [US$67.9 million].

Europe is the big growth market for Douglas Pharmaceuticals generic products.

The company opened its Fiji laboratories in the late 1990s because at the time it couldn't legally work on patented pharmaceuticals in New Zealand.

"In Fiji, the market is too small to worry about and there isn't the regulation to provide protection for pharmaceuticals, so the big companies just don't bother," Van Breugel says.

"That means we could legitimately and legally open a facility in Fiji," he says.

New Zealand law has since changed, but in the meantime, the Fiji laboratories had acquired abilities that Douglas Pharmaceuticals wished to retain.

Of the 25 staff, 23 are local people of whom nearly half are scientists or well-qualified technicians.

"We have developed quite a bit of expertise in solid oral dose drugs and the company sees the value of that, even though the patent situation is no longer an advantage. We don't go after the super drugs. There's no point. We don't have the manufacturing facilities and there are dozens of other companies going for them. We need to find ones that slip under the radar because they are too small or too difficult. We have a reputation now in Europe for doing difficult to formulate drugs. Oratane (an acne treatment) was one. In fact, we were the first company in the world to produce a competitor," says Van Breugel.

Van Breugel and Technical Manager Firoz Ghazali, originally from Pakistan, lead a staff of 25.

Of the 23 local staff, 10 of the 12 laboratory staff are scientists, and five employed on pilot manufacturing work hold diplomas in engineering or science.

"When we started, we had quite a few expatriates to create quality systems and introduce the technology that was needed. We employed locals from that point on and they've developed to the present stage. We send people overseas for training and have visitors come here. We still have a lot of involvement from our New Zealand parent. We have technical people visit us at least every three months. A team comes from New Zealand to review our projects and there are several tele- calls a week. So we manage the site remotely through contemporary technology. We try to have at least four products going on at a time that are intended for the European markets, and also two or three products at a time for third parties," with the new schizophrenia treatment product, Van Breugel says, "We have not got as far as a brand name because the patent doesn't expire until 2007. Now that we have got it registered, we are starting to think about making it."

Steering a new product through European regulators is a complex and protracted path to follow. In November, Netherlands' regulators decided, "Yes, we can distribute to the marketing organization. It was authorization for the first drug developed in Fiji and probably the Pacific."

The next step is to win European registration of the Fiji facility as one that complies with the highest of manufacturing standards.

"In addition to the facility, the European regulators have to be confident that the country you manufacture in is above board with secure pharmaceutical manufacturing legislation in place. Fiji actually does have legislation but it is outdated and has to be reviewed to meet European requirements," says Van Breugel.

The company hopes to see improved legislation in place later this year.

"We have a marketing license, but the import licenses won't be forthcoming until the legislation is in place."

European approval will enable Douglas Pharmaceuticals to proceed with plans to enlarge its Nadi laboratory building and equip it for commercial manufacturing operated in three shifts.

Februrary 15, 2006

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