UPDATE 1-Roche maintains focus as industry faces cutbacks

* Crisis will leave generics and innovators as survivors

* Roche sticks to guns, no plans to diversify

* To submit breast cancer T-DM1 soon for U.S. approval

(Updates with quotes, details, background)

By Caroline Jacobs

PARIS, May 26 (BestGrowthStock) – Europe’s economic jitters will
clean out the health-science industry, leaving global generic as
well as innovative drugmakers among the survivors, the head of
Swiss drugmaker Roche (ROG.VX: ) predicted on Wednesday.

Fresh healthcare spending cuts in several European countries
following the debt crisis triggered by Greece are expected to
hurt the pharmaceutical sector. [ID:nLDE6440D5]

“We will see dramatic changes in the industry,” Chief
Executive Severin Schwan said at a news conference. “If pressure
increases you will have suddenly winners and losers and you have
a lot of enterprises that will be squeezed out.”

Survivors would be generic drugmakers with economies of
scale needed to handle the volumes of the cheaper copies of
branded drugs, as well as drugmakers that find medicines with
improved outcomes compared with available drugs.

Those in the middle, with little differentiation, would be
wiped out. “I’m sure of that,” Schwan said.

The economic crisis has only strengthened the conviction of
the world’s largest maker of cancer drugs to stick to its guns,
said Schwan.

Roche is focused on drugs that can prolong and improve the
quality of lives to such an extent that governments and patients
will be prepared to pay for them, he said.

Among Roche’s innovative drugs is trastuzumab-DM1 which
showed such promising mid-stage Phase II trial results on women
with advanced breast cancer that the U.S. Food and Drug
Administration (FDA) encouraged Roche to submit it for approval.

“It is imminent,” Schwan said about the U.S. filing, adding
the drug’s launch could take place in the beginning of 2011, if
approved. Roche will still need to conduct Phase III studies.
Drugmakers usually file for approval after final trial outcomes.

BIOSIMILARS A DIFFERENT BALL GAME

Some of Roche’s rivals, like French peer Sanofi-Aventis
(SASY.PA: ), have diversified their business by expanding in areas
like over-the-counter drugs or generics, or, as some are looking
at, into biosimilar drugs — generic versions of biotech drugs.

Merck & Co (MRK.N: ) has created a biosimilars unit and
AstraZeneca (AZN.L: ) has said it would be in the field to some
degree. [ID:nLDE61A1XV]. Generic drugmaker Sandoz, part of
Novartis (NOVN.VX: ) has three biosimilars on sale in Europe.

Schwan acknowledged that the arrival of biosimilars posed a
challenge but said it would be one that would be easier to
handle than traditional generics because the threshold for
launching a biosimilar was much higher.

Traditional generic drugs are copies of chemical entities
while biosimilars can never be true copies because they are
based on living cells.

Generic drugmakers need to run clinical trials to prove
their version of a biosimilar is efficient and safe, and will
also need to create their own sales force to address physicians
who will not easily switch patients from the original version.

“It’s a different ball game and we expect a much lesser
penetration of biosimilars,” Schwan said.

Israel’s Teva Pharmaceuticals (TEVA.TA: ) and its partner
Lonza (LONN.VX: ) are working on developing a similar version of
Roche’s blockbuster antibody drug Rituxan, also called MabThera.
The biosimilar could be launched in 2014. [ID:nLDE6401UB]

In addition, Roche’s blockbusters MabThera and Herceptin
could become vulnerable to biosimilars as they lose their patent
protection in a several European countries in 2014 and 2015.

Investing

(Reporting by Caroline Jacobs; Editing by Mike Nesbit)

UPDATE 1-Roche maintains focus as industry faces cutbacks