Generic Gold

<span class="lockleft">Generic gold</span>

 

Generic Gold

By: Claude Solnik
November 13, 2015

Possibly Long Island’s fastest growing company is one whose name you may not know, although it’s well known to pharmacists. It hasn’t developed a single new blockbuster drug or run a TV ad touting its products’ nearly magical medicinal qualities.

It doesn’t have to.

Amneal Pharmaceuticals is part of a booming, sometimes invisible Long Island manufacturing industry, fueling construction and hiring when most manufacturing is declining. The seventh biggest maker of generic pharmaceuticals in the nation based on prescription volume, Amneal is responsible for nearly 4 percent of prescriptions nationwide and on a hiring spree, adding hundreds of workers and hundreds of thousands of square feet here.

The firm with large Long Island operations in Brookhaven and Hauppauge makes about 10 billion tablets and capsules annually (nearly 29 million a day or 19,000 a minute), including about 9 billion, or 90 percent, on Long Island.

“You can react quickly to market conditions,” Amneal Co-CEO Chintu Patel told LIBN of the benefits of a U.S. base. “The generic industry is very opportunistic. The No. 1 advantage is control over your supply chain and quality.”

If “generics” brings to mind Kirkland (Costco’s private label) and no-name computer brands, think again.

“The generics industry is growing in all segments,” Patel said. “The world’s healthcare system can’t sustain the cost of medications. The only way to control the cost is through generic medications.” As drug patents expire, companies like Amneal jump in with generics to fill the gap in a huge financial free-for-all.
“There are plenty of products coming off patents over the next five years,” Patel said. “And there are complex products where generics haven’t entered.”

 

Changing of the guard

The same forces that fuel generic growth are battering big-brand pharmaceuticals firms, which often are reeling. Forest Laboratories, with large operations in Commack, gave the world Namenda for Alzheimer’s and Lexapro and Celexa for depression.

It last February reached a deal to sell to Irish firm Actavis for $25 billion, as patents for drugs such as Namenda expire. Amneal, meanwhile, is busy launching its generic version of Namenda, known by the chemical name, mementine. Consider it a changing of the guard.

“They are leaving, because of their acquisition,” Patel said. “But there is a substantial number of prescription and over-the-counter manufacturers on Long Island. There’s a talent pool.”

Long Island is ground zero for the generic drug industry with firms such as A & Z Pharmaceutical, Contract Pharmacal, LNK International and InvaGen all in Hauppauge. Ascent Pharmaceuticals is based in Central Islip. Amneal invests $150 million in research and development, developing new generics to grow market share.

“The generics pharmaceutical industry is doing extraordinarily well nationwide,” said James Manicone, partner at JM2 Architecture, in Farmingville, working on projects for Amneal and other generics makers. “It’s doing extraordinarily well on Long Island. In my estimation, it’s the epicenter of R&D for the generics industry.”

Other firms bought their way onto Long Island, without shutting down operations here. Lake Forest, Ill.-based Akorn Pharmaceuticals acquired High Tech Pharmacal, a specialty pharmaceuticals firm in Amityville. “We still see opportunities to acquire smaller companies and continue to grow,” Akorn spokesman Dewey Steadman said. “Those products are typically smaller volume and higher price points and margins than little white pills.”

 

All about Amneal

Amneal’s story easily could have been about a Long Island loss, but instead became one of the region’s biggest success stories. Chintu Patel moved from India in 1987, graduated from the Rutgers University pharmacy school in New Jersey and worked as a pharmacist from 1994 to 2002. He, his brother, Chirag, and their father, Kanu, also a pharmacist, in 2002 launched Amneal, named for nephews Amun and Neal.

They funded it with $200,000 and a partner, renting a 30,000-square-foot plant in Paterson, N.J. “I worked as a retail pharmacist for eight years and decided to do something on my own,” Patel said. “It struck me that I wanted to get in the manufacturing space.” Amneal in 2005 brought in Parsadia as an investor, giving them the right economics as well as expertise.

“They struggled to get the company off the ground until (Parsadia) invested, which allowed them to expand and start R&D,” Manicone said.

The firm in 2008 bought Interpharm, with operations in Hauppauge and Brookhaven. While some acquirers move companies off Long Island, Amneal doubled down. “We decided to stay here,” Patel said, noting the firm’s technical headquarters is in Hauppauge.

“We kept all the employees. We never let go of anybody from Interpharm in manufacturing and other areas.”

Amneal grew to employ 3,600 worldwide, including 1,500 in the United States and 800 on Long Island where it plans to hire another 300 over the next few years. What’s driving demand? The generics industry in 2014 saved customers over $254 billion and during the past decade saved over $1 trillion, Patel said.

“We think we are in the right space, which is generics. It’s a growing industry. It saves healthcare a lot of money,” Patel said. “We’ve been reinvesting in the business. Our goal is a long-term vision for the company.”

 

Generic Growth

Amneal is a perfect example of the often unseen side of pharmaceuticals and an often overlooked industry. If “Cheers” is the place where everybody knows your name, generics is the industry where nobody, or almost nobody, does. “Consumers don’t know our name,” Patel said. “But at the pharmacy level, they do.” Doctors and patients don’t generally order Amneal products. They instead request generics, which firms like CVS and Walgreen’s (Amneal clients) supply.

“They go to the pharmacy and get prescriptions,” Patel continued. “We are not in the front of the store. We are behind the counter.”

Public companies typically have higher profiles. Amneal and many generics makers focus on the product not the publicity. While Amneal doesn’t need to market to consumers, it is making its name through growth and market share. JM2 is helping Amneal add nearly 400,000 square feet in Brookhaven. The project, originally slated to cost $65 million plus $25 million for equipment, has been expanded to nearly $140 million.

“It shows that Amneal is totally committed to this project,” Patel said. “We added extra requirements and space.”

Amneal just got a temporary certificate of occupancy from Brookhaven for a warehouse. A lab and office along with 180,000 square feet are in the works. The firm isn’t the only generic maker in a growth spurt.

JM2 helped Spirit Pharmaceuticals add another 55,000 square feet in Bohemia and is working on a 250,000-square-foot manufacturing facility for Ascent Pharmaceuticals in Central Islip.

That project will include a 75,000-square-foot warehouse for Ascent’s sister company Alphamed, which produces medication bottles.

“You’re dealing with people who are living longer, who want to save money,” Manicone said. “Generics are going to save people billions of dollars on the cost of conventional mainstream pharmaceuticals.”

 

Challenges and Choice

While branded drugs are protected by patents, generics have no such right to block others from vying with them.

“Every business comes with many challenges,” Patel said. “Competition for certain products is crowded.”

Global generic giants also vie with large generic firms such as Amneal. Israeli firm Teva and Pittsburgh-based Mylan, both public companies, acquire smaller businesses. Amneal also has to find people to fill jobs and keep costs down in the face of electricity and healthcare expenses. To grow globally, Amneal is diversifying beyond tablets and capsules. It now makes liquids, creams and ointments, patches and injectables.

“We’re mainly an organic-driven company. That’s where we invested heavily, in R&D,” Patel said. “We’re also a consolidator.”

The firm in March acquired Actavis’ generic business in Australia and in July acquired a 200,000-square-foot manufacturing facility in Cashel, Ireland.

“It came at the right time,” Patel said of the site Amneal will use to make inhalers. “It fits our requirements and was economical for us to buy and supports international needs.”

Generics makers could merge, leaving fewer in business and leading to the end of the road for some firms. But other factors could mean this is the beginning of a new generics generation in which big pharma won’t just mean big brands.

“It’s an industry that’s not affected by the economy,” Manicone said. “The pharmaceutical industry is unique. In a down economy, people are going to be looking for generics. People are always going to have a need for pharmaceutical products. People are still going to get sick in a boom or a recession.”