Estimating the number of Hepatitis patients treated by Roche's Pegasus

As Shamnad had earlier blogged, Roche’s patent on Pegasus now stands revoked by the IPAB. As discussed by Shamnad, the Pegasus patent is interesting for a multitude of reasons: it was the first pharmaceutical product granted to Big Pharma in India, it was the first biological to get patent protection and most importantly, there is no generic manufacturer of Pegasus. 

What I find more interesting is estimate of the patient population infected with Hepatitis C virus. As per media reports India has a population of over 10 to 12 million citizens infected with the Hepatitis C virus, which Pegasus is supposed to treat. 

If our readers may remember, back in 2010, we had published a limited number of Form 27s for pharmaceutical patents. You can read those posts over here. Form 27 basically requires all patentees to disclose to the Patent Office the degree and extent to which their patented inventions are being worked i.e. the quantum of sales. 

For the Pegasus patent, Roche revealed (p. 10) that, in 2009, it had sold a total of 44,432 packs in India for a sum of Rs. 42,63,89,000 (Rs. 42.63 crores). Initially, I was under the impression that 44,432 packs meant that at-least 44,432 patients were being treated with Pegasus but that is not the case. The Pegasus treatment seems to be long drawn and it is likely that each patient requires more than one pack. I couldn’t find the exact number of packs required per patient but there is another way to come to a rough estimation and that is by dividing the total income from sales of Pegasus by the cost per patient. 

From the information available it appears that the entire cost of Pegasus per patient is at Rs. 4,36,000 (Rs. 4.3 lakhs) but is also available for a discounted figure of Rs. 3,14,496 (Rs. 3.14 lakhs). So dividing the total sale (Rs. 42.63 crores) by the cost per patient (at the discounted price of Rs. 3.14 Lakhs), you get a grand total of 1,355 patients. Remember, this is a rough estimate. 

Image from here

Going back to the the number of Hepatitis C patients in our country: 10 million to 12 million. Roche was thus able to sell it drug to a mere 0.01 percent of the target market. Remember, Roche had a monopoly on this drug – it had no competition. Yet it was able to serve only 0.01 percent of the market. So what did the remaining 99.99% of the patients do? My guess is that there are several other Hepatitis drugs out there which were priced much more competitively than Roche’s Pegasus which is priced at Rs. 3.14 lakhs i.e. several times more than the annual per capita income of the average Indian. 

All this brings us back to the question of differential pricing. It’s tragic when a patient chooses his or her treatment according to the cost of the drug but as we’ve seen earlier with the Tykerb example, the sales of the drug literally doubled when the price of the drug was cut in half. The market for life-saving drugs should be relatively inelastic but not so in India. 

Going back to the issue of differential pricing, the entire business model in India should be to recover costs and make profits by selling the drug at a lower price but in huge volumes. What better example than Pegasus? If you are looking at a target population of 10 million patients, the volumes speak for themselves. 10 million is more than the population of some European countries combined. 

It’s a tragedy that companies like Roche are so slow on the learning curve, especially since they take so much pride in their capacity to innovate. From the way I see it companies like Roche need an entire managerial revamp. Most of the Big Pharma subsidiaries in India are relics of the past, an old boys club with a management that first joined these companies when they were created in the seventies and eighties. Its time Big Pharma revamped their managements with younger blood that is more attuned to the complexities of the Indian market.