Japan approves first generic biotech drug

The logo of Swiss drugmaker Novartis is seen on the top of an office building at the company's plant in Basel January 28, 2009.

ZURICH (Reuters) - Japanese regulators approved a human growth hormone from Novartis AG, the first green light in Japan for a biosimilar or generic version of a biotech drug, the Swiss drugmaker said on Thursday.

Biosimilars are viewed as a promising new market, given the pent-up demand for cheaper versions of extremely expensive biotech drugs, some of which are coming to the end of their patent life.

Somatropin, made by Novartis' generics unit Sandoz, is for treatment of growth hormone deficiency in children and growth disturbance associated with Turner's syndrome or chronic renal insufficiency, the group said.

The approval is for the same range of diseases as the reference product, Pfizer Inc's Genotropin, Novartis said. The drug is already approved in Europe and the United States as Omnitrope.

Biotech drugs, used to treat everything from cancer to autoimmune diseases such as rheumatoid arthritis, tend to be more expensive and complex than traditional chemical medicines because they are made from living cells.

Conventional drugs can lose up to 90 percent of their sales within a year once they face generic competition. But relatively few companies are now capable of making biosimilars.

Brand-name biotech companies such as Roche Holding AG's Genentech Inc and Amgen Inc say they need an adequate period without competition to encourage development of new medicines.

Novartis shares fell 1.0 percent to 45.04 Swiss francs by 0827 GMT (4:27 a.m. EDT), in line with the DJ Stoxx European healthcare index.

The first biosimilars have already been approved and are on the market in Europe. The United States, the world's biggest and most lucrative pharmaceuticals market, is still discussing a regulatory pathway for follow-on biotech treatments.

Drugs industry supplier Lonza Group Ltd believes it is tough to predict the size of the market because of uncertainty of how regulations will end up, its chief executive Stefan Borgas said earlier this month.

"I think common wisdom at the moment is that the global biologics market is something like $80-90 billion, and what the price reduction will be is a bit of a crystal ball discussion at the moment," Borgas told Reuters.

"Even if the most optimistic forecast is too optimistic, it will be a significant market. In the billions and the 10s of billions."

(Editing by Mike Nesbit and David Holmes)