Abbott prepares for entry intogeneric x-ray contrast market

November 20, 1996

Generic x-ray agents may add to severe price pressure in industryAbbott Laboratories plans to leapfrog into the x-ray contrastmarket, skipping much of the R&D required to develop a newpharmaceutical, by manufacturing a generic

Generic x-ray agents may add to severe price pressure in industry

Abbott Laboratories plans to leapfrog into the x-ray contrastmarket, skipping much of the R&D required to develop a newpharmaceutical, by manufacturing a generic brand of the low-osmolarx-ray contrast agent iopamidol. The company could become a majorthreat to existing players in the industry as it leverages itsextensive contacts with U.S. hospitals to drum up sales of x-raycontrast agents.

"We will do generic contrast media," said Sean Murphy,director of new business development for Abbott Hospital Products."As one of the largest generic injectable suppliers in theworld, it is only natural that we would provide that type of solution."

The Abbott Park, IL, company is ready to mass-produce iopamidol,a low-osmolar contrast medium (LOCM) that came off patent protectionin January. As part of its abbreviated new drug application submissionto the Food and Drug Administration, Abbott has already producedtest batches demonstrating its ability to manufacture the agent.When the company will be able to switch into high gear dependson when the FDA approves the ANDA, which Abbott filed in 1995.

Iopamidol was developed by Squibb Diagnostics and commerciallyreleased on the world market a decade ago under the name Isovue.The LOCM became a Bracco product two years ago, when the Milan,Italy, company bought Squibb Diagnostics (SCAN 8/10/94).

The contrast media industry has been anxiously awaiting theentry of generic LOCM since Isovue's patent protection ran out.Concern has centered on the effect that the entry of such a productwould have on prices. The effect will not be as noticeable asit might have been just 12 months ago, however, due to recenterosion in contrast media prices.

Discounting by the major players has sent prices tumbling sincespring 1996. For example, effective July 1, Nycomed slashed pricesfor nonionic contrast media by 24% to members of VHA, in additionto previous discounts already afforded the group purchasing organization.VHA officials reported that the cuts provide total discounts of58% to 60% off list price.

Whereas long-term players in the contrast media market mayview softening prices and heightened competition as a threat,Abbott sees the volatility as an opportunity, providing the foundationfor a company from outside the field to grab market share withlow-priced, high-quality products.

"The consolidation of purchasing organizations in theU.S. has created an opportunity for nonincumbents," Murphysaid.

Abbott executives will consider producing other generic LOCMas these products come off patent over the next five years, butit may be some time until the next agent loses patent protection.

"There is a fairly big gap (until patent expiration) betweeniopamidol and the next one," Murphy said. "While weare planning for (introduction of these agents), whether we everintroduce them will depend on the relative size of the markets."

Introduction of iopamidol will be the latest of several stepsthat Abbott executives hope will establish the company as oneof the largest vendors of contrast media worldwide. Earlier thisyear the company established a partnership with Berlex Laboratoriesfor distribution of MRI and x-ray contrast, complementing an existingdeal with Sonus Pharmaceuticals for ultrasound contrast (SCAN7/3/96 and 10/23/96).

"We've found that providing solutions across differentmodalities is crucial for us in determining longstanding partnershipswith clients," Murphy said. "The more products you have,the easier it is to provide the right mix of services and arrangements."

As one of the largest diversified medical products companiesin the world, Abbott Laboratories can exert enormous influence.The company comprises several business units. The Abbott HospitalProducts unit will be developing the contrast media business.The company has on average five contracts per hospital in theU.S., many of which involve drugs and drug-delivery systems. Thesecontracts could provide the basis for a relatively easy transitionto contrast media.

"Our ability to leverage (these contracts) has been avery good weapon for us," Murphy said. "It's fairlyobvious that when you have relationships and ongoing agreementswith hospitals in multiple areas, it makes it pretty easy forthe customer to secure access to our products."