The Top 15 Generic Drugmakers of 2016 by Eric Sagonowsky, Eric Palmer, Angus Liu

The top 15 generic drugmakers of 2016 by Eric Sagonowsky, Eric Palmer, Angus Liu

Branded drugmakers weren’t the only ones working through a tumultuous 2016. Generics companies faced pricing pressure, too. And while branded companies suffer pricing pain on costly cutting-edge therapies, generics outfits feel the pinch with already-thin margins, making pressure all the more agonizing. How is the industry responding? By consolidating and hoping to save money, for one. Take a look at FiercePharma’s 2014 ranking, and it’s clear that some companies have made leaps too big to depend on organic growth alone. Take Teva, which topped the 2016 list as it did in 2014. It wrapped up the biggest M&A move in recent history for the generics industry, swallowing Allergan’s unbranded offerings for $40.5 billion in August. The massive move will continue to reverberate in the generics industry for years to come.

Top drugmakers by 2016 generics revenue in USD billions

Teva Pharmaceutical Industries 9.85 Mylan 9.43 Novartis 9 Pﬁzer 4.57 Allergan 4.5 Sun Pharmaceutical Industries 3.61 Fresenius 2.8 Endo International 2.57 Lupin 2.49 Sanoﬁ 2.05 Aspen Pharmacare 2 Aurobindo Pharma 1.86 Dr. Reddy's Laboratories 1.78 Cipla 1.61 Apotex 1.6 Source: Evaluate, May 2017 Get the data

Sales data for Sun Pharma, Fresenius, Lupin, Aspen Pharmacare, Aurobindo, Cipla, and Apotex are Evaluate estimates. Dr. Reddy’s data provided from company filing.

Behind Teva came Mylan, which also completed a big deal last year, a $7.2 billion buyout of Sweden’s Meda. The buy helped it bulk up in over-the-counter drug offerings and win a presence in some emerging markets new to the U.S.-based company. That acquisition followed a series of others in recent years, and Mylan is now working to cut loose up to 3,500 employees as it aims to reap savings from that deal spree. 1

FierceMarkets, a division of Questex, LLC www.fiercemarkets.com | www.questex.com 2017 Questex LLC. All rights reserved. Trailing those two companies was Novartis, whose Sandoz unit tallied $9 billion in off-brand sales for the year, according to life science commercial intelligence firm Evaluate. From there, the industry saw a bit of a dropoff: Pfizer came in fourth with $4.6 billion, while Allergan, which officially offloaded its generics assets in August, rounded out the top 5 with $4.5 billion. Other names in the top 15 are familiar to industry watchers: Sun Pharmaceutical Industries, Fresenius, Endo International, Lupin, Sanofi, Aspen Pharmacare, Aurobindo, Cipla, Apotex and Dr. Reddy’s Laboratories. If pricing pressure alone was not enough of a challenge for the generics industry, multiple top players are also embroiled in a pricing collusion probe at the Department of Justice, an issue that could weigh on the sector going forward. Several have been slapped by the FDA for manufacturing violations that continue to weigh on their ability to supply key meds. But amid the industry’s turmoil lies a silver lining. Generic drugmakers are well-positioned to take advantage of the pricing pressure in the U.S. The industry’s lobbying group has already rebranded itself as the Association for Affordable Medicines to drill in on the message, and legislation is pending in Congress that would speed certain generics applications through FDA review. Generic drugs make up 89% of prescriptions but only 27% of drug costs, according to the industry, something the sector will continue to hammer as lawmakers look to reduce drug costs in the U.S. Despite the lingering challenges, life science commercial intelligence firm Evaluate recently predicted that generics will continue on a steady growth path to $115 billion in 2022, up from $80 billion in 2016. The sales data used to arrive at these rankings were compiled on a fiscal- year basis, in some cases from reported data and in some from Evaluate’s internal estimates. We have identified the numbers that are based on estimates, and whether the companies have fiscal years that vary from the calendar year. Questions, comments? As always, please get in touch. And if you’re interested in making comparisons to our 2014 report, here’s where to find it. Editor’s note: This report was updated to reflect a correction in the data from Evaluate.

Worldwide generics sales 2008-2022

2008 $53b 2009 $53b 2010 $59b 2011 $65b 2012 $66b 2013 $69b 2014 $74b 2015 $73b Generics 2016 $80b 2017 $86b 2018 $92b 2019 $97b 2020 $103b 2021 $109b 2022 $115b

Worldwide generics sales are projected to rise at a compound annual growth rate of +6.3% over the next five years, according to EvaluatePharma. 2

Headquarters: Petah Tikva, Israel 2016 generic drug sales: $9.8 billion Being the world’s largest generic drug player certainly comes with its challenges. With 57,000 full-time employees around the globe, Israel’s Teva Pharmaceutical Industries ranked No. 1 among the world’s top generic drugmakers, raking in $9.8 billion with its copycats last year. That’s in line with the drugmaker’s finish in FiercePharma’s 2014 ranking, and Teva has bulked up even further in 2016, purchasing Allergan’s generics for $40.5 billion. But industry bragging rights weren’t enough for Teva’s restive shareholders. Before the drugmaker even closed the deal in August, it faced investor angst over concerns it paid too much. “They grossly overpaid, there’s no doubt about it,” one investment banker told the Financial Times last year. Those concerns would prove to be just the start of Teva’s recent troubles as problem after problem cropped up. The drugmaker said goodbye to its CEO, settled a massive bribery case with U.S. officials and lowered its 2017 guidance, all within a few months. Facing those challenges, an Israeli newspaper in March reported that Teva is considering thousands of layoffs. Meanwhile, in an attempt to combat the trends so badly hurting the industry, Teva last fall committed to a high number of launches—1,500 per year—to propel its business to 5% growth in the years to come. “Our global pipeline of generic products positions us for an increasing number of first-to- file opportunities and other key generic launches, as well as further expanding our product portfolio,” Teva wrote in its annual 20-F filing with the Securities and Exchange Commission. Overall, the drugmaker has 330 product applications awaiting FDA approval, according to that filing, and 71 tentative nods from the agency. Teva said it’s the first-to-file company for 95 of those products, which comes with a 6-month monopoly and its attendant revenue boom. And it disclosed a staggering 1,655 generic drug approvals in Europe last year. The company is just kicking off its launch of AirDuo RespiClick and an authorized generic of that product, which is an alternative to GlaxoSmithKline’s respiratory giant Advair that Evercore ISI analyst Umer Raffat called a “very important launch” for Teva. Like Mylan and several other generics firms, Teva is under investigation for possible generic pricing collusion.

FierceMarkets, a division of Questex, LLC www.fiercemarkets.com | www.questex.com 2017 Questex LLC. All rights reserved. While Teva pressures branded drugmakers with its cheap copycats, the company faces its own generic threat with its branded Copaxone, a blockbuster MS med. Already fighting off copycats to its original Copaxone formula, Teva is expected to soon face generic erosion on its follow-up 40 mg version. After losing numerous court battles to defend that med, the drugmaker caught a lucky break when Momenta and partner Sandoz received a complete response letter from the FDA related to manufacturing. 2. Mylan

Headquarters: Bunschoten, The Netherlands 2016 generic sales: $9.43 billion For some time, Mylan’s corporate image will be linked with its damaging EpiPen pricing controversy. But aside from all that negative attention, it has a booming generics engine that generated $9.43 billion in sales last year, according to Evaluate analysts. The drugmaker had a rough time in 2016 after its EpiPen price increases, made over several years, went public. To appease critics, the company launched an authorized generic and amped up its patient assistance programs. Still, Mylan worked through a deluge of bad PR and is now working to finalize a settlement with the U.S. Department of Justice over alleged Medicaid overcharges on its med. Despite the controversy, Mylan turned in 18% growth last year to $11.1 billion in total sales, expanding at a clip the company’s larger pharma peers would love to duplicate. But it wasn’t all sunny, as pricing presented a challenge and will continue to pressure results in 2017, President Rajiv Malik said in an accompanying statement. “We continued to see erosion both globally and in U.S. generics in the mid-single digits which was in line with our expectations, and we continue to expect a comparable environment in 2017 given the breadth and make-up of our global portfolio,” he said. For 2017, Mylan is expecting 17% growth at the midpoint of its revenue projections.

At the end of 2016, Mylan had more than 35,000 employees around the globe and 247 generic drug applications pending at the FDA, representing nearly $100 billion in sales for the branded versions. Needless to say, it’s a complicated outfit constantly seeking to challenge Big Pharma’s patents, master manufacturing and supply chain efficiencies, and steal market share from expensive branded meds. It’s also pushing into biosimilars, with a Herceptin biosim on the market in India and applications pending in the U.S.

FierceMarkets, a division of Questex, LLC www.fiercemarkets.com | www.questex.com 2017 Questex LLC. All rights reserved. The company has been on a bit of an M&A spree lately, last year picking up Swedish drugmaker Meda for $7 billion and a group of topical skin meds from Renaissance Holdings for $1 billion. With savings to achieve from its M&A spree, the drugmaker late last year said it’d be chopping up to 3,500 jobs. Mylan is among the companies under investigation by federal officials for potential collusion on generic drug pricing. But despite the controversies, the company announced a $97 million exit package for non-executive director Robert Coury, who stopped being an employee in June. Mylan first started making generic drugs in the 1960s and today markets more than 7,500 products, according to its website, with offerings in “virtually every therapeutic area.”At the end of 2016, Mylan had more than 35,000 employees around the globe and 247 generic drug applications pending at the FDA, representing nearly $100 billion in sales for the branded versions. Needless to say, it’s a complicated outfit constantly seeking to challenge Big Pharma’s patents, master manufacturing and supply chain efficiencies, and steal market share from expensive branded meds. It’s also pushing into biosimilars, with a Herceptin biosim on the market in India and applications pending in the U.S. The company has been on a bit of an M&A spree lately, last year picking up Swedish drugmaker Meda for $7 billion and a group of topical skin meds from Renaissance Holdings for $1 billion. With savings to achieve from its M&A spree, the drugmaker late last year said it’d be chopping up to 3,500 jobs. Mylan is among the companies under investigation by federal officials for potential collusion on generic drug pricing. But despite the controversies, the company announced a $97 million exit package for non-executive director Robert Coury, who stopped being an employee in June. Mylan first started making generic drugs in the 1960s and today markets more than 7,500 products, according to its website, with offerings in “virtually every therapeutic area.”

Headquarters: Basel, Switzerland 2016 generic sales: $9 billion With branded and generic sales near the top of the pack, Novartis holds somewhat of a unique position. The drugmaker turned up fourth in FiercePharma’s review of top drugmakers by overall revenue last year, and its Sandoz outfit landed in third place for generic sales. Sandoz turned in $9 billion in generics revenue last year, according to Evaluate. With its $1 billion in biosimilar sales included, Sandoz raked in $10.1 billion, good for 1% growth versus the previous year. The company’s numbers illustrate pricing pressures felt around the generics industry. Sandoz grew sales volumes by 9% last year, but that was partially offset by a 6% erosion in price. Execs expect that trend to continue through 2017. For the current year, Novartis execs are calling for low-single-digit growth from Sandoz, as pricing challenges hitting its peers continue to hurt its own business. Last November, the drugmaker was rumored to be considering a purchase of New Jersey-based drugmaker Amneal to further build up its generics business, with RBC Capital Markets analyst Randall Stanicky writing at the time that pressure for generics M&A will only continue because of pricing erosion. Stanicky wrote that “the sector needs to consolidate as one of the offsets to this cyclical pressure that we think can get worse.” As of yet, however, Novartis hasn’t struck a deal in generics.

Headquarters: New York, NY 2016 generic sales: $4.57 billion Below the world’s top three generics companies, scale in the industry drops off somewhat. Pfizer landed at the No. 4 spot globally, and though the New York drug giant gets the bulk of its sales from branded meds, it has an important generics and unbranded drugs business that turned in $4.57 billion in sales last year, according to Evaluate. Pfizer’s critical move relating to generics last year was its decision to remain as one company, rather than splitting up as analysts and industry-watchers had long anticipated. With that move, the company’s branded and off-patent medicines stayed under the same roof. Back in 2015, the drugmaker bulked up in injectable generics with its purchase of Hospira, worth $15 billion. As industry-watchers know, the company had been eagerly looking for deals after its megamerger bid for the U.K.’s AstraZeneca fell through. Pfizer’s Essential Unit, as it’s called, “is expected to generate strong consistent cash flow by providing patients around the world with access to effective, lower-cost, high-value treatments,” including generic sterile injectables, according to Pfizer’s recent 10-K filing (PDF) with the Securities and Exchange Commission. With more than 220 injectable meds in the group, plus other off-brand products, Pfizer is looking to Essential Health as a “major growth driver” going forward, according to its website. While challenging rivals with generics, Pfizer is expecting competition from Teva and Mylan on its notorious blue pill, Viagra, later this year. Pristiq, an antidepressant, already went over the patent cliff back in March.

Headquarters: Dublin, Ireland 2016 generic sales: $4.5 billion Formerly Watson Pharmaceuticals and Actavis, Allergan rounded out the top five in this analysis of the top drugmakers for 2016. As industry- watchers know, the company offloaded its generics offerings to Teva during the period for this report, representing a major shakeup and the latest consolidation move for a sector facing painful price pressures. In a move to reshape its focus, Allergan inked a deal to sell its generics assets to Teva back in 2015, with the deal closing in August last year. Separately, Allergan also pursued a megamerger with Pfizer last year, a move ultimately foiled by new rules from U.S. authorities. Even though it’s out of the generics business now, the company was named as one of a group under investigation for alleged generics price collusion. Allergan is also the target in a shareholder lawsuit claiming execs hid behind-the-scenes pricing practices that put the company at risk. In the U.K., authorities have recently gone after Actavis for “excessive and unfair prices” on a generic in one case, and for “illegal” deals with Concordia in another. Both are now issues in the hands of India’s Intas, which picked up Actavis assets in the country from Teva. 6. Sun Pharmaceutical

Headquarters: Mumbai, India 2016 generic revenue: $3.61 billion (estimate)

India’s Sun Pharmaceutical has had its ambitions stymied by FDA action against a key manufacturing plant, but it still managed to generate more than $3.6 billion in generic sales during its last fiscal year. That figure excludes sales of its U.S.-based Taro Pharma subsidiary, in which Sun holds a 69% controlling interest. Taro in its last fiscal year reported $950 million. But even if its share of the Taro sales were figured in, the drugmaker would fall a little short of making the top five, a ranking it still claims to hold in the U.S. Many expected to see the company further along at this point, two years after its buyout of Indian peer Ranbaxy Laboratories, but things just have not worked out as Sun founder and Managing 8

FierceMarkets, a division of Questex, LLC www.fiercemarkets.com | www.questex.com 2017 Questex LLC. All rights reserved. Director Dilip Shanghvi envisioned when he completed that deal. Ranbaxy came on the market because of its own regulatory problems. The deal doubled Sun Pharma’s size and definitively made it India’s largest drugmaker. At that time, Shanghvi pledged to resolve FDA concerns for the four Ranbaxy plants the FDA had banned from selling in the U.S. and told investors growth should unfold as each plant came back online. But instead of achieving much with Ranbaxy, Sun got sidetracked when the FDA issued a Form 483 in 2014 and then a warning letter in 2015 for its Halol, India, API plant, a facility crucial to supplying the generic meds it sold in the U.S. Those regulatory setbacks kept it from winning any new generic drug approvals from the facility, hurting Sun’s growth. Even as the problems at Halol have stunted Sun’s generic growth plans, however, the company has found ways to bring some important products to market. Last year, its U.S. sales were boosted significantly by its 6-month, first-to-file exclusivity for its copy of the Novartis leukemia treatment Gleevec. While Shanghvi continues to believe in the potential for growth in generics, it also has branched into drug development and bought some branded meds to help it move further up the pharma food chain. One deal involved buying 14 older but established prescription brands from Novartis in Japan for $293 million. The acquisition gave Sun solid footing in the country even as Japan’s government turns to more generic meds to cut its healthcare bill for an aging population. But then, that was the same strategy Ranbaxy’s former owner, Daiichi Sankyo, had undertaken before the unit’s regulatory problems led the Japanese drugmaker to give up and sell it off to Sun.

Sun’s fiscal year ended on March 31, 2017.

Headquarters: Bad Homburg, Germany 2016 generic sales: $2.8 billion (estimate) Fresenius Kabi, the generics arm of the Fresenius German healthcare group, managed to do something that many generic drugmakers struggled with last year—grow revenues in the U.S., about 4% in its case. And with big investments in its future, the drugmaker aims to strengthen its position going forward. Fresenius Kabi’s growth follows from the fact that the company primarily sells sterile injectable drugs. Because more and more biologic drugs have made their way to market, more and more of them are going off patent. That presents opportunities to companies with the expertise and facilities necessary to manufacture them. And because biologics are more complex, and so tricky to produce, FDA regulatory concerns often lead to recalls and production interruptions that trigger shortages, which offer up more opportunities and higher prices for those that get manufacturing right. And Fresenius is placing even more bets on growth in that area going forward. Last year it announced plans to invest $250 million to turn a U.S. site into a showcase for its sterile injectable capabilities. Construction will begin this year on a decade-long, multiphase project to create a campus at its manufacturing operation in Melrose Park, Illinois. Also last year, Fresenius picked up a 115,000-square-foot plant in Wilson, North Carolina. That plant, opened in 2010, was originally set up by BD Rx, the sterile injectables business Becton Dickson had started to boost its syringe manufacturing sales. With an agreement in hand to supply BD with a portfolio of intravenous solutions, the drugmaker is evaluating whether to continue to ship infusion products from Europe, or build or buy a plant in the U.S., CEO Stephan Sturm recently told investors.

Both of those deals were either done or underway when Sturm took the CEO role at Fresenius in July 2016. But the new CEO pulled off two significant deals recently, committing more than $5.4 billion to considerably expand the company’s reach in sterile generics.

In April 2017, it reached a $4.75 billion agreement to buy U.S.-based generics maker Akorn. The deal, expected to close in early 2018, builds on Fresenius’ strength in sterile injectables and expands Kabi into new segments such as ophthalmics and topical solutions. On the same day, Fresenius announced plans to buy the biosimilars portfolio of Germany-based Merck KGaA for €170 million up front and up to €500 million in milestone payments, or about $729.2 million total. While a much smaller deal, the move provides an entry point for Fresenius in what is expected to be the next big market in off-patent drugs. One estimate says innovative biologics will lose $110 billion in sales to biosimilar copycats by 2025. 10

Headquarters: Dublin, Ireland 2016 generic sales: $2.56 billion Endo didn’t even make it to the top 20 generics companies by 2014 revenue. Then, the merger with Par happened, but the joy didn’t last long; its stock started tumbling like an avalanche as guidance slashing, regulatory setbacks, new rivals, generics price erosion and job cuts all contributed to its fall. Let’s go back to May 2015, when Endo announced the $8 billion acquisition of Par Pharmaceutical. It gave Endo some 100 products from Par, including many high-barrier-to-entry, profitable generic products. The deal looked promising for Endo as Par enjoyed $1.3 billion in revenue in 2014, with compound annual revenue growth rate of 12.2% from 2012 to 2014. Endo’s stock traded at around $85 at that time, but would drop to $14 in a year. In May 2016, Endo slashed its full-year top-line guidance from the $4.32 billion to $4.52 billion stated in its 2015 full-year financial results to $3.87 billion to $4.03 billion, and dialed back adjusted diluted EPS from $5.85 to $6.20 to $4.50 to $4.80. Then-CEO Rajiv De Silva cited new rivals on the market, greater-than-expected generics price erosion and regulatory delays as reasons for the lackluster performance. The final 2016 revenue for Endo? Just $2.56 billion. But that was later. Shares plunged about 40% at the news, though they had already been on a downward trajectory comparable with those of Valeant. De Silva’s former title as COO of the Canadian drugmaker and a similar acquisition-heavy, debt-building strategy helped make the connection, and was probably part of the reason behind his ouster in September, followed by former EVP and CFO Suketu Upadhyay’s departure in November. With that readjustment in May, Endo also announced a restructuring plan to close plants and cut 740 jobs. The job-cutting spree continued in December 2016 as it sidelined its once-core pain business, tossing 375 full-time and contracted jobs. In January 2017, the company kicked off a new round of restructuring that claimed 90 jobs primarily within corporate functions and branded pharma R&D. The Dublin drugmaker also took several hits for its star med Opana ER since 2016 as the whole country raged over an opioid epidemic. In March 2016, the company settled a case with a New York state prosecutor, agreeing to pay $200,000 and not soft-pedal the risks of taking the drug or oversell its crush resistance.

FierceMarkets, a division of Questex, LLC www.fiercemarkets.com | www.questex.com 2017 Questex LLC. All rights reserved. Following controversy over the med’s role in a 2015 HIV outbreak in southern Indiana, in August 2016 the company withdrew a supplemental NDA that would label Opana ER as “abuse deterrent.” The FDA found that the med’s new formulation may have made it easier for injection, and an advisory committee at the agency decided in March 2017 that the drug’s benefits are “overshadowed” by “misuse, abuse and diversion.” Possible restrictions as far as complete takedown could follow. Now, it’s up to new CEO Paul Campanelli, the former CEO of Par, to turn things around. But it will take time to right it “from a company that grew through debt-fueled M&A to one that will primarily focus on organic growth,” Campanelli said on the company’s 2016 earnings call. The company’s $3.45 billion to $3.6 billion 2017 revenue outlook fell short of the consensus $3.83 billion estimate, while an adjusted earnings range of $3.45 to $3.75 per share didn’t come close to Wall Street’s $4.29 prediction. 9. Lupin

Headquarters: Mumbai, India 2016 generic sales: $2.48 billion (estimate) 2016 was a mixed year for Lupin. It completed the acquisition of U.S.-based Gavis in March 2016, obtaining its first manufacturing site in the U.S., along with some 60 ANDA filings pending approval with the FDA at that time; but a Form 483 for its Goa plant and two large-scale drug recalls because of failed ingredients were setbacks. For the entire fiscal year ending March 2017, Evaluate estimated that Lupin’s total generic revenue reached $2.48 billion. To put that into context, the company’s entire revenue—generic and branded—in the previous fiscal year was $2.09 billion. That volume boost was largely thanks to the Gavis purchase.

The two first struck the $880 million deal in July 2015. In what Lupin touted as the largest acquisition made by an Indian pharmaceutical company in the U.S., Lupin broadened its portfolio to more than 120 marketed products, nabbed a manufacturing and R&D site, a packaging and distribution facility and 62 ANDA filings with the FDA worth more than $9 billion. Lupin said that upon completion of that buy, the company has the fifth-largest pipeline of ANDA filings with the U.S. FDA (the branded counterparts of those generics total a $63.8 billion market), plus 45 first-to-file products, including 25 exclusive ones. It immediately tapped industry veteran Kurt Nielsen, Ph.D., to lead the new U.S. business called Lupin Somerset. He was formerly with Sandoz as global head of product development and VP of U.S. product development, portfolio and launch management.

FierceMarkets, a division of Questex, LLC www.fiercemarkets.com | www.questex.com 2017 Questex LLC. All rights reserved. For the fiscal year from April 2016 to March 2017, Lupin also launched 13 generic products in the U.S. Among them is a generic of Pfizer’s antidepressant Pristiq, which reeled in $578 million in U.S. sales for the Big Pharma in 2016. But Mylan, Actavis and Sandoz are also eying the same product. Lupin also revealed in early 2016 that it is building a dedicated oral solids plant in Tottori, Japan, that would be able to produce 2 billion tablets a year. Japan represents the Indian drugmaker’s third-largest market, following the U.S. and India, and the country’s growing demand for generics is beyond the ability of its current facility in Sanda, Japan. It also indicated it was seeking out potential M&A targets in Japan. But it was not all smooth sailing for Lupin. First, there were still no words about completion of the acquisition of Russian generic drugmaker ZAO Biocom. Lupin announced in July 2015 that it had a deal to buy 100% equity stake in the Russian company, but regulatory roadblocks have gotten in the way and it has yet confirm the deal has been completed. Perhaps not as deep in the FDA regulatory quagmire as its fellow Indian drugmaker Sun Pharma, Lupin also has its own share of problems to worry about. The FDA cited nine observations in a Form 483 sent to Lupin’s Goa, India, plant in March 2016. After clearing the concerns in November, the plant was cited again after an inspection this year. 10. Sanofi Headquarters: Paris, France 2016 generic sales: €1.85 billion ($2.05 billion) It was pretty much business as usual at Sanofi generics in 2016 in terms of revenue—net sales were down 3.3% or up 0.7% at constant exchange rate to reach €1.85 billion ($2.05 billion). But there was a different story fermenting beneath that calm sea surface, namely the fate of its European generic unit. Sanofi CEO Olivier Brandicourt expressed intention to divest the company’s European generic unit in his “strategic roadmap” unveiled in November 2015, less than a year he had been at the helm. But it was only in October 2016 that the French drugmaker, after “examining all options,” confirmed the plan. Sanofi’s European generic business is built around Zentiva, a Czech business Sanofi acquired in 2008 for $2.6 billion. As for manufacturing, that includes two sites, one in Prague, and the other in Bucharest, Romania. The sector, which doesn’t include the Russian Commonwealth countries and Turkey, contributed more than 43% of sales (€802 million) to the company’s entire generics business in 2016. Then why did Sanofi want to sell it?

FierceMarkets, a division of Questex, LLC www.fiercemarkets.com | www.questex.com 2017 Questex LLC. All rights reserved. When it first announced the option, the company said that “geographic synergies are limited and market complexity is increasing” for its European generic business. Compared to other markets, generic sales growth in the European area has not exactly been energetic these years. In 2015, that market grew 2.8% CER, while emerging markets grew 6.9%, the U.S. rose 15.4%, and the rest of the world grew 86.4%, mainly due to launches in Japan of the authorized generics of its own Allegra and Plavix. In 2016, generics sales in Europe decreased 0.7% CER, while emerging markets, the U.S. and the rest of the world enjoyed growths of 1.8%, 1.8% and 1.2%. In March it was reported the Pharma had hired financial advisers to guide the long-awaited deal, potentially worth more than €2 billion, through an auction process slated to begin laster in the year. In its 2016 annual report, Sanofi said it “will be looking for a potential acquirer that will leverage the mid and long-term sustainable growth opportunities for [the European generic] business,” and that it is still committed to its generics business in other parts of the world, “and will further focus on emerging market.” At least the sell will give those who missed out on the recent Stada deal another chance into the European generics market. After Boston private equity firm Advent made the first offer of $3.7 billion, the German drugmaker announced in April that it will be sold at €5.32 billion ($5.63 billion) to Cinven and Bain Capital. After adjustment, Stada’s 2016 generics sales around the world reached about €1.29 billion. 11. Aspen

Headquarters: Durban, South Africa 2016 generic sales: $1.97 billion (estimate) Falling just outside of the world’s top 10 generic drugmakers, South Africa’s Aspen Pharmacare is on track to generate an estimated $1.97 billion in generic sales during its current fiscal year, according to an estimate from Evaluate, enough to rank it No. 11 for 2016’s largest generic drug producers. Aspen has 27 manufacturing facilities at 18 sites on six continents, according to its website, and produces 24 billion tablets each year. With sales in more than 150 countries, the generic drugmaker is worth about $10 billion. Looking to continue its growth spree, Aspen last year set out $520 million up front and up to $250 million in milestones to purchase a portfolio of older anesthetic drugs from AstraZeneca. At the time, Aspen CEO Stephen Saad said the deal represented a “strategically important investment” for his company and an “excellent opportunity to build on the quality brands” the company has worked to market.

FierceMarkets, a division of Questex, LLC www.fiercemarkets.com | www.questex.com 2017 Questex LLC. All rights reserved. For Aspen, that acquisition represented the latest in a series of recent deals. During the company’s string of M&A activity, Aspen spent more than $2 billion on drug and facility purchases from top pharma companies like Merck and GSK, South Africa’s Business Daily reports. Aspen is also making a growth push in China. Last July, Saad told the Business Daily the company would increase sales reps in the country by an extra 350 “in the next few months,” aiming for a total of 500 new reps in the market. “Aspen believes absolutely that it can expand quickly into a market such as China, because the critical thing when it comes to medicine beside the price point is quality of the product,” the helmsman told BD. In September 2016, GSK sold the last of its Aspen stake in a transaction worth $620 million. Aspen’s fiscal year ends on June 30, 2017. 12. Aurobindo

Headquarters: Hyderabad, India 2016 generic sales: $1.837 billion (estimate) With an estimated $1.837 billion in generic sales during its last fiscal year—as calculated by analysts with life science commercial intelligence firm Evaluate—Aurobindo ranks at No. 12 of the world’s top generics players for 2016. Lately, the company has been building up U.S. capacity and was warned by U.S. authorities for manufacturing shortfalls in India. The company gets about 55% of its sales from the U.S., 28% from Europe and 17% from other markets, according to its annual report (PDF). As of last March, Aurobindo ranked 7th by U.S. prescriptions dispensed, the report states, citing IMS Health data.

Last April, Aurobindo decided to relocate its U.S. headquarters to Durham, North Carolina, and build a manufacturing plant in the city. All told, the $31.7 million investment will create 275 jobs. In New Jersey, the company kicked off construction last August, and announced back in February it’d build a second plant at the site. More recently, the company got an FDA Form 483 detailing several manufacturing shortfalls at a plant in Hyderabad, India. In a filing with the Bombay Stock Exchange, the company assured investors that the issues had to do with procedural improvements. “None of the observations are related to data integrity,” according to the filing (PDF). The company has 18 manufacturing facilities in India and one in Brazil, according to its report, employing 15,000 employees around the world.

FierceMarkets, a division of Questex, LLC www.fiercemarkets.com | www.questex.com 2017 Questex LLC. All rights reserved. Hyderabad-based Aurobindo filed 22 abbreviated new drug approvals during its 2015-2016 fiscal year, according to the annual report, and received 49 approvals. Aurobindo’s fiscal year ended on March 31, 2017. 13. Dr. Reddy’s Laboratories

Headquarters: Hyderabad, India 2017 generic sales: $1.780 billion Dr. Reddy’s is India’s second-largest drugmaker, and, like its much bigger peer, Sun Pharmaceuticals, regulatory issues defined its 2016. In fact, problems at Dr. Reddy’s manufacturing facilities have been ongoing for a couple of years, and they appear to be far from over. After a series of inspections at three of its plants turned up problems in 2014 and 2015, the Indian drugmaker entered into intense negotiations with the FDA about dealing with all of the shortcomings. But after responding to the agency’s concerns nine times, the FDA issued a scathing warning letter in late 2015 that covered the three facilities, two API operations and a formulation facility where the company makes oncology meds. Particularly annoying to the FDA was the discovery of a secret testing lab that one plant used for years to test batches, which allowed it to hide failed test results. Needless to say, these plant failings triggered more problems and dampened generic revenues. Dr. Reddy’s has even been sued by a South Korean client, which blames its own FDA rejection—for a new erectile dysfunction drug—on the fact that a Dr. Reddy’s plant didn’t meet agency standards. The company’s issues have persisted in 2017, with the FDA handing the drugmaker a Form 483 after re-inspections of two of the facilities cited in the previous warning letter. The Indian drugmaker has taken steps to offset the financial hit. Last year, it bought a portfolio of six over-the-counter brands sold in the U.S., including Doan’s and Bufferin, from New Jersey- based Ducere Pharma for an undisclosed sum. It followed that up with a $350 million deal to buy an unidentified mix of eight generic drugs, some approved and others awaiting approval, that competitor Teva had to unload in the U.S. to secure regulatory approval for its buyout of Allergan’s generic business. But not all of Dr. Reddy’s efforts to reignite its U.S. business have turned out as planned. When its regulatory issues derailed a copycat version of Novartis’ blockbuster cancer drug Gleevec, it turned

FierceMarkets, a division of Questex, LLC www.fiercemarkets.com | www.questex.com 2017 Questex LLC. All rights reserved. to an outside contractor for help. But in a February 2017 earnings call, a Dr. Reddy’s exec said the contractor faced its own problems with the FDA, which might further delay getting the drug to market. Dr. Reddy’s generated an estimated $1.599 billion in global generic sales during its last fiscal year, according to life science commercial intelligence firm Evaluate, which ended on March 31, 2017. 14. Cipla

Headquarters: Mumbai, India 2016 generic sales: $1.607 billion (estimate) Cipla turned in an estimated $1.642 billion in global generic sales during its last fiscal year, enough to place 13th amid the industry’s top players, according to life science commercial intelligence firm Evaluate. The Mumbai-based drugmaker had a change at the top last year when it bid farewell to its CEO Subhanu Saxena in August. Saxena joined Cipla in 2013 after a long stint at Novartis. Under his leadership, the drugmaker made a foray into U.S. manufacturing with the $550 million acquisition of InvaGen Pharmaceuticals in New York and Exelan Pharmaceuticals. Cipla announced Saxena’s departure as it reported a 6% revenue decline and a 42% decrease in earnings before interest, tax, depreciation and amortization. The company boasts more than 35 manufacturing facilities, according to its annual report, with sales in more than 100 countries. Its drug production sites outside of India include the U.S., South Africa, Uganda and Yemen. Back in 2015, the drugmaker implemented a restructuring in an effort to cut costs and boost profitability. In doing so, it exited some international markets in order to focus on growth prospects. With that, the drug company made a move to expand in South Africa, where it committed to spend $89 million on a new biosimilars plant. Cipla’s fiscal year ended on March 31, 2017.

Headquarters: Ontario, Canada 2016 generic sales: $1.602 billion (estimate) Apotex may only rank 14th among top generics makers, but it is a pretty big deal in Canada, where it bills itself as the country’s largest Canadian-owned pharmaceutical company. Privately owned Apotex, founded in 1974 by now- billionaire Bernard Sherman, has about 6,000 employees in the country and 10,000 worldwide, and says it produces more than 300 generic drugs in approximately 4,000 dosage forms. But as a key supplier in Canada’s healthcare system, it can also be a big deal when the company has supply problems, as it did last year when it ran short of seizure drug clobazam. With tens of thousands of Canadians using the drug to control seizures, the situation was worrisome enough that Health Canada held a teleconference with epilepsy groups to discuss the shortage before new API supplies allowed Apotex to get the situation under control. The drugmaker is known for fighting for what it wants. It unsuccessfully brought a claim to international authorities alleging the U.S. violated the North American Free Trade Agreement when it banned products from Apotex plants in Toronto and Quebec from 2009 to 2011 because of manufacturing shortcomings. Then, last year, it sued the Canadian government and former health minister Rona Ambrose, claiming defamation for a 2014 import ban. Canada’s Federal Court quashed that suit. Apotex also has tangled repeatedly in the courts with Amgen over development of biosimilars of the biotech’s cancer meds Neulasta and Neupogen—but, then again, what biosimilar maker hasn’t? Although much of its manufacturing is in Canada, in 2017 Apotex kicked off a $184 million project in South Florida that comprises a new manufacturing plant to produce pain meds, a packaging facility and a new R&D center. That project is slated to be complete in 2019 and eventually employ 150.