1

Sustainable production of the natural product,

galanthamineDEFRA Ref. NF0612

By

Jayne L Brookman,

Merigan Research Services Ltd,

Phillip Morris (Technical Annex) and Michael K Theodorou (Project Co-ordinator),

Plant, Animal and Microbial Science Department,

Institute of Grassland and Environmental Research (IGER)

April 2006

Executive Summary

Alzheimer’s disease is a common form of dementia with an estimated population of

15 million sufferers worldwide and this number expected to treble by 2050.

Alzheimer sufferers exhibit a gradual decline in cognitive faculties with loss of

memory, judgement and ability to comprehend the external environment. These

patients require considerable care and their inevitable disease progression can exert a

heavy toll emotionally on carers and financially on the health service and the patient’s

family.

Alzheimer patients can be treated with a class of drugs, called acetylcholinesterase

inhibitors. These drugs slow the progression of the disease and alleviate many of the

symptoms. One of these drugs is a compound called galanthamine and is marketed in

the UK as Reminyl by Shire Pharmaceuticals. Galanthamine is an alkaloid compound

found in plants such as daffodils and snowdrops and this natural product was used in

the original drug formulation. A synthetic route was found to produce galanthamine

which reduced the requirement for daffodil-sourced drug but the impending loss of

patent protection for the use of galanthamine as a drug treatment in Alzheimer

patients may change this situation.

This report describes the current and historical UK supply chain for galanthamine

production and sale for production of the branded drug, Reminyl. The production of

generic formulations of galanthamine is discussed and a potential supply chain for a

generic producer from UK-grown daffodils is outlined. Interviews with actual or

possible suppliers for the galanthamine supply chain, the regulatory bodies and patient

organisations have been carried out and the intelligence gained incorporated into the

report. Each component of the supply chain has been considered and the commercial

and legislative requirements of the different parts of the chain reported, alongside

possible hurdles and interactions between supply chain members. Alternative routes

to market, such as health supplements, are considered together with the cost

implications of related pricing strategy and legislative issues.

The technical component of this study is described in the Technical Annex to the

report and used commercially grown material from test plots supplied by Alzeim Ltd.

to analyse levels of galanthamine in a range of commercially-available daffodil

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varieties including the normal galanthamine stock, Carlton, from upland and lowland

sites in Wales. The level of galanthamine present in Carlton bulbs at the two sites has

also been analysed for variability, the distribution of galanthamine throughout the

plant tissues determined and the levels of compound compared with the plant growth

cycle in time course experiments.

The financial feasibility of expanding the current supply chain has been modelled:

particularly to consider the effects of generic formulations on the price of

galanthamine in a markets-based model. A production and extraction-based model has

also been constructed to describe the likely sensitivities of galanthamine price with

daffodil bulb price, extraction costs and extraction efficiency. These models showed

that a UK daffodil-based supply chain for the extraction and supply of galanthamine

for generic drug manufacture is feasible, that extraction efficiency has a considerable

impact on the economics of the supply chain process and that cost-effective research

to increase the overall level of galanthamine in the daffodil bulb stock would be

beneficial.

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Index

Introduction to Alzheimer’s Diesease............................................................................5

Background and Clinical Symptoms..................................................................5

Prevalence and Size of Patient Population.........................................................6

Disease Pathology and Mechanisms..................................................................8

Current Therapies.............................................................................................11

Acetylcholinesterase Inhibitors........................................................................11

NMDA Receptor Antagonists..........................................................................13

Drugs in the Pipeline........................................................................................14

Current Market Size and Future Market Prospects..........................................17

Generics................................................................................................18

Galanthamine as a Generic Drug.........................................................20

Current Supply Chain for Galanthamine......................................................................22

Background and History to Development........................................................22

Potential and Current UK / EU Supply Chain.................................................24

Daffodil Production in the UK.........................................................................24

Growers............................................................................................................27

Extraction Facilities.........................................................................................29

Marketing Agents.............................................................................................31

Contract Manufacturers....................................................................................32

Generic Companies with UK Manufacturing Capability.................................32

Branded Manufacture of Reminyl....................................................................33

Drug Wholesalers.............................................................................................33

Health Food/Supplement Route to Market......................................................34

Alternatives to Daffodils as Natural Sources of Galanthamine.......................35

Critical Analysis of Galanthamine Supply Chain........................................................35

Factors affecting Galanthamine Levels in Daffodil Bulbs...............................35

Factors affecting Choice of Supplier by Supply Chain Members....................36

Critical Points in Financial Feasibility of Supply Chain..................................37

Market Model...................................................................................................37

Extraction Model..............................................................................................39

In Summary......................................................................................................42

Factors altering the Market in the Future.....................................................................43

References....................................................................................................................43

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5

Introduction to Alzheimer’s Disease

Background and Clinical Symptoms

Alzheimer’s disease is a form of dementia that accounts for approximately 50% of all

dementia cases. It has an age-related incidence with only 1.1% of UK sufferers from

the 45-64 age group (age group is 22.9% of the population) rising to more than 39%

in the ≥85 age group (age group is 1.89% of the population). These patterns are found

throughout the developed World with an estimated 15 million Alzheimer’s sufferers

worldwide; a number predicted to treble by 2050 (Forman et al., 2004). An average

sized health authority in the UK has 6048 dementia patients (500 000 population total,

1.2% incidence) and of these 3327 would be Alzheimer patients with 1996 falling into

the mild-to-moderate definition pertinent to this study.

Alzheimer sufferers exhibit a gradual decline in cognitive faculties with loss of

memory, judgement and ability to comprehend the external environment (Table 1)

(Orgogozo et al., 2004; Aguglia et al., 2004). Behavioural difficulties and alteration of

mood often result from onset of the disease with a requirement for significant hands-

on care, often from family and friends, in the early to mid-stages of disease

progression.

Table 1 Stages and Symptoms of Alzheimer’s DiseaseMild Moderate SevereEarly-stage Alzheimer's Mid-stage Alzheimer's Late-stage Alzheimer's

Mood swings Confusion HelplessnessImpaired mental ability Uncontrolled feelings Repetitive actionsMemory loss Reduction in verbal communication Rigidity of bodyChanges to language Delusional misjudgements Increase in fallsAltered perception Withdrawal Loss of speechLoss of abstract thinking Sleep disturbance and agitation IncontinenceLoss of judgment Agitation

Mood changes- aggression

Mild cognitive impairment (MCI) is a condition where the memory is impaired but

cognitive functions are normal with no or little impairment of general living activities.

MCI appears to be a risk factor for development of Alzheimer’s Disease (AD;

Grundman et al., 2004). It is considered in this report within the context of market

development opportunities.

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The measurement of cognitive function requires tools that enable rapid and

reproducible scoring of patient abilities as part of clinical assessment for trials or

monitoring of a patient’s disease progression. A common measure used for a rapid but

limited assessment is the Mini Mental State Examination (MMSE). The Alzheimer’s

Disease Assessment Scale (ADAS) is a more comprehensive assessment developed

for research purposes and measures both cognitive and non-cognitive functions. The

ADAS-Cog test is a subset of this larger format comprising the eleven cognitive

components within ADAS. ADAS-Cog is a commonly used measure for scoring drug

effects in Alzheimer patients as beneficial cognitive effects are key product profiles

for anti-Alzheimer drugs. Alzheimer patients receiving no drug treatment will usually

see a negative change of approximately nine points in their ADAS-Cog score over a

single year. Effective drug treatments should significantly reduce this decline (Loy

and Schneider, 2005).

Prevalence and Size of Patient Population

There are several sources of recent information on prevalence of Alzheimer’s disease

in the EU, US and throughout the developed world. The OECD report on dementia

care by Moise et al (2004) the Europa and Eurostat websites, an article on the

projected US populations by Hebert et al (2003) and a Delphi consensus study on

estimates of incidents and world population by Ferri et al. (2005) have been used

extensively for the data reported below.

Table 2 Estimates of Alzheimer’s and Dementia Prevalence and Total Patient

Populations

65-74 75-84 85+OECD - Alzheimer'sEngland and Wales 1.3 5.8 14.0Sweden 1.8 5.5 15.1US 1.4 7.3 22.2

TotalEU-25 pop 0.54 1.51 1.05 3.09US pop 0.26 0.90 0.94 2.10

Alzheimer Europe- Dementia YearEU-25 pop (2003) 5.37Delphi Study- DementiaWestern Europe (2001) 4.9US (2001) 3.4

Prevalence figures

Patient Population

Patient Population

Prevalence figures given are % population, numbers of patients given are in millions.

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The data for prevalence of Alzheimer’s disease at any age group varies between

reports. This is due at least in part to differences in the way data was gathered (e.g.

from clinicians or care-givers). However all datasets show a substantial increase in

prevalence with advancing age (Tables 2 and 3). These differences in estimates of

prevalence rates can cause quite significant variation in estimates of patient

populations, e.g. the OECD study (Moise et al., 2004) gives a total US Alzheimer’s

population of 2.1million compared with the estimate of 4.5million from Hebert et al.

(2003) and 3.4 million for the total dementia population from the Delphi consensus

study (Ferri et al. 2005). All sources agree however that the population is large and

growing at a considerable rate, with an interesting perspective on the shift in world

pharmaceutical markets in the future considering the rapid growth in dementia in

developing countries such as India and China, where numbers of dementia sufferers

are expected to increase by 300% between 2001 and 2040 compared with a 100%

increase in the developed world (Ferri et al. 2005).

The population dynamics of the developed world are such that despite low projected

increases in overall population size, age demographics show a marked shift towards a

more elderly population. For example the EU-25 group of countries had an over-65s

population of 74.7million in 2003, at 16.3% of the total compared with only 14.4%

total population in 1993. This would at a conservative estimate put the EU-25 over-

65s population at 100M by 2050 with an even larger increase in the 85-plus age group

at particular risk of Alzheimer’s disease. Hebert et al. (2003) have estimated that the

number of over-85s in the US will quadruple by 2050 with Alzheimer patient

populations increasing by nearly 3-fold from 4.5 to 13.2 million.

Table 3 Estimates from Herbert et al. of US Alzheimer’s Populations 2000-2050 by

Age and Mild-Moderate Patient Population

Year/ Age 65-74 75-84 85+ Population2000 0.3 2.4 1.8 3.4652010 0.3 2.4 2.4 3.8972020 0.3 2.6 2.8 4.3452030 0.5 3.8 3.5 5.9752040 0.4 5 5.6 8.3642050 0.4 4.8 8 9.932

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It is clear that the patient base for Alzheimer drugs is going to increase substantially

for the foreseeable future unless new anti-Alzheimer’s drugs are found which not only

alleviate the symptoms of the disease but actually prevent the occurrence and

development of the illness.

Disease Pathology and Mechanisms

The brain of Alzheimer disease patients change in chemistry and histology throughout

the course of the disease. An abnormal protein ( amyloid protein)) is found at

elevated levels in brain and cerebrospinal fluid. This amyloid protein is

accumulated and deposited in plaques around nerve cells in the brain, eventually

leading to cell death, and in the walls of small blood vessels within the brain. Another

protein, ‘tau’, which is normally present within cells helping to organise the

cytoskeletal microtubules, is also accumulated abnormally. Furthermore tau is

phosphorylated abnormally in Alzheimer patients and accumulates within nerve cells

as neurofibrillary tangles.

Post-mortem histological analysis of brains from Alzheimer patients show a general

loss of nerve cells and their synapses giving “spaces” and an atrophied appearance to

areas of the brain where nerve cells would be expected.

Levels of the neurotransmitters serotonin, acetylcholine, norepinephrine and

somatostatin are all found to be decreased in the brains of Alzheimer patients while

glutamate levels are usually elevated.

These observations and proposed disease mechanisms have informed the direction of

drug discovery in the area of Alzheimer disease (see below and following section).

The causal mechanism of Alzheimer’s disease is not known definitively but three

main hypotheses have been proposed:

1. Cholinergic

Alzheimer’s disease is caused by a loss of cholinergic function and so reducing the

amount of acetylcholine degradation in the brain will delay or reverse disease

progression. Cell-replacement therapy has been discussed in this context as a potential

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therapy route for Alzheimer’s in a similar manner to the approach taken for

Parkinson’s disease with dopamine-producing cells. Acetylcholinesterase is the drug

target of choice for this mechanism as it degrades acetylcholine, removing it from the

synapses.

The observed failure of acetylcholinesterase inhibitors to “cure” the disease has

suggested that the acetylcholine deficiency is likely to be a symptom and not a cause

of the disease.

2/3. Beta Amyloid Plaques vs. Tau-Protein in Neurofibrillary Tangles

The presence of amyloid beta plaques is a constant in Alzheimer’s disease whereas

the presence of neurofibrillary tangles is not, leading the proponents of the “aptists”

view of AD mechanism to suggest that this abnormality is the key to causation of

Alzheimer’s.

One consequence of laying down of amyloid plaques is a brain cell-mediated immune

response where one type of cell, astrocytes, proliferate within the brain of an

Alzheimer patient and are activated to produce a inflammatory response. Another cell

type (the microglial cells) are also activated within the brain and respond by

producing free radicals which together with the astrocyte-mediated response lead to

the death of the neurones as part of an inflammatory response.

The “tauist” hypothesis states that the abnormalities in the microtubule-organising

protein, Tau, are the first point and trigger of disease pathology. The tau protein when

it has been hyper-phosphorylated, as seen in Alzheimer patients, does not fulfil its

usual cellular function of guiding microtubules. The microtubules are important for

transporting nutrients and regulating cell-function within cells particularly in neurones

which may be exceptionally long with their axons and dendrites covering large

distances from the cell body. The tau proteins bind to each other and form the

neurofibrillary tangles seen in Alzheimer’s brain histology. The neurones containing

these tangles and lacking a functional microtubule network die rapidly.

Most reports suggest that the amyloid plaques themselves are not sufficient to cause

death of cells seen in the brains of Alzheimer’s patients and that where no

neurofibrillary tangles are present an alternative filamentous aggregate, the Lewy

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Body comprised of another precipitated cytoskeletal protein complex, causes the cell

death observed in AD pathology.

It can be seen from this brief overview of the proposed mechanisms of Alzheimer’s

disease that the biochemical processes leading to the pathological output seen

clinically are complex (see Figure 1) but with greater understanding evolving new

drug targets are being proposed.

Figure 1 Current Understanding Of The Molecular Interactions Taking Place In Alzheimer’s

Disease from www.calbiochem.com

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Current Therapies

Acetylcholinesterase Inhibitors

Acetylcholinesterase inhibitors act on the enzyme that breaks down acetylcholine in

the brain as part of the normal recycling/control mechanism for brain function.

Alzheimer sufferers have reduced levels of acetylcholine due to death of

acetylcholine-producing cells in the brain. In general, reducing the breakdown of

acetylcholine relieves some of the symptoms and slows progression of the disease by

several months and in some cases by up to a year and a half.

Galanthamine appears to have a dual action whereby it not only acts as an

acetylcholinesterase inhibitor but also acts on the target brain cell to strengthen its

response to available acetylcholine.

Figure 2 Chemical structures of the three anti-Alzheimer’s Disease drugs in common

usage: galanthamine, rivastigmine and donepezil (respectively).

Four acetylcholinesterase inhibitors have received approval for clinical use in early-

to mid-stage Alzheimer’s disease: tacrine, donepezil, rivastigmine and galanthamine

(see Table 4). Tacrine the first in class gained FDA approval in 1993 but has since

been largely withdrawn due to adverse side effects. The three remaining drugs,

donepezil, rivastigmine and galanthamine have fewer adverse side-effects and have

been shown to be relatively safe in general use.

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Table 4 Approval dates for the acetylcholinesterase inhibitor drugs

Compound Tacrine Donepezil Rivastigmine GalanthamineTrade name(s) Aricept Exelon Reminyl/Razadyne

CountryAustralia 1995 1998 2000 2001Japan 1999 2001United States 1993 1996 2000 2001Sweden 1995 1997 1998 2000UK (NICE) 2001 2001 2001

Eisai / Pfizer Novartis OrthoMcNeil / ShireSupplier

* Tacrine was never approved for use in Japan and the UK. The UK dates are the NICE approval dates, donepezil and rivastigmine were approved for use outside of the NHS structure before this date.

Dosage and Formulation

Galanthamine HBr is dispensed as Reminyl or Razadyne (US) in prolonged release

capsules with 8, 16 or 24 mg equivalent of free galanthamine base; in colour-coded

tablets with 4, 8 or 12 mg equivalent of free galanthamine base or in 4 mg/ml oral

solution. The capsules are designed for single daily dosing whereas the tablets and

oral solution should be administered twice daily. The drug is given at a lower starting

dose of 8 mg daily and is then increased over a period of 4 weeks to an initial

maintenance dose of 16 mg daily for at least 4 weeks and then may be increased if

beneficial to a final maintenance level of 24 mg daily (see Table 5 for UK pricing).

Rivastigmine tartrate is produced as Exelon in 1.5, 3, 4.5 and 6 mg capsule strengths

plus a 2 mg/ml oral solution. The dosing is twice per day and is increased slowly with

an initial daily dose of 3 mg for at least 2 weeks then similarly spaced incremental

increases to 6, 9 and if tolerated 12 mg per day.

Donepezil hydrochloride is produced as colour coded tablets with a once daily dosing

of 5 mg which may be increased to 10 mg after 4-6 weeks if tolerated and beneficial.

Table 5 Available formulations and UK pricing

Reminyl 8mg dose x 28 16mg dose x 28 24mg dose x 28(galanthamine) Capsules 54.60£ 68.32£ 84.00£

Tablets 54.60£ 68.32£ 84.00£ Oral soln.* 120.00£

Aricept 5mg dose x 28 10mg dose x 28(donepezil) Tablets 68.32£ 95.76£ Exelon lower doses x 28 6mg dose x 28 12mg dose x 28(rivastigmine) Capsules 63.00£ 63.00£ 63.00£

Oral soln.** 108.00£

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NMDA Receptor Antagonists

The second class of drug approved for treatment of Alzheimer’s disease is the NMDA

receptor antagonists (N-methyl-D-aspartate mimics the natural neurotransmitter

glutamate). The only compound approved to date is memantine hydrochloride which

is marketed as Namenda in the US, as Axura in Germany and as Ebixa in other parts

of Europe including the UK.

Memantine acts on the NMDA receptor of neurones within the brain; this receptor

acts as an ion channel which allows movement of Ca++ ions and is controlled in part

by glutamate binding. Cells with NMDA receptors are mostly found in the brain and

these are thought to be involved in the memory and learning processes by altering the

synaptic plasticity or modulation of the post-synaptic neurone’s excitability response

to a given stimulus.

Over activation of the NMDA receptor and the consequential cell death seen in these

tissues is thought to be part of the aetiology of Alzheimer’s disease and other

dementias. It was reasoned that reduction of the excitory action should lead to less

cell death and hence halt progression of the disease. Memantine acts as an

uncompetitive antagonist and binds at low affinity to the NMDA receptor blocking

detrimental influx of Ca++ into the neurone. However normal function of the cell is

maintained when the drug is present as the low affinity binding means that levels of

glutamate present following normal synaptic function will be sufficient to activate the

receptor normally.

Memantine hydrochloride was approved by the European Medicines Agency for

treatment of moderate to severe Alzheimer’s disease in 2002 and by the FDA in 2003.

The drug was developed by Merz Pharmaceuticals GmbH and is licensed to Forest

Laboratories Inc. in the US and to Lundbeck A/S in other parts of Europe and

Mexico. It has not yet received NICE approval for use within the NHS in the UK.

Dosage and Formulation

Memantine is produced as 5 and 10 mg tablets and as a 2 mg/ml oral solution for

twice daily dosing. The approved dosage is 10-20 mg per day but as for the

compounds above the dose should be titrated with an initial dose of 5 mg once daily

increasing to two 5 mg doses after 2 weeks, then 15 mg and finally a maintenance

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dosage of 20 mg daily if tolerated and beneficial. The costs for this drug are

comparable to the acetylcholinesterase inhibitors at £74.20 for 28 days supply for the

tablets and £66.25 for 25 days of the liquid format (www.alzscot.org).

Drugs in the Pipeline

The market for Alzheimer treatment drugs is relatively young in comparison to more

established areas such as cardiovascular disease but given the projected age

demography it is not surprising that there is a substantial amount of interest in

developing drugs for this market.

Table 6 shows a selection of the new compounds in development at this time and their

progression through the drug discovery and development process. The two anti-

Alzheimer drug classes with approved drugs available, the cholinesterase inhibitors

and the NMDA receptor antagonists, are represented in the drug pipeline.

Axonyx, an American biotechnology company are developing esterase inhibitors with

a dual mode of action that are also considered to reduce the levels of -amyloid

protein. The first of these, Phenserine, was recently (Nov 2005) withdrawn from

development after failure in phase III trials. A single isomeric form of the

phosphoaminoacid is now in phase I and a butyrlcholinesterase, BNC, is at the late

pre-clinical (IND) stage. Novartis, the producers of Rivastigmine (Exelon) are

planning to file an application in 2006 for an extended release formulation as part of

the life cycle management of their acetylcholinesterase brand.

Forest Laboratories and Merz are developing Neramexane (phase III) for treatment of

moderate to severe Alzheimer’s disease to replace Memantine within its product line

when this approved first-in-class drug becomes available generically (2009-2011).

They are also gathering data for approval of Memantine in mild Alzheimer’s disease

in conjunction with treatment with vitamin E and/or approved esterase inhibitors.

Compounds with a primary activity against the amyloid protein are an active focus of

the research and development efforts of several companies. These compounds are

often anti-inflammatory and alter the processing of the amyloid protein reducing its

propensity to form plaques within the brain. Two of these compounds are in phase III

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clinical trials, Neurochem’s Alzehemed and Myriad Genetics’ Flurizan. Eli Lilly have

a compound with a similar mode of action in phase II trials (see Table 6). It is thought

that these compounds, if effective, will not only reduce the symptoms of the disease

but should alter its progression by reducing the severity of plaque formation and its

consequences for the disease pathology.

One drug in development is the AAB001 humanised monoclonal antibody (Elan

Pharmaceuticals/ Wyeth) that appears to act as a passive immunisation against the

amyloid protein products found in the plaques and removes them via a different

mechanism to the compounds above. This monoclonal has replaced an earlier active

immunisation programme (using peptide AN-1792) which was discontinued at phase

II due to adverse safety events caused by inappropriate immune responses in some

patients. Elan is also developing a new, more specialised vaccine product which is in

the preclinical stage of development.

Sanofi-Aventis are developing compounds that promote the action of neural growth

factors in the brain; one of these in phase III and the other in phase II trials. It has long

been considered that reduction of growth factors in the brain of Alzheimer patients

makes them more likely to lose neurones by cell death during the disease pathology

and so it is hypothesised that these drugs would provide protection against the cell

death. One of these, Xaliproden, is also thought to act as a serotonin agonist. Sanofi-

Aventis have a third compound in trials for Alzheimer’s disease with a similar agonist

activity (SL650155, Table 6).

Eli Lilly are testing one of their drugs approved for use in Attention

Deficit/Hyperactivity Disorder (Strattera) to determine whether co-treatment with

acetylcholinesterase inhibitors provides additional benefits in symptom relief (phase

IV, Table 6).

There has been an observed link between taking cholesterol-lowering statin drugs and

a reduced risk of developing Alzheimer’s disease. There is also preliminary evidence

for beneficial effects in patients with mild Alzheimer’s disease which is now

undergoing further analysis via two phase III trials using Pfizer’s Lipitor and Merck’s

Zocor (latter trial conducted by National Institute on Ageing, see Table 6).

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Table 6 Pipeline for anti-Alzheimer’s Disease DrugsTrade name Compound Disease stage Phase Company Mode of Action/ TargetAlzhemed 3-amino-1-propanesulphonic acid mild to moderate III Neurochem Inc. -amyloid modulator. Flurizan R-flurbiprofen mild to moderate II/ III Myriad Genetics Inc -amyloid modulator (g-secretase)

LY450139 mild to moderate II Eli Lilly -amyloid modulator (g-secretase)AAB-001 humanised monoclonal antibody mild to moderate II Elan/ Wyeth -amyloid immunotherapy. Posiphen isomer of phenserine mild to moderate I Axonyx -amyloid modulator + AChEsterase inhibitor

bisnorcymcerine (BNC) mild to moderate IND Axonyx -amyloid modulator + butyrlChE inhibitor xaliproden (SR57746) mild to moderate III Sanofi Aventis neurotrophicSR57667 mild to moderate IIb Sanofi Aventis neurotrophicSL650155 mild to moderate IIb Sanofi Aventis serotonin receptors (5-HT4 partial agonist)neramexane moderate to severe III Forest / Merz NMDA receptors

Lipitor atorvastatin mild to moderate III Pfizer LDL cholesterol lowering agentZocor simvastatin mild to moderate III National Inst. Aging LDL cholesterol lowering agentStrattera atomoxetine mild to moderate IV Eli Lilly norepinephrine reuptake (+ AChE inhibitors)Namenda/Ebixa memantine mild to moderate III Pfizer/Forest co-treatment with Vit E and AChE inhibitors

See also:

http://www.alz.org/news/05q2/050305.asp, http://www.myriad.com/alzheimers/phase2_ad.php

http://www.alzheimersupport.com/library/showarticle.cfm/ID/2130, http://www.alzinfo.org/research/prevention/default.aspx#6

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Current Market Size and Future Market Prospects

The current market size for galanthamine is summarised in Table 7. The IMS figure

for annual sales of Razadyne in the US were approximately $247 for the year to April

2005 (Pharmacy choice). The sales of galanthamine appear to be increasing with

royalties payable to Shire Pharmaceuticals increasing by 14% in the year with Q3

2005 royalties at $12.9M (www.shire.com). The latest data freely available puts the

UK sales of Reminyl at £7.9M ($13.04 M at 1.65 $ to sterling rate) in 2003 as part of

a total market of £53 m for anti-AD medication. The rate of growth in UK markets

may be lower than US markets due to the uncertainties associated with the NICE

recommendations.

Table 7 An estimate of the total market size for galanthamine from population

estimates and market share projections

Market FactorWorldwide patient population (m) 5.2Market penetration of class 40%Galanthamine share in class 20%Galanthamine population (m) 0.416Value p.a. (£m) 369.47Value p.a. ($m) 591.16Moderate only market (£m) 144.98Moderate only market ($m) 231.97

The population figure used is from Table 2 above and the market penetration figures and galanthamine share are estimates from current sales data. The NHS pack price for the mid-range dose was used to derive annual sales values. The size of the moderate market is estimated from the figures given in Herbert et al. 2003.

NICE is the National Institute for Helath and Clinical Excellence and it is responsible

for considering the cost-effectiveness of medicines for prescription under the NHS. It

has recently changed its recommendations regarding the use of anti-

acetylcholinesterase drugs, such as galanthamine, in mild-to-moderate Alzheimer’s

disease. The guidelines now state that patients already receiving these drugs should

continue to receive them from the NHS but that in the future new patients will only

receive them once the disease has progressed to the moderate stage.

These recommendations do not alter the licence terms for this drug class but reflect a

decision made on economic grounds. Further dialogue is ongoing between the drug

companies, patient groups such as the Alzheimer’s Society and NICE over these

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issues. The onset of generic forms of these drugs (see below) with the expected

reduction in pricing is also likely to bring about a difference in the cost-effectiveness

arguments and should increase the availability of the drugs to the widest group of

patients possible. Discussions with the Alzheimer’s Society have indicated that they

would welcome the widest availability of these drugs to a clinically appropriate

patient population.

Generics

Generic medicines are pharmaceutical products that contain an active ingredient that

is not protected by patents. Generics are generally sold with little if any promotion

and tend to rely on cost compared with branded competitors as a major driver for their

sales.

The route for gaining approval to market for a generic drug is different from that for

figurethe initial application, both in the EU and the US. Broadly speaking to gain

approval for a generic drug it needs to be determined as essentially similar to the

current, approved branded product, without further demonstration of safety or efficacy

via pre-clinical tests or clinical trials. Essentially similar has been defined as “the

same qualitative and quantitative composition in terms of active principal/substance,

and the same pharmaceutical form: and of being bioequivalent”. In both the US and

the EU an abridged application is made to the medicines registration authorities

known as an Abbreviated New Drug application (ANDA) to the Food and Drug

Administration (FDA) in the US and to the European Medicines Agency, EMEA for

pan-European approval. The abbreviated route in the UK usually requires that the

product has already been authorised for ten or more years in the EU which could

delay the approval of a generic in the UK until 2010.

Bioequivalence is the confirmation that the medicines behave in very similar ways

within the body so that the active ingredient within any generic drug preparation is

absorbed and metabolised at approximately the same rate as the approved drug. This

parameter provides assurance that any patient switching from a branded label version

of a drug to its generic form would be unlikely to be affected by the change.

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The development process required to gain the marketing approval in the UK/EU

would until recently have meant that the generic’s manufacturer would be breaking

the terms of the brand holder’s patent. This is not the case in the US, Canada, India

and other states and has led generics’ manufacturers to undertake their drug

development outside of the EU. The EU directive 2001/83/EC under which the

marketing approval of medicines is given has been altered by the directive

2004/27/EC which now allows development to take place before the end of the patent

protection to bring the EMEA process into concordance with the US FDA system (see

Figure 3 below). This means that UK manufacturers can now work on the

development of generic galanthamine in the UK before the end of the patent

protection.

The US system has become complicated by the practice of brand manufacturers of

creating a series of overlapping patents which means that the generic’s manufacturer

often is unable to file their ANDA citing clearly that the relevant patent for the

medicine has expired or approval will be timed to after the patent expiry (Paragraph II

or III certification) and instead has to file a Paragraph IV certification citing that the

generic will either not infringe any patent or that the patent(s) held are invalid. If an

application is filed via this route the brand manufacturer has a right to sue the generic

competitor and in so doing is granted an automatic 30-month stay on FDA approval,

thereby extending the drug’s effective patent life regardless of outcome.

20

Generic Manufacturer files ANDA with FDA

Brand Manufacturer sues

30 month stay triggered by lawsuit

FDA Approval Process 180 day wait

1st generic approved

Other generics may enter

market

Dec 2008

0 18 24

June 2009

31.5 37.5

Feb 2010

Aug 2010

June 2007

Delayed FDA Approval Process 180 day wait

1st generic approved

Other generics may enter

market

Figure 3 Summary of the Timelines for Application to the FDA for Generic Drug

Marketing Approval with Galanthamine dates

Galanthamine as a Generic Drug

The primary galanthamine use patent for galanthamine in treatment of Alzheimer’s

Disease was due to expire on 15th January 2006 but has an initial extension from the

FDA until the 14th December 2008. This means that a generic competitor is likely to

launch any product in early 2009 with development and registration proceeding in

2005/2006 or shortly thereafter.

An early indicator of activity in the filing of applications for marketing approvals for

generic forms of a drug is the submission of Type II Drug Master Files (US FDA

definitions) by companies likely to produce the API (Active Pharmaceutical

Ingredient) as shown in Table 8.

21

Table 8 Galanthamine Drug Master Files submitted to the FDA since original

registration

Number Type Date Applicant Compound and Location

17972 II 05-J an-05ZHEJIANG YIXIN

PHARMACEUTICAL CO LTDGalantamine HBr as manufactured in ZHEJIANG, P.R. CHINA.

18013 II 20-J an-05DR REDDYS LABORATORIES

LTDGalantamine HBr as manufactured in ANDHRA PRADESH, INDIA.

17967 II 03-J an-05 WUHAN SHIJI JINGMAO CORPGalantamine HBr as manufactured in HUBEI, CHINA.

18114 II 22-Feb-05 RANBAXY LABORATORIES LTDGalantamine HBr as manufactured in PUNJAB, INDIA.

17863 II 01-Dec-04 SCINOPHARM TAIWAN LTDGalantamine HBr as manufactured in TAIWAN, R.O.C.

18152 II 03-Mar-05S A AJINOMOTO OMNICHEM N

V OMNICHEM DIVISIONGalantamine HBr as manufactured in WETTEREN, BELGIUM.

18078 II 09-Feb-05 MACFARLAN SMITHGalantamine HBr as manufactured in SCOTLAND, ENGLAND.

18112 II 23-Feb-05 IVAX PHARMACEUTICALS SROGalantamine HBr as manufactured in OPAVA, CZECH REPUBLIC.

A range of companies have filed Drug Master Files on galanthamine to the FDA since

December 2004 in readiness for the ANDA application approvals for generic

galanthamine. These companies are based around the world and form part of the new

potential supply chain for galanthamine. MacFarlan Smith is a UK-based company

(now part of Johnson Matthey) that contributed to the original Drug Master File

prepared for Reminyl approval.

Janssen Pharmaceutica Products L.P (J&J) has filed a lawsuit in the US against Barr

Laboratories Inc., together with Synaptech (holder of the original patent for use of

galanthamine) for patent infringement. This filing starts the process under the Hatch-

Waxman Act as described in Figure 3 and will regulate the timing of approval of

generic galanthamine in the US. Janssen and Synaptech also filed actions against Teva

Pharmaceuticals Ltd., Mylan Laboratories Inc., Dr Reddy’s Laboratories Ltd. and

Alpharma Inc. (as Purepac Pharmaceutical Co.); these companies are part of the group

of seven companies filing for licences from the FDA to market generic galanthamine

(see below).

Barr Laboratories Inc. filed an ANDA with the American FDA on 28th February 2005

and it was accepted for processing in April 2005. Part of the process involves

notifying the licence holder as shown in Figure 3. Janssen have indicated that they

have received similar notifications from the FDA of actions by the four companies

named above plus from the Boehringer Ingelheim subsidiary Roxane Laboratories Inc

22

and a US generics manufacturer, Mutual Pharmaceutical Company, which brings the

total number of companies considering proceeding with generic galanthamine to

seven.

Current Supply Chain for Galanthamine

The following sections describe the historical formation of the UK daffodil-based

supply chain for galanthamine, the development of an alternative supply chain from a

synthetic chemical route and the possible form of a new UK supply chain to serve a

generic manufacturer (see Figures 4 and 5 respectively).

Background and History to Development

Shire Pharmaceuticals approached Macfarlan Smith in the early 1990s to develop the

bulk extraction and supply chain process for plant-derived cGMP (current Good

Manufacturing Process) produced galanthamine for their proposed anti-Alzheimer’s

drug, Reminyl.

There was at that time some history of galanthamine extraction from Turkish

snowdrops in Eastern Europe, particularly Bulgaria. The supply of galanthamine from

these wild-grown snowdrops was likely to be in the 300 kg per year region rather than

the thousands of kilogrammes likely to be required for the new drug.

Alternative sources of galanthamine-containing biomass were tested and the

agronomically more manageable daffodil was chosen as the best source of

galanthamine for commercial extraction.

Macfarlan Smith developed an extraction process and assisted Johnson and Johnson

(Janssen) with the preparation of the Drug Masterfile Document for submission to the

FDA in preparation for Reminyl’s approval and launch in 2000. Dedicated laboratory

space was built in Edinburgh for galanthamine extraction at the Macfarlan Smith site.

A later approval was gained for Reminyl prepared using synthetic galanthamine from

Sanochemia in 2001 in the US (see section below). The demand for naturally

produced galanthamine was now not as high as initially envisaged when no chemical

synthesis route was available and Macfarlan Smith withdrew from the market for

23

supply of daffodil bulbs for galanthamine production after its contract for supply

ended in 2003 (Johnson Matthey Annual Report 2003;

http://www.matthey.com/AR03/phmat.html ). Galanthamine is now listed again as

one of the products produced by Macfarlan Smith on their website

(www.macsmith.com , March 2006).

Sanochemia Pharmazeutike AG

Sanochemia are an Austrian chemistry-based pharmaceutical company with a patent

for the synthetic production of galanthamine; they are based in Vienna and were

founded in 1990. They filed their original process patent in 1995 and gained the final

approval for the synthetic route in 2000; this expires in 2014. They have recently

purchased three other galanthamine patents for €6.85M.

Sanochemia have been working with Johnson and Johnson (Janssen) and Shire

Pharmaceuticals since 1997 and have worked with them for successful registration of

the synthetic galanthamine as a component of Reminyl in the EU in 2002.

Sanochemia have the rights to develop galanthamine derivatives in a variety of

applications and are keen to develop these in the areas of stroke, epilepsy and

Parkinson’s disease. They have also been involved in clinical trials for use of

galanthamine in limited alternative applications, namely post-operative delirium.

Shire Pharmaceuticals

Shire is a successful growing business, founded in the UK in 1986 to market calcium

products for the osteoporosis market. It has grown by acquisitions and in 2001 via a

merger into the third largest UK- based pharmaceutical company with sites in the US,

Canada and Europe. Shire’s total revenues for 2004 were $1.36 bn growing steadily

from the value of $0.64 bn in financial year 2000.

Shire has a wide ranging portfolio with interests in acquiring compounds in phase II

or later for development and marketing particularly in the areas of CNS, GI tract and

renal treatment. It has several products for ADHD (attention deficient hyperactivity

disorder) in development and is also developing compounds in niche areas with few

competitor drugs such as the metabolic diseases, Hunters and Gauchers.

24

Shire developed galanthamine as a treatment for mild to moderate Alzeimer’s in

cooperation with Janssen (Johnson and Johnson). They originally co-marketed the

product Reminyl in the UK and Ireland with Janssen-Cilag but now have sole

marketing rights after agreeing $30M terms with Janssen-Cilag. Shire acquired the

galanthamine use patents from Synaptech and hold rights to the compound worldwide

except for North America, Japan, Korea, Taiwan, Thailand and Singapore. Johnson

and Johnson pay Shire royalties on sales for North America and the rest of the world.

Potential and Current UK / EU Supply Chain

Production of galanthamine from natural sources in the UK, EU and the rest of the

world is served by an existing supply chain outlined below and in figures 4 and 5.

Introduction of generic forms of galanthamine is likely to broaden this supply base as

there will be a different customer base to the present Janssen requirement plus non-

pharmaceutical grade approved purchasers using galanthamine for supplements etc.

This section outlines both the current and possible future members of the

galanthamine supply chain and suggests likely individual organisations that either

have an interest or would be suitable partners in any future enterprise.

Daffodil Production in the UK

Much of the information on daffodil production systems in the UK was derived from

a meeting with Gordon Hanks (HRI) in May 2005.

Daffodils are planted in raised ridges (similar to potatoes) in an almost continuous

band by machine. Daffodil planting machines come in different sizes according to

field sizes and scale of operation. Growers in the Eastern part of the UK tend to use

larger scale machines due to the size of their fields compared with the Cornish and

Isles of Scilly growers. An average planting rate in the UK is 15 t bulbs ha-1 but this

could easily be increased to 20 t ha-1 with minimal negative impact on yield per

individual bulb but with the advantage of higher planting density in terms of land use

and manpower.

25

The main sites for daffodil production within the UK are East Anglia, Cornwall (and

Scilly Isles) and Angus with an estimated 4500 ha of commercial acreage.

In the past, the Eastern regions were predominantly bulb suppliers with the cut flower

market being quite separate but that distinction is now blurred with many producers

supplying both bulbs and cut flowers.

Part of the reason for this changing market perspective is the decrease in market price

for bulbs; on average daffodil bulbs were fetching £500 per tonne 8-11 years ago

whereas the 2004 price was £150-200 per tonne and the current price is around £300-

350 per tonne (Farm gate price, 3 separate grower telephone reports). The UK market

is estimated at 20-30 000 tonnes p.a.

The UK method of growing daffodil bulbs differs from other countries in that we

adopt a 2-year down approach. For example, bulbs planted in August 2005 would not

be lifted until June 2007. This has advantages for the grower in terms of land

utilisation and labour costs plus it overcomes a major hurdle for combining the cut

flower and bulb production process into one. Before planting, bulbs are routinely

treated with hot water to reduce the pathogen load on the bulb, in particular the stem

nematode, Ditylenclius dispaci (see Figure 6). Bulbs are soaked at 46ºC for 3h which

is sufficiently close to the lethal temperature of 50ºC, for this length of incubation, to

damage flower developing within the bulb. So in our example of a bulb planted in

Aug 2005, after heat treatment the flower produced in Spring 2006 would be poor but

this would be reversed by Spring 2007.

A disadvantage with the 2-year down method is that crops can become prone to

diseases such as fungal or bacterial rots which would be largely avoided with a one-

year cycle. This is particular important during times of market depression where bulbs

may be left for more than 2 years. The merging of cut flower and bulb production

provides flexibility and has allowed larger companies to manage their portfolio more

easily by balancing income with the two products according to the state of the market.

26

Figure 6 Daffodil bulb affected by nematodes.

The economics and logistics of daffodil growing requires intensive input on three

occasions during the growing season(s) once the bulbs are set: (1) flower picking, (2)

bulb lifting and finally after lifting (3) cleaning and grading of the bulbs for resale or

replanting. These processes are semi-mechanised but still require considerable

amounts of labour for short periods of time. There are small lifting machines that

usually are accompanied by workers removing clods of earth and breaking up clumps

of bulbs to minimise the downstream processing required. Alternatively if fields are of

sufficient size then there are large machines requiring considerably less labour which

will be less discriminating in the removal of earth and bulb clumps from the harvested

material. The sorting and cleaning of bulbs will still be required but can be done at a

central yard which may be more efficient for larger organisations.

The yield of bulbs from daffodils is at least 100%, i.e. bulbs planted at 20 t ha-1 will

yield bulbs at lifting at 40 t ha-1, but this would be considered a poor return with 150%

representing a more reasonable yield.

The grower would routinely treat the bulbs with 3 applications of herbicide and 5 of

fungicides per season. The grower may occasionally treat with an insecticide to try

and combat the large narcissus fly although there are no really effective compounds

available. Good practice would recommend “rogueing” removal of poor or aberrant

forms from the daffodil plots during the flower picking season.

27

The most vigorous cultivars suited for growing in the UK are the widely available

commercial varieties. Golden Harvest and Carlton make up 40% of the UK stock with

20-30 other main varieties covering the remaining stock. There are several hundred

types of daffodils available but not usually at commercially relevant levels. This

would be an important factor when choosing galanthamine-rich varieties outside of

these varieties as daffodils are slow to multiply.

Growers

There are many small producers of bulbs and flowers but many of these have formed

cooperative organisations or entered into marketing deals with the larger companies.

In Cornwall there are 1750 ha daffodils grown with a market size of £2.4 M for bulbs

and £10.7 M for cut flowers annually (www.chenet.org.uk/horticulture/industry.php).

Major names in Cornwall are Fentongollan (www.flowerfarm.co.uk), Cornish

Bulbgrowers Ltd. and Winchester Growers (see below). In East Anglia, Nocton Ltd

provide up to 20% of the UK cut flower supply, together with Winchester growers

and ex-Angloflora which is now part of Grampian Growers (see below)

Winchester Growers are based in Spalding, Lincolnshire with an additional major site

near Penzance, Cornwall. They farm approximately 400 ha of daffodils producing 120

M stems and approximately 5000 tonnes bulbs annually.

www.winchestergrowers.com

Grampian Growers are based at Logie, Montrose in Angus and are a cooperative of 18

bulb growers that produce between four and five thousand tonnes of bulbs annually.

They actively export their bulbs, in particular to North America and have certified

virus-free stock. www.grampiangrowers.co.uk

28

Figure 4 Current and Historical UK Supply Chain for Reminyl®

Patient

Hospital Pharmacy

GPPharmacy

Reminyl SupplyShire

Pharmaceuticals

Reminyl SupplyOff-shore

Wholesaler/Distributor Wholesaler/Parallel Import

Synthetic galanthamineSanochemia

Bulb Marketing Agent

Extraction

Reminyl Production

Janssen

Grower

Figure 4 Current and Historical UK Supply Chain for Reminyl®

Patient

Hospital Pharmacy

GPPharmacy

Reminyl SupplyShire

Pharmaceuticals

Reminyl SupplyOff-shore

Wholesaler/Distributor Wholesaler/Parallel Import

Synthetic galanthamineSanochemia

Bulb Marketing Agent

Extraction

Reminyl Production

Janssen

Grower

Patient

Hospital Pharmacy

GPPharmacy

Patient

Hospital Pharmacy

GPPharmacy

Reminyl SupplyShire

Pharmaceuticals

Reminyl SupplyOff-shore

Reminyl SupplyShire

Pharmaceuticals

Reminyl SupplyOff-shore

Wholesaler/Distributor Wholesaler/Parallel ImportWholesaler/Distributor Wholesaler/Parallel Import

Synthetic galanthamineSanochemia

Bulb Marketing Agent

Extraction

Reminyl Production

Janssen

Reminyl Production

Janssen

Grower

29

Extraction Facilities

The UK industry has sufficient expertise and available facilities to make commercial

extraction of galanthamine of the appropriate scale and quality feasible. A possible

European player has been added due to their known interest in galanthamine.

Macfarlan Smith

Macfarlan Smith is based in Edinburgh and is now part of the Johnson Matthey group.

The company has a long history in the extraction of pharmaceutical agents from

botanicals and is particularly renowned for its work on extraction of opiates.

Macfarlan Smith was the original providers of daffodil-extracted galanthamine for

Reminyl and contributed to the original drug master file submitted to the FDA by

Johnson and Johnson. They are one of the eight companies that have filed a drug

master file with the FDA for production of generic galanthamine (filed Feb 2005)

together with Omnichem from Belgium and Ivax Pharmaceuticals from the Czech

Republic. There are also files submitted from two Chinese and two Indian

manufacturers.

Botanix

Botanix is an extraction specialist with headquarters in Kent. This company has

grown from a background of hop extract supply to the brewing industry. It has

broadened its product range to include a wide variety of natural products such as

essential oils and has contract extraction facilities. Botanix has particular skills in the

use of liquid and supercritical carbon dioxide as an extraction solvent. Extraction of

galanthamine from daffodils using carbon dioxide has not been reported to date but

may be applicable and commercially feasible.

30

Grower

Extraction and Supply of API

Figure 5 Possible UK/EU Supply Chains for Generic Drugs from Daffodil Galanthamine

Formulation and Production of Capsules/ Tablets

Generics Manufacturer and Supplier

Patient

Hospital Pharmacy

GPPharmacy

Wholesaler/Distributor Wholesaler/Parallel Import

Procurement / Marketing Agent

Grower

Extraction and Supply of API

Figure 5 Possible UK/EU Supply Chains for Generic Drugs from Daffodil Galanthamine

Formulation and Production of Capsules/ Tablets

Generics Manufacturer and Supplier

Patient

Hospital Pharmacy

GPPharmacy

Patient

Hospital Pharmacy

GPPharmacy

Wholesaler/Distributor Wholesaler/Parallel ImportWholesaler/Distributor Wholesaler/Parallel Import

Procurement / Marketing Agent

31

Wilde and Co.

Wilde and Co specialise in extraction of oils from plant material using

hydrofluorocarbons at low temperatures. They have a large extraction plant in

Thailand but have a product development facility at Thirsk and are a possible UK

extractor for galanthamine from daffodils.

Omnichem

Omnichem is based in Belgium with a manufacturing capability in Wetteren. It has a

long history in the production of active ingredients from botanicals and has provided

active pharmaceutical ingredients, APIs, particularly alkaloids (galanthamine is an

alkaloid) from natural sources for several decades. It is now part of the Japanese

Ajinomoto Company group and is known to have investigated the production of

galanthamine both by submission to the FDA and also by negotiations with UK-based

daffodil growers.

Within the EU there are several companies with considerable experience in extraction

of natural products from plants in commercially relevant quantities, e.g. Pierre Fabre

in France and Indena in Italy.

Marketing Agents

United Farmaceuticals is a wholly-owned subsidiary of the UK marketing cooperative

United Oilseeds. It was formed in 2003 to exploit the markets for pharmaceutically

active ingredients from crops. A major focus is the supply of morphine poppies to

Macfarlan Smith for opiate production. United Farmaceuticals have purchased

daffodils for galanthamine production and have recently reported that they have

doubled their hectarage for the Summer 2006 harvest. The majority of their

galanthamine supply comes from the daffodil variety Carlton, with most of the bulbs

destined for export to the EU for extraction (Annual report United Oilseeds, Autumn

2005; notes from meeting with John Manners, 2005).

The bulb industry contains several strong grower cooperatives to market and supply

their produce. One of these, Lingarden, has demutualised and adopted a slightly

32

different business model with the original members now holding shares in the trading

company. Since July 2005 Lingarden has been part of Flamingo Holdings which also

controls a range of cut flower suppliers and growers throughout the EU and Africa.

(http://www.lingarden.com/ ). Lingarden provided contract-grown daffodil bulbs to

Macfarlan Smith during the 1990s, when Macfarlan Smith were under contract for

Reminyl production

Contract Manufacturers

There is a wide range of pharmaceutical manufacturing capability in the UK, a few of

the possible solid oral dose and liquid oral dose suppliers are described below. Almac

Pharmaceutical Development and Manufacturing Services have a MHRA licensed and

FDA approved manufacturing facility in Northern Ireland. Ashton Pharmaceuticals,

near Manchester, is part of the Inyx group and has a cGMP manufacturing plant (14

000 m2) which is compliant with MHRA, EU and Asia regulatory requirements. Penn

Pharmaceuticals based in Tredegar, Wales have a small manufacturing capability of

40 m2 suitable for galanthamine tablet or capsule production. Pharmapac UK have a

well-respected manufacturing operation at the ex-Bristol-Myers Squibb site on the

Wirral.

Generic Companies with UK Manufacturing Capability

Alpharma, now part of the Actavis group of companies, have a large manufacturing

plant in Barnstaple, Devon which is capable of producing up to 5 bn tablets p.a.

Johnson and Johnson instigated legal action against Alpharma regarding Alpharma’s

challenge to their protected galanthamine production as outlined above in the

Generics section.

There are a range of other UK-based generics companies some with manufacturing

capabilities in the UK, others acting as sales and marketing organisations for their

parent companies. Some of the available manufacturing space within this sector is

accessible as contract manufacturing facilities. The British Generics Manufacturer’s

Association is a useful starting point for information on this sector

33

(http://www.britishgenerics.co.uk ). Two of these manufacturing plants are part of the

Teva group and another is a representative of Dr Reddy’s Laboratories, both

companies have filed ANDA applications for galanthamine.

Branded Manufacture of Reminyl

The production of Reminyl by Janssen for supply to Shire Pharmaceuticals or other

Johnson and Johnson partners takes place at the Janssen Pharmaceutica

Pharmaceuticals plant in Geel, Belgium (http://www.pharmaceutical-

technology.com/projects/geel/ ).

Reminyl® supplied to UK pharmacies comes from Shire Pharmaceuticals if bought

directly. The advent of a free market within the EU means that wholesalers will

sometimes import medicines from other EU states into the UK. This process called

parallel import requires a licence from the MHRA. Many wholesalers have applied

and been granted such licences for the parallel import of Reminyl®. Parallel importers

buy medicines from another EU country where the price of the product has been set

by the government to be lower than in the UK. The medicines are often repackaged in

the UK and sold into the usual supply chain. The Association of the British

Pharmaceutical Industry estimates that more than one in eight prescriptions is serviced

from parallel imports into the UK.

Drug Wholesalers

The drug wholesalers known to be used by Shire include AAH Pharmaceuticals,

Unichem, Phoenix Healthcare Distribution and Boots.

The wholesale market in the UK is dominated by AAH Pharmaceuticals and Unichem

who control over sixty percent of total sales. Boots occupies an unusual position in

that it is a major wholesaler within the sector by virtue of its very large share of the

total prescription market (11% of NHS scripts dispensed) serviced by its retail

pharmacies. The sector is one that is predominantly a logistics-driven business with

regular, reliable supply of products necessary for the hospital and independent

pharmacies.

34

AAH Pharmaceuticals is the UK’s largest pharmaceutical wholesaler with over thirty

percent of the total market for high street pharmacies and hospital dispensaries. Their

business is a large logistics operation with 19 depots and over 600 vehicles

distributing 27000 different products.

Unichem plc is part of the Alliance Unichem group formed in 1997 to encompass the

broad aspiration of supply of medicines, surgicals and support services for pharmacies

in the UK and since 2000 throughout the EU. Another member of Alliance Unichem,

Alliance Pharmacy, is the third largest pharmacy group in the UK. Unichem was

formed in 1938 and are based in Surrey with eleven regional distribution centres to

provide the twice daily deliveries to their 5700-strong client base.

Phoenix UK is part of the large Phoenix Group headquartered in Mannheim,

Germany. It was formed by the acquisition of several UK-based wholesalers in the

late 90s and early 00s and the major East Anglian acquisition in Feb 2005. Phoenix

UK is based in Runcorn in Cheshire with good GB-wide geographical coverage

supplied by its 14 depots. Phoenix UK has a close association with the over the

counter (OTC) supplier, Numark plc, which is owned by the independent pharmacies

and is an equal partner in a joint venture marketing Numark products.

Health Food/Supplement Route to Market

An alternative route to market that could be adopted by a galanthamine producer

would be a food supplement marketed through the internet or via health food outlets.

Two major players in this market, Holland and Barrett and Boots were approached but

neither was prepared to discuss this option for the UK market. A spokesperson for the

MHRA indicated that galanthamine would not be covered by the Herbal Medicines

Directorate and that any product produced using daffodil-produced galanthamine

could not be marketed with any health claims unless it underwent the appropriate

licensing procedure.

Galantamind is a capsule formulation of galanthamine produced from a natural source

which is available on the internet from US sources. It claims to support memory

35

function but does not specifically mention Alzheimer’s disease. The capsules contain

8mg galanthamine and the dosing information is as for the branded product. This

product is available for $66.14 for 90 capsules with further discounts available for

bulk purchases, a comparable amount of branded galanthamine would cost £175.50

(using an exchange rate of $1.75:£1 correct March 2006) approximately 4.6 times

more expensive.

Alternatives to Daffodils as Natural Sources of Galanthamine

Daffodils are the natural choice for galanthamine-containing biomass for UK

suppliers but alternative crops are available outside of the UK. In Eastern Europe the

Bulgarian Pharmaceutical Group Ltd. produce Nivalin which is galanthamine

extracted from the snowdrop Leucojum aestivum (www.bpg.bg/nivalin ). The Chinese

pharmaceutical company Yixin Pharmaceuticals use a range of spider lily plants from

the genus Lycoris, in particular Lycoris radiata and trade through a Czech site

(www.galantamine.cn ).

Critical Analysis of Galanthamine Supply Chain

Factors affecting Galanthamine Levels in Daffodil Bulbs

The data used in this section of the report for levels of galanthamine in bulbs and

information on changes to the levels throughout the growing season were derived

from the technical part of the project which is outlined in full in the Technical Annex.

The technical component of the this study used commercially grown material from

test plots supplied by Alzeim Ltd. to analyse levels of galanthamine in a range of

commercially available daffodil varieties including the normal galanthamine stock,

Carlton, from an upland and a lowland site in Wales. The level of galanthamine

present in Carlton bulbs at the two sites has been analysed for consistency and level of

accumulation across the season and within the plant growth cycle in time course

experiments.

The level of galanthamine found in individual bulbs varies considerably with replicate

bulb samples from both sites analysed showing three-fold differences at some time

36

points. However, the variability did not appear to show any particular phasing nor was

it confined to one sampling site or time-point and presumably reflects the inherent

variability often seen in levels of plant secondary products (see Technical Annex)

The level of galanthamine in the daffodil bulbs grown at the two sites analysed in the

technical study appears to be highest before flowering. The time-course data suggests

that the maximum levels may be attained soon after germination of the bulb.

Harvesting of bulbs at this point, before flower formation, while providing the highest

concentration of galanthamine in the bulbs, would have logistical and economic

consequences for daffodil production. These factors and the possible advantages or

disadvantages that may arise from such a change in harvest date are outlined below:

Higher levels of galanthamine are likely to improve extraction efficiency

Bulbs lifted early would have low mass so growers would expect premium

Increased drying costs for early-lift bulbs

Additional machine and labour costs of separate harvest

Inclement weather more likely to hinder early harvest

Growers lose flower income from bulbs harvested pre-flowering

Factors affecting Choice of Supplier by Supply Chain Members

The branded or generic manufacturer (i.e. the ultimate industrial customer in the

supply chain) will probably look to the supplier of extracted galanthamine to ensure

maintenance of high standards in the chain below them, from middleman and/or

directly to the grower. Factors likely to influence choice of supplier for the extracted

product and the raw bulb material are outlined below.

The bulb growers need to be able to provide Carlton stock in sufficient quantities,

hundreds and not tens of tonnes, to supply most or all of the galanthamine extractor’s

requirements. They are unlikely to wish to deal with many bulb suppliers and so may

choose to buy from a small number of large growers or deal with a single agent for

their entire annual purchase. In either case the provenance of the bulbs is important

both for extraction efficacy and for quality assurance and traceability of the medicinal

37

product. The galanthamine extractor may wish to secure their supply of bulbs for

future years and require a guaranteed growth and delivery contract at a predetermined

price from chosen bulb growers.

The company responsible for extraction of the galanthamine should ideally be familiar

with the principles and practice of medical grade natural product extractions, if

possible with experience of cGMP. Their facilities should have been inspected by the

medicines agency, MHRA, or be suitable for such inspection. The extractor needs to

be technically capable of developing an efficient extraction process at a reasonable

cost. Experience in the support of regulatory submissions would also be a useful

attribute.

Critical Points in Financial Feasibility of Supply Chain

An understanding of the financial sensitivities of the supply chain is necessary to be

able to comment on the factors influencing the likelihood of maintaining or increasing

the current UK daffodil-derived production of galanthamine for drug use. Two simple

financial models have been constructed using a ‘top-down’, market-led approach to

determine galanthamine price and an extraction and raw materials cost based ‘bottom-

up’ model to determine the cost of galanthamine production. The models are available

as an Excel spreadsheet and show all assumptions made during their construction.

The market model has been subjected to sensitivities consistent with price deflation

and altered gross margins for pharmaceutical producers in generic manufacture

whereas the extraction model has been analysed to determine the effect of changes in

bulb price, extraction efficiency, extraction costs and galanthamine levels in the

starting material.

Market Model

The key drivers for this model are likely to be changes in drug pricing and expected

margins of generic manufacturers compared with current branded product.

Galanthamine is an expensive API and would be expected to contribute a significant

cost to the total for the formulated product, particularly for simple tablet formulation,

38

making the 30-90% figures modelled for this parameter sensible. Similarly it is

normal for the market price of drugs to fall by up to 30% with generic competition;

thus the market model analysis below considers a 10-40% reduction in cover price.

The gross margin expected by a branded pharmaceutical manufacturer is at least 75%

which is reflected in the market model, whereas generic producers would consider

55% or 65% gross margin to be desirable as their overall gross margins are more

likely to be in the range of 45-50%, for example the generics manufacturer Teva

Pharmaceuticals reported an overall gross margin of 47% in 2005 whereas Shire

Pharmaceuticals’ margin was 87% for 2004.

Figure 6 Galathamine Cost Comparsion

Galanthamine price vs. total price for all market costs and gross margins

0

5000

10000

15000

20000

25000

30000

35000

30 50 70 90

Galanthamine cost as % total costs

Allo

wab

le g

alan

tham

ine

pric

e (£

/kg)

Full price @ 75% margin

30% discount @ 75%margin

Full price @ 55% margin

30% discount @ 55%margin

http://www.tevapharm.com/pdf/12909ACL.PDF ,

http://www.shire.com/shire/uploads/reports/Annual_Report_2004.pdf

Figure 6 shows some examples of the maximum price payable for galanthamine from

the market model sensitivity analysis. The permissible costs for a branded-

manufacturer level of gross margin (75%) at full price and discounted by 30% is

shown together with the comparable figures at a more normal generic manufacturer’s

gross margin of 55% Clearly the proportion of total manufacturing costs derived from

the galanthamine price is an important factor in this calculation of affordability,

39

however as stated previously above in a simple formulation such as tablets the cost of

the active pharmaceutical ingredient (API) would account for the vast majority of the

total costs (70-90% are reasonable figures).

This analysis shows that there is considerable opportunity for a normal market

adjustment to take place in the price of a generic galanthamine drug but still maintain

a profitable market sector for galanthamine producers. For example, under the

conditions assumed by the model, a reduction in current drug cover price by 30% at a

generic-type gross margin of 55% and a moderate 70% figure for the galanthamine

proportion of total drug production costs gives a top level of figure of £17800 per kg

galanthamine.

Extraction Model

Modelling of the cost of galanthamine production shows that efficiency of extraction

is a key driver when considering the economic feasibility of the process. The

parameters varied in the sensitivity analysis have been adjusted to give the most

accurate picture possible considering the relative lack of available published data on

these parameters (Figure 7).

The bulb price has been considered both at its current level of £300-350 per tonne, a

slight premium for Carlton at this time due to market demand, up to an elevated level

which could be envisaged if harvesting practices were changed to reflect the

maximum temporal concentration of galanthamine in the bulbs and the associated

premium required by growers.

40

Figure 7 Production Costs in Relation to Extraction Efficiency

Production costs vs extraction efficiency

0

5000

10000

15000

20000

25000

30000

35000

1 2 3 4 5 6 7

Extraction Efficiency (%)

Prod

uctio

n Co

sts

(£ p

er k

g ga

lant

ham

ine)

£350 bulb high

£700 bulb high

£350 bulb low

£700 bulb low

Figure 7 shows data for £550 per tonne extraction costs. The data points are for bulb

costs £350 or £700 per tonne with data from both the high and low galanthamine level

assumptions.

The extraction costs have been modelled for between £250 and £950 per tonne with

wide ranging differences in the extraction efficiencies between 20 and 80% Figure 8

shows the production costs for a process running at 40% extraction efficiency. Again

this analysis shows that the relationship with the variable parameter, extraction costs,

is linear and that increasing the overall galanthamine level in the bulbs would greatly

increase the economic attractiveness of the process. More complex possibilities such

as changes in relative extraction efficiency, which are likely to occur with an elevated

galanthamine starting level, have not been included in the modelling process although

it is possible to account for such changes manually in the model.

The cost of bulbs, extraction costs and amount of galanthamine present in the bulb

raw material all show substantial effects on the final cost of galanthamine production

but do so in a linear, or close to linear, fashion. However the extraction efficiency as

would perhaps be expected shows a non-linear relationship with cost and it is clear

that of any single factor the extraction efficiency is crucial for an economical process

(Figure 7).

41

Figure 8 Production Costs in Relation to Extraction Costs

Production costs vs extraction costs

0

5000

10000

15000

20000

25000

250 350 450 550 650 750 850 950

Extraction Costs (£ per tonne)

Prod

uctio

n Co

sts

(£ p

er k

g ga

lant

ham

ine)

£350 bulb high

£700 bulb high

£350 bulb low

£700 bulb low

Figure 8 shows data for 40% extraction efficiency. The data points are for bulb costs

£350 or £700 per tonne with data from both the high and low galanthamine level

assumptions.

Figures 8 – 9 (above and below respectively) show that given a reasonable extraction

efficiency (40% used in the model) the production costs for galanthamine can be

managed with substantial variation in extraction and bulb costs. However it is also

clear that the economics of the process would be considerably enhanced if the levels

of galanthamine were consistently at the higher level modelled (450 g per tonne)

Increasing the basal level by cultivar selection does not seem to be feasible at this

point unless a hitherto untested daffodil type shows itself to be a higher producer than

Carlton. If a variety was found to be a high producer it would not really be beneficial

in the short to medium term unless it was already grown on a considerable scale due

to the very slow multiplying times of daffodils, or alternative lab-based methods for

the multiplication were viable. Alternative agronomic approaches may be worth

considering, such as the early lifting regime suggested above and modelled here or

42

completely different approaches to daffodil propagation, such as abiotic or biotic post

harvest stress or hydroponics to optimise galanthamine accumulation.

Figure 9 Production Costs in Relation to Bulb Price

Production costs vs bulb price

0

5000

10000

15000

20000

25000

250 300 350 400 450 500 550 600 650 700

Bulb Costs (£ per tonne)

Prod

uctio

n Co

sts

(£ p

er k

g ga

lant

ham

ine)

30% high

60% high

30% low

60% low

Figure 9 shows data for £550 per tonne extraction costs. The data points are for

extraction efficiencies of 30 and 60% with data from both the high and low

galanthamine level assumptions.

The process is clearly feasible at a commercial level at this time hence the interest

from a variety of generic manufacturers in the UK, other EU states and countries

outside of the EU, in filing for abbreviated drug approvals once Reminyl is out of

patent. A Chinese manufacturer offered medical grade galanthamine at $40 000 per kg

which is approximately £25 000 per kg and the ‘rule-of-thumb’ within the industry

states that a good estimate of EU-based manufacturing costs can be gained by the

price offered by Chinese pharmaceutical suppliers.

In Summary

Extraction efficiency is key to the process

Increase in galanthamine levels is highly desirable

Minimal parameters to produce galanthamine at £10 000 per kg given assumptions

from model

43

High galanthamine – efficiency ≥30% and bulb price ≤ £700 per tonne

Low galanthamine – efficiency ≥50% and bulb price ≤ £400 per tonne.

Factors altering the Market in the Future

There are a variety of factors that may alter the dynamics of this supply chain in the

near and mid-term, these have been discussed above but are also summarised below:

New anti-Alzheimer’s drugs replacing galanthamine

Use of daffodil alkaloids as a route to semi-synthetic drugs in this or other

applications

Wider prescribing of galanthamine recommended by NICE due to improved

cost-benefit data

Development of new cultivation or post cultivation methodologies to increase

the level of galanthamine in bulbs

References

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study of rivastigmine, donepezil and galantamine in a real-world

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Forman, M.S., Trojanowski, J.Q. and Lee, V.M-Y. (2004) Neurodegenerative

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Grundman, M., Petersen, R.C., et al.(2004) Mild cognitive impairment can be

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Hebert, L.E., Scherr, P.A., Bienias, J.L., Bennett, D.A. and Evans, D.A. (2003)

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