The future looks dicey for the Philadelphia operations of URL Pharma, a decades-old drug company that succeeded in raising the price of a popular gout medicine by 100 times despite an outcry from sufferers of the painful affliction.
The price increase was an expected, but unintended, consequence of a Food and Drug Administration program that began in 2006 that tried to lay scientific foundations under medicines in use for decades or centuries, but whose safety and efficacy has not been tested in clinical trials.
To get a drug company to pay for such trials, the FDA had to offer something in return, such as market exclusivity.
Colchicine, the extract of the autumn crocus plant (also known as meadow saffron), has been used for centuries to deal with the pain of inflamed joints.
URL Pharma's subsidiary, Mutual Pharmaceuticals, did enough testing to get approval in 2009 for single-ingredient oral colchicine, which it marketed as Colcrys for the treatment of gout and familial Mediterranean fever. Once the drug was approved, the FDA ordered the nonapproved versions of colchicine removed from the market. URL Pharma took advantage of its new monopoly, raising the price from as little as a nickel per pill to $5 per pill.
"This was a case of a well-intentioned FDA and a company that took advantage of a regulatory situation to build a business model that was fantastic," said Audrey Kunis, Temple University Hospital doctor, not entirely approvingly. Dr. Kunis is the president of the American College of Rheumatology, which criticized the decision in 2009.
URL Pharma's patented version of colchicine attracted the interest of Takeda Pharmaceuticals Ltd., based in Osaka, Japan, which bought URL Pharma for $800 million in June.
But Takeda's only interest was Colcrys, which Takeda said accounted for about 72 percent of the nearly $600 million in sales for URL Pharma in 2011. To reinforce that point, Takeda waited only five months before selling all of URL Pharma -- except for Colcrys -- to India's biggest drug company, Sun Pharmaceuticals Ltd., for an undisclosed price.
URL Pharma's other products and its Philadelphia facilities are now part of Sun Pharma. Will Sun Pharma continue operating the Philadelphia facilities?
"No decision has been made," Sun Pharma spokeswoman Mira Desai said in an email. "We are still evaluating."
Richard Roberts, who led URL Pharma before the sale, makes no apologies about the research or profits from the sale.
"If we had discovered nothing of significance, we wouldn't have gotten the patents or the approval of the FDA," Mr. Roberts said. "This is not your father's colchicine."
Mr. Roberts' late father, Albert, was trained as a bench chemist at the University of Pittsburgh and started URL Pharma in 1946 by going around to Philadelphia slaughterhouses collecting the pituitary glands from pig brains, from which he extracted ACTH, a steroidal hormone that helped treat pain.
"Now, URL Pharma is a scientifically driven company, but growing up, the packaging department was our dining room table," Richard Roberts said.
URL Pharma was near bankruptcy several times before venture capital firms bought control from Albert Roberts in 1997, leaving Richard as CEO with a minority stake. Mr. Roberts said he got "less than one-third" of the $800 million that Takeda paid for the company and that employees held 10 percent of the company stock. At the time of the Takeda sale, the company had about 500 employees and about 380 contract sales representatives.
Amid everything else, the company has a date with the U.S. Supreme Court on March 19. URL Pharma's Mutual Pharmaceuticals subsidiary is contesting a New Hampshire court decision that gave $21 million to a woman who nearly died after taking Mutual drug sulindac for shoulder pain.
Sun Pharma inherits that litigation. Whether it keeps the Philadelphia factories, too, remains a question, in part because it has a lot of U.S. manufacturing capacity, according to one financial analyst.
In a Feb. 8 conference call with analysts, Sun Pharma managing director Dilip Shanghvi said URL Pharma has complementary existing products and spray delivery systems for medicine that will help Sun Pharma, but as for new products, "They do not have a very deep pipeline."
"If we bring in the operating discipline controls and focus on market share, costs and efficiency, I am reasonably sure that at one point of time they used to make at least five, six, seven times volumes than what they are making today," Mr. Shanghvi said. "So there is opportunity for us to bring in efficiency and improve performance."