Global Insight Perspective | |
Significance | The announcement sees the termination of the standstill agreement between Teva and Wyeth, triggering Teva's resumption of pantoprozole marketing after a brief stoppage. Sun Pharma, which shares 180-day generic marketing exclusivity with Teva, will also launch a generic version. |
Implications | The decision has deep implications for Wyeth, with the short-term expected to contribute to a revised earnings target for full-year 2008 figures. Wyeth will continue to pursue a patent infringement lawsuit against Teva, but the immediate upside is now in favour of the generic firm, which has already established a supply chain for its generic. |
Outlook | Wyeth's move has quashed any potential for a settlement with Teva, but highlights a trend of increasing at-risk launches given the growing strengths of generics firms. |
Wyeth's Decision
U.S. pharma firm Wyeth has announced that it will launch a generic version of one of its best selling drugs, Protonix (Pantaprazole sodium), through a distribution agreement with the lesser-known Prasco Laboratories (U.S.). According to the company, the move marks a response to the at-risk launch of generic pantoprazole sodium tablets in the United States by Israel's Teva Pharmaceuticals in late December 2007. Wyeth and its partner, Altana Pharma (now part of Nycomed; Switzerland), are to continue pursuing the legal challenge against Teva and India's Sun Pharmaceuticals relating to Protonix, alleging patent infringement. Teva has meanwhile stated that Wyeth's generic launch has effectively terminated the standstill agreement on Protonix reached on 24 December 2007, which restricted Teva from marketing and shipping additional generic versions of Protonix unless the matter was resolved. Sun Pharma, the other beneficiary of a marketing exclusivity upon expiry of Protonix patent, has also announced the launch of its generic version. The move is significant as so far the Indian firm had refrained from opting for an at-risk launch, unlike Teva.
Patent Challenge Timeline
The patent infringement lawsuit was first triggered by Teva and Sun Pharma's filing of Abbreviated New Drug Applications (ANDAs), receiving tentative approvals in 2006. However, the final approvals were delayed until August-September 2007 following the lawsuit. Wyeth and Nycomed were denied a preliminary injunction on the product, with the trial expected to proceed in the second half of 2008. According to the U.S. FDA's Orange Book, the patents related to Protonix expire between 19 July 2010 and 17 November 2021.
Outlook and Implications
The implications of the decision are wide-ranging for Wyeth. In the short term, the launch will see earnings from Protonix drop; the drug generated annual sales of US$1.7 billion in 2006 and has already garnered US$1.45 billion in the first nine months of FY 2007/08. In its full-year earnings announcement, Wyeth is expected to factor in the effects of the Protonix generic launch in the face of Teva and Sun Pharma's flooding the market with their generic versions. Though the decision to launch its generic does automatically stop any potential for a settlement with the generic manufacturers, Wyeth is not assured of an increased market share, either going by the fact that Teva has reportedly already set up a supply chain for the product; the initial estimates suggest that the Israeli firm may have attained a 60% share in some quarters (source: Dow Jones). The move also weakens the patent infringement lawsuit against the generic drug-makers, which Wyeth will pursue. In the larger corporate context, the development echoes the problems faced by Wyeth, coupled with failed attempts for new approvals in 2007. In fact, the reality of a proposed workforce cut worldwide pegged at 10% will gain momentum, as further measures of cost cutting as profit margins begin to shrink.
For Teva, Wyeth's move does not dent into the company's projections for Protonix at least in the first quarter, with potentially strong inventories already in place. The Israeli drug-maker, however, faces product damages liability if it loses the patent infringement lawsuit. The at-risk launch in December has plenty of upsides—for example, putting enough pressure on the patent holder to make the shift towards a generic—and the timing means that Teva will be well ahead of Sun Pharma despite the standstill agreement. Teva has already suggested increased earnings from the Protonix generics launch, the first indication of which will be fully reflected in its first-quarter 2008 financial results. The development highlights the potential of a marked increase in at-risk drug launches by generic drug majors for precisely these reasons, and the added benefit of no documented penalties arising from patent lawsuits will only attract other generic firms to employ the tactic.
Related Articles
- United States - Israel: 22 January 2008: Protonix Standstill Agreement Extended
- Israel - United States: 27 December 2007: More Trouble for Wyeth as Teva Launches Protonix Generic
- United States: 16 November 2007: Wyeth Secures FDA Approval for New Form of Protonix
- United States: 28 September 2007: Tough Challenges Ahead for Wyeth's New CEO