Global Insight Perspective | |
Significance | This is Teva's second consecutive triumph over the U.S. drug regulator after U.S. courts earlier forced the FDA to reconsider its rejection of Teva's exclusivity claim for a generic version of Bristol-Myers Squibb's Pravachol (pravastatin). |
Implications | If unchallenged by the FDA, the decision will mean that the genericisation of the Zocor market will be delayed until the end of 2006. |
Outlook | The revenue streams for Teva and Ranbaxy will no doubt be enhanced, also providing a boost for patent-holder Merck and authorised generic player Dr Reddy's (India). |
Litigation Upheaval
The dispute surrounding Zocor relates to the FDA's decision to 'delist' simvastatin patents and allow as many generic approvals for the cholesterol drug when its patent expires in June 2006. The delisting effectively removed the rewards gained through the 180-day marketing exclusivity incentive given to first-to-file generic firms who have successfully challenged the patents. Dow Jones reports that the ruling elucidated that the FDA's actions were 'contrary to the clear intent of the Congress', upholding the Hatch-Waxman statute. Teva's newly acquired unit Ivax gained approval for 10 mg, 20 mg and 40 mg dosages, while India's Ranbaxy holds first-to-file status for the 80 mg tablet form. Sales of Zocor totalled around US$4.4 billion in 2004, and while the cholesterol-lowering statin is already off-patent in some international markets, Merck's patent in the lucrative U.S. market expires this year.
Teva has successfully overturned the FDA's recent decision to reject its claim of exclusivity to sell a generic version of BMS's Pravachol. This is Teva's second triumph against the U.S. regulator, following earlier unsuccessful attempts to re-list the patents in the 'Orange Book' that catalogues branded drug patents.
The price erosion expected in the US$4 billion Zocor market may not happen just yet; although Teva and Ranbaxy's entry is likely to bring down prices, it will not be to the extent earlier envisaged. With more than 10 generic manufacturers in the fray, the price of Zocor was expected to be knocked down severely - from US$150 for a month's supply to US$15 - prompting health funds to expect a significant cost saving with the onset of patent expiry. However, a more gradual price erosion will unfold following the court's decision. As its closest competitor in the statin market, U.S. giant Pfizer's Lipitor (atorvastatin) is also expected to receive an unlikely boost from the decision, according to Reuters. With the entry of a deluge of generics into the simvastatin market, Lipitor faced the threat of a possible shift in patient prescriptions to the now much cheaper Zocor. Patent-holder Merck had also forecast a 50% slump in sales of Zocor during 2006, to US$2.3 billion (see United States: 1 February 2006: Pressure on Top Products Takes Toll on Merck & Co, but Not Such a Bad Year After All).
Outlook and Implications
The U.S. court decision may not represent a definite end to the Zocor dispute, as the FDA still has the option of appealing. However, for the time being though, the Zocor market is expected to witness limited competition, from Merck, Teva, Ranbaxy and Dr Reddy's.
The decision is a welcome surprise for the Israeli drug-maker, whose 2006 financial guidance incorporated sales generated from marketing exclusivity relating to Pravachol and Proscar, through its recently acquired unit Ivax. An enhanced revenue stream can be expected as Teva strengthens its position in the statin market. Teva also believes that 39 of its 145 ANDAs constitute first-to-file status, worth a massive US$25 billion in sales.
For Ranbaxy, the judgement represents a boost for a company that has based its growth strategy on challenging the patents of blockbuster drugs, with the aim of gaining marketing exclusivity during the first six months of patent expiry. However, the past year has seen unsuccessful attempts to overturn Pfizer's Lipitor patent, leading to high litigation costs that dented its profits (see India:19 January 2006: Ranbaxy's 2005 Ends in Dismal Performance, Revival Not Expected Until Q2).
Related Articles:
- Global: 13 April 2006: Teva Claims FDA Recognition of Exclusivity Period for Generic Pravachol
- United States: 2 February 2006: Authorised Generic Versions of Zocor and Proscar Point to New Direction for Merck & Co
- India: 1 February 2006: Dr Reddy's Enters Authorised Generics Business, with Merck's Zocor and Proscar
- Israel: 3 January 2006: Teva Receives U.S. FDA Approval for Generic Zocor
- India: 30 September 2003: Ranbaxy Receives FDA Approval for Generic Version of Merck Cholesterol Drug