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BIG PHARMA GOES GENERIC.

MUMBAI -- Faced with losses once its blockbusters start losing patents, Big Pharma is now devising strategies to counter the impact. Recent deals by pharma biggie Pfizer with domestic generic firm Dr Reddy's and globally with Watson and Sanofi in France have been struck to stem revenue erosion as the world's largest selling drug, Lipitor, loses patent protection in US in November this year. Other pharma biggies may adopt a similar strategy as their blockbuster drugs (over $1 billion in sales) go off-patent , even as it opens up significant opportunities for domestic generics to enter into such deals.

Recently, Pfizer inked three agreements to ensure that it has a steady flow of revenue even after it loses its patent on cholesterol drug Lipitor, which netted annual sales of over $11 billion globally. While Pfizer settled a patent infringement suit with Dr Reddy's over launch of a generic version of the blockbuster drug in the US, it also signed an agreement with Watson Pharmaceuticals to sell an 'authorized generic' in the US for five years. Under the agreement, Pfizer will provide Lipitor to Watson to sell without the brand label in return for a share of the sales.

Analysts expect that Pfizer may enter into more deals, possibly with domestic companies like Aurobindo and Lupin for generic versions of the drug, in an attempt to offset the impending revenue loss. Says Sujay Shetty, partner PwC India: "Big Pharma will fight tooth and nail to trap whatever little revenue it can, and not surrender the huge market share it once had (through market exclusivity) to a generic competitor."

Faced with an impending patent cliff (drugs losing patent protection), Big Pharma has not been able to discover new blockbusters which will mitigate revenue loss. Now, with the mostwatched case, Lipitor, losing patent , pharma biggies like Pfizer will adopt a multi-pronged strategy to ensure they have a steady flow of future income, says Ranjit Kapadia, senior VP, Centrum , adding that more such deals are on the cards.

Lipitor's patent expires in November in the US this year, and nine companies (global and domestic) have sought approval from the Food and Drug Administration to launch their generic versions. Under an agreement with Pfizer, Ranbaxy has the right to sell the generic (atorvastatin ), exclusively for 180-days once the patent expires.

Concerns have been raised by experts on whether Ranbaxy will be able to launch the drug in November, as it is yet to resolve its long-pending issues with the FDA over its two plants-Paonta Sahib (Himachal Pradesh) and Dewas (Madhya Pradesh). Though, recently the company has said that talks with FDA are progressing well.

Says Ernst and partner Murali Nair, "The deals are quite in line with what was expected and the trend is expected to continue in the short term. But this can only be a transient strategy to smoothen the revenue downslide as even with all these, the revenue slip will be substantial."

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Publication:Pakistan & Gulf Economist
Date:Sep 25, 2011
Words:488
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