Copycat of Liptor threatens Pfizer’s profits
The decision that threatens Pfizer’s economic future could be just weeks or months away. And the investors are waiting for a federal court to decide whether a copycat form of Pfizer’s $10 billion-a- year Lipitor cholesterol drug can come to market.
Lipitor, the world’s best-selling medicine, accounts for about 20 percent of Pfizer sales. Launched eight years ago, the drug’s sales continue to explode and it is Pfizer’s strongest bulwark as the company fights off revenue and earnings decline due to a raft of problems.
After patent expirations paved the way for cheaper copycats, Pfizer’s sales treatments for epilepsy, fungal infections and high blood pressure fell drastically. Patents will expire soon on other important Pfizer medicines, more than any other major pharmaceutical company.
Sales of Pfizer’s Celebrex arthritis drug have been cut almost in half due to heart-safety concerns. And the blockbuster revenue from Pfizer’s newer arthritis drug, Bextra, vanished when it was withdrawn in April after being linked to a deadly skin condition and its own heart risks. But these setbacks would pale in comparison with the loss of Lipitor, the crown jewel in Pfizer’s $114 billion acquisition of Warner-Lambert five years ago.
The threat comes from Indian drug maker Ranbaxy Laboratories which has challenged the validity of Lipitor patents in Delaware federal court and in a British court.
Rulings from US and British judges are expected at any time. But focus is on the far-more- lucrative US market and the trial last December in Delaware, at which Pfizer insisted its patents bar generics until 2011.
Pfizer shares are currently about 40 percent lower than they were when it acquired Warner-Lambert, due to uncertainty over whether the US court will back Lipitor.
Most industry analysts believe Pfizer will prevail in the Lipitor battle, but none are dismissing the Ranbaxy threat.
“The loss of Lipitor’s US patent protection would badly hurt Pfizer’s stock and bring the company’s earnings down to about 30 percent in 2007,” said Oppenheimer & Co. analyst Scott Henry. Henry noted that branded medicines can quickly lose more than 75 percent of their sales once cheaper generics reach drugstores, as Eli Lilly and Co. learned in 2001 when its anti-depressant, Prozac, lost patent protection.
Deutsche Bank analyst Barbara Ryan believes Pfizer has an 80 percent chance of defeating Ranbaxy.
If victorious, she forecasts that Pfizer shares could jump to $33. But should it lose, shares could sink to $21.
At Pfizer’s current share price of about $26, near the middle of that range, she said that investors are betting Pfizer has only a 50 percent chance of victory.
Reuters and EPP news bureau
Morepen Laboratories has filed its second Drug Master Files (DMF) for the amorphous form of Atorvastatin Calcium (Lipitor) and becomes the second company to plan entry into US Generic market for this drug after Ranbaxy. Lipitor is Pfizer’s biggest money spinner and with market of a whopping $10 billion.
Morepen had filed a DMF for its own patented new crystalline form VI of Atorvastatin Calcium. DMF filings are currently also underway in the European Union (EU). Morepen’s positioning in this molecule is consolidated and is all set to go for generic version of this cholesterol reducing drug once the litigation of para IV challenge is over.
Ranbaxy is currently in a legal fight with Pfizer on generic form of the number one drug in the world in United States. “While the outcome of the trial is difficult to predict at this point, if the Ranbaxy manages to win, floodgates would open for other generic players to enter the market,” said Mr. Sushil Suri, Chairman and Managing Director.
Morepen is poised to leverage the Atorvastatin opportunity even better in Europe since it has patented offerings of both the Amorphous and the Crystalline forms of Atorvastatin . “We are in a stage of inking deals for the amorphous form. Our crystalline form VI which has excellent stability results is being evaluated by different generic players who are waiting to emerge as opportunity unfolds,” he said.
Generic companies have already launched the amorphous form of Atorvastatin in Czech Republic and Slovakia. Pfizer has been legally unable to restrain them from launching their product. Ranbaxy and Morepen are hoping this will happen in the US too.
Both the forms have already been commercialised at Morepen’s plants in Himachal Pradesh putting them in a state of readiness to be off the blocks as the first in the race for supplying the API in bulk quantities as soon as Lipitor goes generic.