Pfizer’s stunningly successful heart drug Lipitor loses patent protection in the U.S. tomorrow, and there are two companies that are expected to offer generic alternatives. Those generics could take 60% of the market for the drug by 2012, writes Canaccord Genuity analyst Randall Stanicky.
Watson Pharmaceuticals (WPI) and Ranbaxy are both expected to launch drugs, but generics behemoth Teva Pharmaceuticals (TEVA) could also get involved through a deal with Ranbaxy, Stanicky notes. That could boost Teva’s fourth quarter EPS.
“The bottom line here is that we think both the event and anticipated profit & loss impact to parties involved are at this point well understood under a base case scenario that has both Watson and Ranbaxy launching. That said, potential for surprise remains on varying levels given FDA uncertainty and lack of transparency into settlement agreements (particularly for TEVA given its early settlement date).”
Stanicky also sees some other possible (though unlikely) scenarios:
“Other less likely scenarios include (1) Ranbaxy�s ANDA is rejected by FDA (or relinquished by Ranbaxy) and we see others come in. Under this scenario Mylan (MYL) [which also has a generic Lipitor drug] and TEVA would see an earlier benefit while WPI would be negatively impacted or (2) Ranbaxy is �parked� by the FDA, in which case WPI would benefit both by being alone on the market while TEVA and MYL could see delay to market (we have a hard time seeing the FDA allowing this given focus here).”
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