Allergan pooh-poohs threat from Shire's prospective dry-eye drug

Allergan ($AGN) dry-eye blockbuster Restasis has some competition coming its way in Shire ($SHPG) candidate lifitegrast. But with a three-pronged growth strategy in place, the drugmaker isn't worried about the med getting some company.

As Allergan's president of branded pharma, Bill Meury, told investors Monday on the company's Q4 conference call, sustaining expansion for Restasis is going to be a function of keeping up its formulary coverage and market share--and of Allergan ultimately launching other new dry-eye products to keep the ball rolling. But with the way things are going now, he's not worried.

For one, Restasis boasts a coverage rate that currently sits at about 85%, he pointed out--and Allergan is already in the process of submitting Medicare Part D bids for 2017. Considering that Restasis is a "very, very popular" product with a big user base, he doesn't expect "any real surprises or major formulary changes" headed the drug's way.

"Even with the introduction of Shire's Lifitegrast, I just don't see any major disruption," he noted.

The way he sees it, the company is sitting pretty on the market share front, too. Some 70% of Restasis patients are repeat users, suggesting they may stay loyal. And in the dry eye market, "you're just scratching the surface" right now, he said. Only a small number of dry eye sufferers are currently being treated, and so while the growth rate may take a "step down" when Shire's contender rolls out, "I think it will recover," Meury said.

Allergan--and Pfizer ($PFE), which has agreed to buy the company and is pushing for a close this year--are certainly hoping so. The Dublin drugmaker named Restasis as a leading growth driver for the year on its branded pharma side, and its sales swelled 19% in 2015.

Shire, though, expects to come out strong with lifitegrast, a product it resubmitted for FDA review in January after receiving a Complete Response Letter. As Evercore ISI analyst Umer Raffat wrote in a note to clients last October, Restasis doesn't actually have a specific FDA nod for dry eye; instead, it has a go-ahead for "tear production increase," meaning lifitegrast could poach part of its patient pool if it gets a full dry-eye indication.

But Allergan also has its own new dry-eye products coming up the pipeline--including a multidose, preservative-free formulation of Restasis that it expects to win approval in the second half of this year. The new version will be easier to administer, and users will receive one 60-dose vial instead of 60 single-unit vials.

"I think dry eye sufferers are going to love it," Meury said. "… I like the overall outlook for the business."

- read the call transcript

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