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Good news for Teva ($TEVA) when it comes to Mylan's ($MYL) generic version of AstraZeneca's ($AZN) Nexium: It won't be around for a little while.
The FDA has found the Mylan knockoff safe and effective, but it can't yet grant final approval, the agency said in a letter to the Pennsylvania drugmaker. That'll come after pediatric exclusivity periods associated with two of AZ's patents expire, the latter of which isn't up till early August of this year.
That means Teva, which grabbed the agency's final approval in January, could be flying solo on the generics market for a while. The Israeli pharma's management said on its fourth-quarter earnings call that it plans to launch the copy later this month, meaning it should have more than 5 months to itself before Mylan's competitor has the FDA's green light.
Of course, there's still the possibility that other filers could enter the market sooner--if the FDA approves them, that is. As Teva's generics CEO Siggi Olafsson said on the call, there are "quite a few" applications pending with the agency. Still, the absence of big gun Mylan represents "significant potential upside" for Teva, Sterne Agee analyst Shibani Malhotra wrote in a Monday note to clients.
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| Teva's global generics CEO Sigurdur Olafsson |
According to Olafsson, Teva has already worked Nexium sales into its 2015 revenue guidance, which ranges from $19 billion to $19.4 billion for the year--with between $9.1 billion and $9.5 billion of that coming from the generics unit, the drugmaker figures. If generics revenues hit within that range, it'll be a decline from $9.8 billion last year, despite the drugmaker's current quest to return to its generic roots. Of course, an acquisition could change that, and Teva has said multiple times that at least one of those is on the way.
Meanwhile, the Mylan hold-up on Nexium is yet another turn of good fortune for AstraZeneca, which has already had plenty of them where Nexium is concerned. India's Ranbaxy Laboratories originally boasted first-to-file, 180-day exclusivity on the drug, whose patent expired in May. But manufacturing woes led the FDA to ban the plant approved to make the generic, preventing Ranbaxy from bringing its product to market--and it was November by the time regulators finally withdrew the company's exclusivity. Now, if AstraZeneca has to face only Teva's copies for 5 months, the competition won't be nearly as intense. That would give AZ a chance to preserve more of its brand sales.
- read the FDA letter (PDF)
- see Teva's earnings call transcript
Special Reports: Top 10 Generics Makers by 2012 Revenue - Teva - Mylan | Top 10 Drug Patent Losses of 2014 - Nexium, AstraZeneca