Shares of Shire ($SHPGY) got body slammed today after the FDA opened slightly the generics floodgate against Adderall XR, its very popular attention-deficit hyperactivity disorder drug. The agency said yesterday that it was allowing Activis to proceed with its copycat version, and Shire shares dropped as much as 11% on the London stock exchange. Shire was up slightly today in U.S. trading.
There are two generic versions on the market now but those are both Shire's. Of course it was known this would happen sooner or later, and as The Wall Street Journal reports, the company has been preparing for the inevitability. Sales of Vyvanse, its next-generation ADHD drug, are growing more than twice as fast as the overall U.S. market for hyperactivity drugs. But the market reaction points to its own hypersensitivity to the ongoing onslaught of generics on the the world's best-selling drugs. An earnings preview, also in The Wall Street Journal, runs down the list of those reporting this month and whether they have stepped off the patent cliff for certain drugs or are still teetering on the edge.
Analysts expect thinner earnings from Eli Lilly's ($LLY) antipsychotic drug Zyprexa but Lilly got a 6-month reprieve on its blockbuster antidepressant Cymbalta because of new studies on its effects on children. But in some cases, the generic effects play out like chess moves. Bristol-Myers Squibb ($BMY) in May lost protection for blockbuster blood thinner Plavix. The question then became how will generic availability for that drug undermine the market for Lilly's blood thinner Effient, as well as Brilinta from AstraZeneca ($AZN)?
Merck ($MRK) is projected to show an earnings increase, boosted by cost cutting as it retrenches in preparation for the August patent loss of its best-selling drug, the asthma treatment Singulair. It also has seen some sales drain away from its cholesterol-lowering drug, Vytorin, after generic versions of Pfizer's ($PFE) Lipitor hit the market, making available much cheaper copycats of the world's best-selling drug ever. Earnings are forecast to be somewhat shy of adjusted earnings per share from last quarter as a full onslaught of generics have knocked Lipitor from its peak. Pfizer is addressing its situation in a number of ways, like selling its nutrition unit to Nestle for $11.85 billion and with plans to sell shares in its animal health division.
In an industry where intellectual property can be so highly prized, the battle of generics vs. branded drugs is ongoing and does not always fall in favor of generics. Courts in the U.K. and Wales have left intact there until May 2015 the Teva Pharmaceutical Industries ($TEVA) patent on multiple sclerosis treatment Copaxone, Globes reports. Mylan ($MYL) was seeking to market a copycat. Meanwhile the battle has just begun for Cubist ($CBST) in a fight with Hospira ($HSP), which is asking the FDA for permission to make a generic of Cubicin before its patent expires in 2020, Bloomberg reports. Cubist filed suit against Hospira hoping to shield its patent for the antibiotic.
- here's an RTTNews report on Shire
- see The Wall Street Journal's earnings review
- get more from The Wall Street Journal
- read still more from The Wall Street Journal
- check out the Globes report
- here's the Bloomberg story
Pharma continues parachute-building for patent cliff
Report shows Big Pharma's patent cliff in graphic detail