Zetia generics launch sets Merck up for $1.4B hit to 2017 cholesterol sales

Merck
Billions in revenue from Merck's Zetia is set to be challenged as Endo on Monday launched the blockbuster’s first copycat.

Merck & Co.'s big-selling cholesterol-fighter Zetia is at the end of its exclusive road. The $2.5 billion seller now faces its first generic competitor, which threatens not only its own revenue, but the blockbuster sales of its combination-med cousin, Vytorin.

Endo’s Par Pharmaceutical unit on Monday launched Zetia's first copycat—and only copycat for six months under FDA exclusivity rules. Though Merck's Zetia sales are likely to suffer from the get-go, they'll face their biggest declines after that 180-day monopoly lifts next year and multiple generics makers rush in. 

Zetia generics come as the company continues to suffer from Remicade biosimilar competition in Europe, where Pfizer and Celltrion have used discounts to quickly steal share. During its third-quarter earnings call, Merck executives warned that losing Zetia exclusivity would be a blow to its 2017 results—though the generics pain is likely to be offset, at least partly, by burgeoning sales of Merck's immuno-oncology star Keytruda.

Zetia and Vytorin are expected to haul in about $3.5 billion this year, according to Leerink Partners analysis, a number that’s predicted to fall to about $1.9 billion for 2017. By 2020, the analysts expect less than $1 billion in sales, they said in a recent investor note.

For Endo, the Zetia generic presents an opportunity to recoup sales as it struggles to redefine itself. Endo’s generic launch comes just after it cut 375 staffers and pulled the plug on a pain med project. Endo bought Par last year for $8 billion. Par will share profits for the generic with its licensing partner, India-based Glenmark Pharmaceuticals.

Ironically enough, Zetia's waning monopoly comes after some data showing the drug, combined with a statin as in Vytorin, could offer a cardiovascular benefit to some patients. The Impact-It trial showed Zetia, added to the Merck statin Zocor, could cut cardiovascular risks for patients with acute coronary syndrome. That finding gave a benefit to all high-powered cholesterol meds as investigators said that it’s not the mechanism, but overall cholesterol reduction, that benefits patients.

An FDA panel later voted against a label update stating that the med reduces the risk of "cardiovascular events," including heart attack, stroke, cardiovascular death and several others, in patients with coronary heart disease. Ahead of the vote, FDA reviewers pointed out the reduction in risk was small and limited to certain patients.

Barclays analysts previously said the Zetia brand’s loss of exclusivity will hurt Merck’s earnings more than its sales; older products typically offer higher margins than newer-to-market meds. Jami Rubin at Goldman has said that much of the drug’s growth since 2011 has been due to price hikes.

The Zetia generics launch as the cholesterol-fighting field grows increasingly crowded, what with the launch of pricey PCSK9 therapies Praluent from Sanofi and Regeneron and Repatha from Amgen. The advent of those drugs, however, could give a boost to ezetimibe versions, however; payers leery of the PCSK9 meds' $14,000-plus list prices are requiring patients to try Zetia as an add-on to statin therapy—or Vytorin—before they'll pay for Praluent or Repatha.