Now that the dust has settled around Ranbaxy Laboratories' deal with the U.S. Justice Department, three missing bits of information are looming large. Which three first-to-file exclusivity rights will Ranbaxy lose? The identity of those drugs, filed under court seal, is obviously important in determining the consent decree's financial impact.
Ranbaxy has 8 pending applications accorded that first-to-file status, which gives generic drugmakers 6 solo months on the market. On a major drug, that 6 months can mean major money, because the first copycat drug can command higher prices. Once other versions launch, price competition kicks in, and margins drop.
If Ranbaxy has to relinquish that 180-day exclusivity on three of the smaller brands on that list of 8, then that's one thing. If it gives up those rights on the three biggest, then that's another. Some analysts figure that the company is sacrificing exclusivity on the three likely to launch first, leaving the U.S. government with the threat of five more to keep Ranbaxy on deadline. Nomura Holdings identified the Cephalon ($CEPH) wakefulness drug Provigil, with $1.1 billion in U.S. sales in 2010; the Takeda Pharmaceuticals ($TKPHF) diabetes pill Actos, with $3.35 billion; and the Novartis ($NVS) blood-pressure remedy Diovan, with $2.5 billion.
At least one analyst thinks Ranbaxy got off a bit lighter. "I believe one of them could be Provigil, the other two could be smaller ones," said IIFL Capital's Bino Pathiparampil when interviewed by India's CNBC. "For most of the larger exclusivities, which are Nexium, Actos, and [Diovan], I believe the FDA has given specific cutoff deadlines ... in terms of applications integrity and manufacturing quality."
But what if Ranbaxy gave up the biggest three instead? AstraZeneca's ($AZN) Nexium racked up $2.7 billion in U.S. sales in 2010. Together with Actos and Diovan, that's $8.55 billion. The first-to-file bonus on Actos alone could be more than $200 million, Priti Arora, a Kotak analyst, told Bloomberg. She believes Actos is among the fated three. But any way you slice it, "Losing 180-day exclusivity is very bad," she said.