Shire's $800M Lialda confronted by generic competition but Zydus copy will fly solo for now

Shire's $800 million ulcerative colitis drug Lialda will soon face generic competition from a version from India's Zydus Cadila.

After years of patent battles, the last legal barrier between Shire and a generic version of its lucrative ulcerative colitis drug Lialda has fallen and the FDA has approved a generic from Zydus Cadila.

It is a rude surprise for Shire investors who had believed the $800 million drug was safe for a few more years, but there is a chance that instead of flood of generics, the Zydus copy may be the only competition for awhile.

The Indian drugmaker this week said the FDA had approved its first to file copy, indicating it will have a six-month exclusivity for its version. It will manufacture the tablets at its plant in Moraiya, a facility that last year resolved FDA issues, but did not say when the product will ship.

Jefferies analyst David Steinberg said that is likely to happen midyear after Zydus has time to build up a stockpile of the drug. In a note to investors, Steinberg offered Shire investors some solace, saying “there is a credible scenario” in which no other Lialda knockoffs reach the market for some time.

This class of drug has “proven extremely challenging” to generic companies to break into, Steinberg says, pointing to the fact that a decade after Pentasa—another Shire ulcerative colitis drug–went off patent, there are still no generics. Given that Zydus is the only drugmaker to have done clinical trials on Lialda, others may have more trouble getting through an FDA approval process, he argues.

Steinberg is projecting Shire will take only a 2% to 3% hit on revenues and 4% to 6% hit on earnings per share through fiscal 2020 because of the Lialda competition.

Meanwhile, Shire is fighting other legal battles to protect other drugs. It has launched a preemptive legal attack against CSL in an effort to try to stop the Australian drugmaker from launching Haegarda, a promising hereditary angioedema med that would compete with Shire’s medications in that market.

The Dublin, Ireland-based drugmaker claims the CSL medication would step on a method patent it only won in April. Shire markets HAE medications Cinryze, Firazyr and Kalbitor already, and it's working on a subcutaneous prophylactic C1 esterase inhibitor dubbed SHP616.