Teva closing up women's health unit Theramex, thanks to lousy Zoely sales

We've seen what happens when a big drug goes generic. Plants close, sales reps lose their jobs. As the impending shutdown of a Teva Pharmaceutical Industries ($TEVA) unit shows, the same is true for an on-patent drug flop.

Theramex, a Teva women's health unit located in Monaco, is planning to close its doors by 2016. R&D stops immediately. Teva will absorb the rest of the operation: commercial, supply chain and quality control. Almost 60 people will lose their jobs, according to the French newspaper Nice Matin, and they're marching in the streets in protest.

One key reason, according to a French newspaper: the "commercial fiasco of Zoely."

Zoely is a hormonal contraceptive, part of Teva's women's health business and among the generic giant's short list of branded products. The Israel-based company acquired it along with Theramex in 2010, in a deal with Merck KGaA. When approved in Europe in 2011, Zoely was touted as a "natural" alternative to other combo pills, because the synthetic estrogen included is structurally identical to that produced by women's bodies.

Later, Teva teamed up with Merck & Co. to develop Zoely in the U.S. But at the end of 2011, the FDA issued a complete response letter on the pill. Merck later launched a new trial of the drug, under the name NOMAC-E2, to check up on its efficacy and assess patterns of vaginal bleeding.

That study was wrapped up earlier this year, but the results haven't been released. Meanwhile, the U.K.'s cost-effectiveness gatekeepers have said that the drug is most likely to be used as a second- or third-line option in "a small subgroup of women" who've found other combo pills unsuitable.

Teva has been on a cost-cutting drive, aiming to chop $2 billion from its cost base by 2017. But under new CEO Erez Vigodman, the company says it's focusing on the positive. Its CFO, Eyal Desheh, recently said another round of cuts "will be counterproductive to growth."

- read the Nice Matin story (in French)

Special Report: Top 10 generic drugmakers by 2012 revenue - Teva