One of Pfizer's ($PFE) top-selling products is suddenly vulnerable to generic competition 18 months earlier than expected. A U.S. court nixed a key Celebrex patent, putting the pain drug up for a sales fight in May. And generics makers Mylan ($MYL) and Actavis ($ACT) are promising to launch their versions as soon as Pfizer's monopoly expires.
Pfizer will appeal, but barring success in a higher court, the company stands to lose billions in sales; Celebrex (celecoxib) brought in $2.9 billion in net sales last year, $1.9 billion in the U.S. Morningstar analyst Damien Conover says the ruling could cost Pfizer $1 billion this year and $2 billion next. And Mark Schoenebaum, an ISI Group analyst, figures Celebrex generics could lop 12 cents off Pfizer's 2014 earnings per share, if they make their debut in May.
On the other side of the coin, launching generics early could be big for the generics makers lined up to make Celebrex copies. Both Mylan and Actavis claim 180-day exclusivity--or shared exclusivity for that period--which would give each company a big boost. Six months of limited competition means higher generic prices, initially, and that's a lucrative prospect. Teva Pharmaceutical Industries ($TEVA) may have a similar claim.
It could also be risky; if Pfizer's appeal succeeds, the Big Pharma would have the right to collect lost sales and damages. Previous at-risk launches have been expensive for generics makers; Teva and Sun Pharmaceuticals rolled out versions of the stomach drug Protonix at-risk in 2007, and found themselves on the hook for a total of $2 billion in damages.
Both generics makers were quick to issue press releases about their impending launches, pending FDA approval, of course. And as The Wall Street Journal points out, Mylan, Actavis and Teva all have tentative approvals from the agency. As Sanford C. Bernstein analyst Tim Anderson notes, "It seems likely that odds are in favor of generics launching early."
It's Pfizer's second court loss for Celebrex's intellectual property protections. In an earlier patent fight, a U.S. appeals court invalidated the 2015 patent, a so-called method-of-use patent. But Pfizer persuaded the U.S. Patent Office to reissue the patent with changes, and had counted on that reissue to protect the drug till Dec. 2, 2015.
And Pfizer has been spending big money to pump as much revenue out of Celebrex for its last years on the market. In 2012, the company forked over $129.8 million to support the drug, even more than it spent on the oft-promoted Viagra (sildenafil).
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