7. Restasis

Restasis faces the prospect of early generics thanks to a federal court decision. (Image: Allergan on Facebook)

Company: Allergan
2017 U.S. sales: $1.41 billion
Disease: Dry eye
Competition expected: Between April and July of 2018

Allergan made countless headlines last year with its scheme to protect Restasis from patent challenge by striking a licensing deal with the Saint Regis Mohawk Tribe. But thanks to a separate federal court decision, the company faces the prospect of early generics anyway.

In a much-maligned move in September, the drugmaker transferred its Restasis patents to the tribe and then licensed them back, hoping to use tribal sovereignty to dodge an inter partes review at the U.S. Patent and Trademark Office. Critics lambasted the strategy, but some market watchers thought it was genius—and likely to spread around the industry.

Allergan defended the strategy by criticizing the entire IPR process, which allows limited challenges to patents before the PTO's Patent Trial and Appeal Board in addition to the usual patent disputes in federal court. The company called for Congress to step in with reforms

In February, the sovereignty claim fell short at the PTAB, and the board decided to move forward with the very patent review Allergan sought to avoid. An appeals court reversed the decision in March and set oral arguments for this summer.

Among the company’s critics throughout the episode was U.S. District Judge William Bryson, who wrote in an opinion that his court had "serious concerns about the legitimacy of the tactic that Allergan and the tribe have employed." In a Restasis patent dispute in his court, Judge Bryson struck down the drug's intellectual property, opening the prospect of earlier generic competition.

RELATED: Allergan loses Restasis patent protections in federal court decision

It was a damaging decision for Allergan because Restasis is among its top performers each year. In 2017, the drug generated $1.41 billion in U.S. sales.

No generic drugmakers have yet won copycat approvals but if they do—and pending potential appeals of the court decision—Restasis could face cheaper competition this year.

On the company’s fourth-quarter conference call, former CFO Maria Teresa Hilado said the company is assuming generic entry between April and July of 2018.

Bernstein analyst Ronny Gal and his team expect generic competition to arrive this year, too; they’re forecasting a 50% revenue loss this year. As Gal has noted, the FDA has been working to speed up complex generic reviews in an effort to fight high costs, which adds to the likelihood of near-term generic launches for Restasis. Akorn, Mylan, Teva and Pfizer’s InnoPharma have generic applications pending at the FDA.

7. Restasis