For the Ranbaxy brass, the past week must have been the toughest in their career as they attempted to patch up with the drug regulator of United States to facilitate the exclusive launch of a low-cost version of Pfizer’s blockbuster drug Lipitor, after its patent protection expired on November 30, in the US.
An approval from the Food and Drugs Administration (FDA) was the only hurdle before Ranbaxy, the generic company that had successfully challenged Lipitor patent and secured a six-month exclusive right to sell the low-cost version of the $10.7-billion medicine in the US market after patent expiry, to monetise this opportunity.
Ranbaxy is expected to earn $600 million if it manages to sell the Lipitor generic, exclusively for six months.
Watson, the company other than Pfizer and Ranbaxy that can market a low-cost Lipitor by virtue of an agreement with Pfizer during the exclusivity period, announced the launch of its product on Wednesday. Unlike Ranbaxy, Watson did not require FDA approval, as the company was merely marketing the medicine produced and supplied by Pfizer.
Pfizer has also reduced the price of Lipitor to minimise the effect of the shift in prescriptions to the low-cost versions.
Ranbaxy’s ability for timely launch of this product came under doubt after two of its manufacturing facilities in India (one of which was to supply Lipitor generic) were placed under an export restriction in 2008 after the FDA raised some serious compliance issues. As a result, all new product approvals from these plants were put on hold and export of 30 drugs banned.
Now, it is the turn of Ranbaxy to secure approval and start shipping its version of Lipitor, the cheapest among the three, to the US market. Analysts expect the drug to fetch $600 million in six months, though the sheen of its profits may fade if the company pays a good portion of that as penalty to FDA to secure marketing approval.
The company had not announced the status of FDA approval till we went to press.
“Half of the revenues from Lipitor generic sales will be profit for Ranbaxy. However, it is a one-time opportunity and will not have a positive impact on the long-term performance of the company,” said Ranjit Kapadia, an analyst with Centrum Broking.
“Ranbaxy may miss a few days if the (FDA) approval comes late, but it will not impact the (six month) period of exclusivity, as its product exclusivity will kick in only from the day the company launches its product in the US,” said an industry expert, who did not wished to be named.
According to him, what will help Ranbaxy is the specific clause in the Medicare Modernisation Act (passed by the United States in 2003), which excludes all six-month exclusivity approvals gained before the enactment of the law from its stipulations. The MMA has detailed mention of the conditions under which a drug company may have to forfeit its six month marketing exclusivity if it fails to get necessary approvals on time. The Ranbaxy Lipitor challenge predates MMA.
Ranbaxy and its majority stake holder, Japanese drug major Daiichi Sankyo, had repeatedly expressed confidence over their ability to monetise the six month market exclusivity.
Ranbaxy’s approval status remaining a question, the industry was abuzz over the various marketing strategies the company might have looked at to minimise the loss of its exclusive marketing opportunity.
Daiichi Sankyo, in a recent communication, had stated Ranbaxy will start selling Lipitor generic in the US from November 30.
Earlier reports also had hinted that the company plans to manufacture the drug at its site in New Brunswick, New Jersey, US with raw materials sourced from approved sources.
Meanwhile, Pfizer hopes to hold on to the brand popularity by announcing patient friendly schemes to make consumers stick to their version of the drug even after the introduction of a low-cost variant.
The company has also, as noted earlier, authorised US-based generic drug maker Watson Pharmaceuticals to sell the “authorised generic” of Lipitor after patent expiry. US laws permit the patent holder to allow one such “authorised generic” to be marketed during the six-month exclusivity period.