Merck makes life tough for Teva over Zocor

Merck is cutting the price of the anti-cholesterol blockbuster. Teva: Our generic version will meet our forecasts.

A month ago, Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) obtained US Food and Drug Administration (FDA) marketing approval for a generic version of Zocor, made by Merck & Co. (NYSE:MRK). Merck is not standing idly by, and is taking measures to defend its blockbuster anti-cholesterol drug, which has $4.6 billion in annual sales.

The price for Zocor is likely to drop following reports about negotiations between Merck and various US healthcare organizations. The “Wall Street Journal” reports, “A spokesman at UnitedHealth Group Inc., one of the nation's largest health insurers, said it had negotiated reduced prices for Zocor with Merck…this move will reduce the co-payment for Zocor made by patients at pharmacies to $10 from $25. Moreover, the new generic version of the drug, made by Teva Pharmaceuticals USA, will be in tier three, or the most expensive price group. Generic drugs typically carry cheaper co-pays than branded drugs.”

The “Wall Street Journal” quotes Merck as saying in response, "We don't talk about our contracting strategies. We are going to continue to price Zocor competitively."

In late May, Teva announced that it had obtained conditional FDA marketing approval for Simvastatin tablets, a generic version of Zocor. Teva will be allowed to market 5mg, 10mg, 20mg, 40mg, and 80mg tablets. Teva was the first company to apply for marketing approval for low dosage Simvastatin tablets (5-40mg), and obtained a 180-day exclusive marketing period for its version of the drug.

Leader DS analyst Uri Hershkovitz said this was the first time that a drug company had lowered the price of an ethical drug before generic versions entered the market. He said that, until now, ethical drug companies kept the full price until they lost half their market share.

Teva said in response to the report, "We will meet the original forecasts we gave to the market. When we released the original sales forecast for the generic version of Zocor, we took into account the competitive environment in which we operate."

Published by Globes [online], Israel business news - www.globes.co.il - on June 21, 2006

© Copyright of Globes Publisher Itonut (1983) Ltd. 2006

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