The war declared by Merck & Co. (NYSE:MRK) against generic drug makers last week is widening. “The Wall Street Journal” reports that, in an aggressive move by ethical drug makers against the generic companies, Pfizer Inc. (NYSE:PFE; LSE:PFZ) managers announced that they would launch a discount generic version of Zoloft, an anti-depressant.
Clal Finance Batucha analyst Yisca Erez says, “Pfizer’s move was taken into account in advance. For almost two years, we’ve been witness to the certification of generics. Pre-launch forecasts took into account that Pfizer would launch generic Zoloft.”
Zoloft had $2.6 billion in sales in the US in 2005, Pfizer’s third highest selling drug. Ivax Corp. which Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) acquired last year, has an exclusive marketing period for generic Zoloft.
Over the coming years, Pfizer faces the expiration of patents on drugs with aggregate sales of $39 billion, and it wants to prevent the anticipated loss of revenue to generic drug companies. Revelations about Pfizer’s plan for generic Zoloft comes one week after Merck reportedly reached an agreement with UnitedHealth Group Inc. (NYSE:UNH) to reduce the co-payment for Zocor made by patients at pharmacies. The agreement is intended to hinder Teva’s entry into the market with a generic version of the drug.
Pfizer’s move is different from Merck’s. Pfizer is using a common method among ethical drug makers, known as “certified generics”, in which the company launches a cheaper generic version of a drug it produces in an effort to cope with competition from generic drug companies.
Merrill Lynch pharmaceutical industry analyst Gregory Gilbert estimates that generic versions are priced 35-40% less than the original drug during the six-month exclusivity period, and usually grab 90% of the market during this period.
Pfizer’s move means Teva is facing a fight for the second blockbuster drug it has scheduled for launch. Pfizer can use “certified generics” to launch its own generic Zoloft during Teva’s exclusivity marketing period for its own generic version of the drug.
Published by Globes [online], Israel business news - www.globes.co.il - on June 29, 2006
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