Mumbai: Ranbaxy Laboratories Ltd has won regulatory approval to sell in the US market a generic version of the world’s biggest selling drug, Lipitor, a development that could earn the Indian drug maker $400-600 million in revenue in six months and prop up its sagging share price.
Patent protection for the Pfizer Inc. cholesterol pill ended on Wednesday. Ranbaxy was the first to file for permission to sell its generic version atorvastatin, but final approval was uncertain as the company’s Indian manufacturing units face an export ban from the US Food and Drug Administration (FDA).
Lipitor tablets. Photo: AFP
Ranbaxy and Watson Pharmaceuticals Inc. are the two companies allowed to sell generic versions of Lipitor for now. At least five other companies will also enter the market after the 180-day marketing exclusivity period is over.
“We are pleased to have received US FDA approval to manufacture and market a safe, effective, affordable and accessible alternative to branded Lipitor,” Arun Sawhney, chief executive officer and managing director, Ranbaxy, said in a statement on Thursday.
Anticipating the approval, the company had kept the generic copy’s inventory from a US plant ready to be able to hit the market on the first day.
Lipitor fetched $10.7 billion in sales last year for Pfizer, the world’s biggest drug maker. The price of the drug is expected to come down with the entry of generic copies.
The FDA had earlier given Ranbaxy tentative approval to market the generic copy of the drug. But final clearance was awaited as it had blacklisted two of Ranbaxy’s Indian manufacturing plants—including one in Himachal Pradesh that was supposed to manufacture Lipitor’s copy—over quality compliance.
Ranbaxy later decided to manufacture the drug at its US facility Ohm Laboratories.
A portion of Ranbaxy’s profits from the sales of atorvastatin during the 180-day exclusivity period will be paid to Teva Pharmaceuticals USA Inc. under an agreement, Ranbaxy said in a statement.
Teva, another global generic company that plans to sell a generic version of Lipitor in the US, had signed an agreement that helped Ranbaxy settle some patent disputes with Pfizer. “Terms of the agreement will not be disclosed,” the Ranbaxy statement said.
Stock market analysts said the development is in line with expectations.
Given its size, this was the most keenly awaited opportunity for Ranbaxy, removing an overhang on the stock, analyst Chirag Talati of the UK investment bank Execution Noble and Co. Ltd wrote in a report on Thursday.
Shares of Ranbaxy rose 2.14% on Thursday to close at Rs444.1 on the Bombay Stock Exchange, while the benchmark Sensex rose 2.23% to close at 16,483.45 points. Ahead of negotiations with the US regulator, Ranbaxy’s shares had touched a 52-week low on 24 November at Rs413.25 on the BSE.
“However, with the approval now in place, we expect the market to focus on its post-launch execution and comprehensive settlement involving Dewas and Paonta Sahib facilities,” Talati wrote.
“The maximum revenue potential of atorvastatin is around $500-600 million, though a part of their profit will go to Teva,” said Ranjith Kapadia, senior vice-president at Centrum Broking Pvt. Ltd.
“Also, they will have to bear increased manufacturing costs because they have got approval to manufacture from their facility in the US. If they had got approval here, costs would have been lower. The costs to manufacture in the US are 10-15% higher,” Kapadia said.
“We are expecting a revenue of $400 million from the first six months when the company has exclusivity,” said Sarabjit Kaur, a pharma industry analyst at Angel Broking Ltd. “Although it will manufacture in the US facility, it will take API’s (active pharmaceutical ingredients) from India and thus the revenue impact may not be that high.”
P.R. Sanjai contributed to the story.