Pfizer, Ranbaxy settle Lipitor spat

Ranbaxy set for $1.7 bn sales from world’s largest-selling drug

NEW DELHI/HYDERABAD: Ending their five year battle in courts across the world, drug major Pfizer Inc, and Ranbaxy Laboratories Ltd, have settled on the former’s blockbuster cholesterol drug Lipitor.

Pfizer will now allow Ranbaxy, which is in the process of being taken over by Japanese pharma major Daiichi-Sankyo, to sell copycat versions of Lipitor in the US and other countries.

Lipitor (generic drug name ‘atorvastatin’) is the world’s largest-selling drug notching up revenues of $12.7 billion in 2007 and accounting for 26% of Pfizer’s revenues.

Not surprisingly, the drug is also the most sought after by generics makers the world over.
Ranbaxy will have the right to sell the generic version without competition for 180 days in the US beginning November 30, 2011, and in seven other countries from varying dates including Canada, Belgium, Netherlands, Germany, Sweden, Italy and Australia.

The company expects to earn a whopping $1.5-$1.75 billion, a Ranbaxy official said, requesting anonymity.

Sarabjit Kour Nangra, pharma analyst with Angel Broking, estimated Ranbaxy could have sales of $1.6 billion in the 180-exclusivity period. She said there will be a huge positive impact on Ranbaxy’s profitability as a result of this settlement.

“Now there is certainty (of launching the drug). Had Ranbaxy continued with the patent disputes, it would have to fight and win all the patent cases before it could start selling the drug,” she said.
There will, however, be no immediate change in share price target as Lipitor sales were already factored in the scrip price, Nangra said.

Analysts had earlier expected Ranbaxy to be in a position to launch generic atorvastatin in March 2010 when one of the patents expires. 

“This comprehensively settles outstanding issues between Ranbaxy and Pfizer bringing to closure a number of ongoing patent disputes. It also provides certainty and visibility to the launch of Ranbaxy’s generic Atorvastatin, with 180 day market exclusivity in the US and an early entry in other markets,” Ranbaxy’s chief executive officer and managing director Malvinder Mohan Singh said in a statement.

The two companies will, however, continue litigation in Finland, Spain, Portugal, Denmark and Romania.

“With the settlement, 90% of the market is taken care of, with the $8.3 billion of sales coming from the US, $1 billion from Canada, and $450 million from Australia,” a Ranbaxy official said.

The settlement also includes Pfizer’s Caduet, which combines ingredients of Lipitor and hypertension drug Norvasc. Caduet had sales of $568 million in 2007.

The Ranbaxy-Pfizer dispute had involved three drugs:Lipitor, Caduet and Norvasc. Though the patent on Lipitor expires in March 2010 Pfizer had maintained in the litigation that Ranbaxy’s generic would impinge on two other patents which prohibit copycats till 2016.

However, with the settlement the while the two companies save the bother of going through litigation and the high costs associated with it, more importantly Pfizer is able to delay the inevitable by several months while Ranbaxy gets certain upsides.

The Lipitor settlement follows a similar arrangement Ranbaxy concluded last month for AstraZeneca’s blockbuster heartburn medicine Nexium, which is the world’s fifth- largest selling drug with sales of $5.2 billion in 2007.

The Gurgaon-based company, which was to launch generic Nexium in mid-April, agreed to postpone the launch till May 27, 2014, in return for assured markets and manufacturing deals.

The two settlements come at a time when multinational drug-makers are fighting with the back to the walls to extend the release dates of copycat versions by generics makers at a time when their new chemical entity pipelines are drying up and many blockbuster drugs are slated to come off patent protection.

Drugs worth an estimated $80 billion are slated to come off the patent list in the coming years.

“While one is seeing such amicable settlements, I don’t see multinationals giving up their markets without a fight,” said Shivani Shukla Raval, Frost & Sullivan’s industry manager, healthcare practice, South Asia and Middle East.
“Authorised generics are coming into play as litigation is becoming risky and a costly affair,” she said.
 
Therefore, it will not be a surprise to see more such settlements with multinationals desperate to postpone the inevitable by a few more months or years.