Generic Imitrex: Ranbaxy’s loss is Dr Reddy’s gain

Hyderabad firm steals a march as bigger rival faces trouble with the US FDA

BANGALORE: Drug-maker Dr Reddy’s Laboratories could be in for some unexpected gains from the sale of an authorised copycat version, also known as generics, of global giant GlaxoSmithKline’s (GSK), migrane and headache drug Imitrex.
This is because rival Ranbaxy, which has also got permission to manufacture the generic version, is facing troubles with the US FDA.

The Hyderabad-based Dr Reddy’s said on Monday it had launched the generic version of Imitrex, becoming the first company to launch an authorised generic version of the drug.

It did not disclose the specific financial terms of the deal. Imitrex had sales of $1.29 billion for the 12 months ending December 2007 according to IMS, it added.

Delhi-based rival Ranbaxy Laboratories too had settled in January this year a patent litigation in the US relating to Imitrex, enabling it to market the generic sumatriptan succinate tablets of the drug in the 25mg, 50 mg and 100 mg strengths with an expected launch date in December.

However, with the US FDA ban on 30 odd Ranbaxy’s drugs manufactured at two of its plants in India, it is uncertain if the company will be able to export generic Imitrex next month to the US.

The ban was imposed in September prohibiting the company from selling drugs manufactured at two of its plans at Poanta Sahib in Himachal Pradesh and Dewas in Madhya Pradesh in the US. The company delivered close to 60 drugs from the two plants. However, it was not clear if sumatriptan succinate was one of them.

When asked to clarify, a Ranbaxy spokesperson said he was not sure but added the company was working towards a solution. “Actually we are also looking at the possibility of acquiring some facility in the US itself that will enable us to manufacture these drugs there,” he added.

Subsequent to the change in ownership from the original promoters to Daiichi Sankyo in June this year, surplus cash to the tune of $750 million is sitting with us. We are looking to utilise this fund for any acquisitions that may be needed, the official explained.

Meanwhile, according to market sources, marketing of Dr Reddy’s authorised generic is expected to kick-in this week providing the company considerable upsides after a long time.

Dr Reddy’s had settled with GSK on sumatriptan succinate in October 2006 providing the company the right to sell the generic version in the three strengths before the expiration of the patent in February 2009.

However, Dr Reddy’s EBITDA margins on sales of authorised generics Imitex will be between 15-20% as compared to the 40-50% that Ranbaxy would have derived if it was able to market the drug, said an industry analyst. But given the current scenario that the company is going through and given the fact the uncertainty over Ranbaxy’s own launch of the drug, the Hyderabad-based company could have a higher share of the market with GSK’s help, he observed.