Delays for India’s Ranbaxy Good News for Novartis and its $5.7 Billion Drug, Diovan

Late last year, Ranbaxy Laboratories reached a much-anticipated settlement with the US government over manufacturing problems that resulted in a $500 million fine and a consent decree (see prior Pharma news). The Indian generic drugmaker also agreed to withdraw applications to market more than two dozen drugs as part of the deal, although the list did not include a copycat version of the Diovan hypertension drug, which has been a big seller for Novartis (NVS) (see MarketWatch).

The disclosure cheered Ranbaxy investors, since the pill generated $5.7 billion in sales last year and the generic drugmaker has exclusive rights to market a version for 180 days. Ranbaxy was the first to successfully challenge the Novartis patent for Diovan. However, Ranbaxy was scheduled to launch last Friday, when the Novartis patent expired, but has not yet done so, The Economic Times writes, because FDA approval has not yet been obtained.

Good news, at least for now, for Novartis, which along with other big Pharma stocks struggles to produce revenue growth.

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As the paper notes, just last month, Ranbaxy ceo Arun Sawhney insisted the drugmaker would exploit the 180-day marketing exclusivity. “We remain confident, we will be holding the exclusivity ourselves,” he told analysts. An FDA spokeswoman declined to discuss the status of the Ranbaxy application, and we are awaiting comment from a Ranbaxy spokesman and will update you accordingly.

Meanwhile, Sandoz, the Novartis generic unit, and Mylan Laboratorives (MYL) have launched Diovan HCT, a low-cost version of a combination of Diovan and hydrochlorothiazide. As the paper notes, Ranbaxy has sole exclusivity for generic Diovan, but these drugs are different because they are combinations. One analyst tells the paper these similar generic drugs will also affect Ranbaxy revenues. “There will be some cannibalisation as they are similar medicines,” he says.

For the moment, though, the absence of a generic Diovan only adds to the uncertainty surrounding Ranbaxy’s ability to recover from its long-standing manufacturing woes and haggling with the FDA over its ability to resume operations on regular basis in the US. “A delay of one to two days is fine,” CLSA analyst Hemant Bakhru tells the paper, “because FDA may take a few more days to approve the drug. But if it extends to weeks and months, then Ranbaxy’s exclusivity period reduces” and money is lost.

To read the remainder of this article, go to Pharmalot.

Ed Silverman is the editor of Pharmalot and a contributor toYCharts Pro Investor Service which includes professional stock charts, stock ratings and portfolio strategies.



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