It has been a long time coming, and now many patients will be able to switch to a generic. Pfizer Inc. (NYSE: PFE) has now officially lost its patent over its cholesterol-lowering statin Lipitor. This event has been known for years, but the last quarter’s annualized sales of Lipitor was about $6 billion and the peak sales were closer to $12 billion on an annualized basis.
Earlier this week came a report from Canaccord Genuity. The specialty pharma analyst Randall Stanicky targets 60% market share for the generic in 2012 and he gave 3 scenarios, which include Teva Pharmaceutical Industries Limited (NASDAQ: TEVA), Watson Pharmaceuticals (NYSE: WPI), and Mylan, Inc. (NASDAQ: MYL):
- Scenario 1 – base case: Watson and Ranbaxy both launch. Under this scenario, it has no changes for Watson, Teva, and Mylan and it sees no surprises across the supply chain “where strategies and impact are well vetted.”
- Scenario 2 – modest surprise: TEVA is involved, most likely via a deal with Ranbaxy. Stanicky is not convinced that generic Lipitor is TEVA’s “mystery” product but he continues to see it as an opportunity. This could offer modest upside to TEVA, although the call noted that a generic Lipitor is likely a June 2012 event for TEVA.
- Scenario 3 – Other less likely scenarios include (1) Ranbaxy’s ANDA is rejected by FDA (or relinquished by Ranbaxy) and others come in; Mylan and TEVA would see an earlier benefit while WPI would be negatively impacted or (2) Ranbaxy is “parked” by the FDA, in which case WPI would benefit both by being alone on the market while TEVA and MYL could see delay to market (we have a hard time seeing the FDA allowing this given focus here.
It may have been coincidental, but a firm called Leerink Swann downgraded Pfizer a couple weeks ago to “Market Perform” At $19.40, Thomson Reuters has a consensus price target objective of $23.36 and Pfizer’s 52-week range is $16.27 to $21.45. It also yields 4.3% and may have a dividend hike coming very soon.
JON C. OGG
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