The Teva Opportunity With Generic Lipitor (PFE, TEVA)

Teva Pharmaceutical Industries Ltd. (NASDAQ: TEVA) has had its share of trouble in 2011, but perhaps the expiring patent on that statin Lipitor by Pfizer Inc. (NYSE: PFE) may offer some reprieve.  The Israel-based generic and brand drug maker announced today that the FDA has now granted tentative approval for the company’s Abbreviated New Drug Application for Atorvastatin Calcium Tablets.  Those tablets make up the generic version of Pfizer’s Lipitor statin for lowering cholesterol.

This will not give immediate market access to Teva, but Lipitor’s annual sales were listed as close to $7.8 billion as of the end of September.  With so many key brand name drugs coming off the patent cliff over the next two years, we cannot help but to continue considering Teva as a value stock which may in fact now be a bit of a special situation for investors.  While the answer is “not yet” we sometimes wonder if the sell-off in Teva has now valued the company solely for the value of its generic business.

Ranbaxy has a 180-day exclusivity period, which ends in May of 2012.  After that date, barring any FDA extensions, other generic drug companies with approved generic versions will be allowed to begin selling generic Lipitor.

Teva even went on to note that a portion of the profits from Ranbaxy’s sales of generic Lipitor during the Ranbaxy 180-day exclusivity period will be paid to Teva.