The news weighed on the shares of New York-based Bristol-Myers and Paris-based Sanofi. As of 4 p.m. in composite trading Friday on the New York Stock Exchange, Bristol-Myers shares were at $22.75, off $1.04, or 4.4%. The American depositary receipts of Sanofi-Aventis were at $45.15, off $1.77, or 3.8%, also on the Big Board.
The availability of a less costly generic version of Plavix, the world's No. 2 drug in terms of sales, would quickly take a bite out of the revenue of Sanofi, the drug's developer, and Bristol-Myers, which holds the rights to it in the U.S. market. Plavix's U.S. sales were $3.8 billion last year, and its global sales were $5.9 billion.
Medco Health Solutions Inc.'s chief executive, David Snow, dropped the bombshell in a conference call with analysts when he said the company was raising its earnings guidance in part on the assumption that a generic version of Plavix would become available this year. Medco's chief financial officer, JoAnn Reed, later added on the call that generic Plavix could hit the market as early as this month. As of 4 p.m. in composite trading on the New York Stock Exchange, Medco shares were at $60.65, up $1.55, or 2.6%.
The launch of a generic version of such a widely used drug as Plavix would be a financial boon for Medco and other pharmacy-benefit managers because they make higher profit margins on generic drugs than they do on pricier brand-name drugs.
Bristol-Myers and Sanofi reached a deal with Canada's Apotex Inc. in March to prevent Apotex from launching a generic version of Plavix. But that deal, which had been struck to settle patent litigation between the two camps, came apart last week when the state attorneys general rejected it and the Justice Department opened a criminal probe into the conduct of Bristol-Myers and Sanofi.
Sanofi said earlier this past week it expected the patent litigation against Apotex to resume. In the lawsuit, Apotex has contested the validity of the patent protecting Plavix, which expires in late 2011.
Before the failed settlement, Apotex had threatened to launch a generic version of Plavix while the lawsuit was still pending. Such a move is known as an "at risk" launch because the generic maker can later be compelled to pay substantial damages to the branded-drug companies if their patent is upheld in court.
Medco's comments suggest the pharmacy-benefit manager expects Apotex to follow through on the threat. Asked what Medco was basing its prediction on, a Medco spokeswoman queried after the conference call cited "increasing market chatter" that the launch of a generic Plavix was imminent. A spokesman for Apotex declined to comment. A spokesman for Bristol-Myers said: "We're looking into the news. We believe the Plavix patent is valid and that it has been infringed. Together with our partner Sanofi-Aventis, we intend to defend our intellectual-property rights." A spokesman for Sanofi couldn't be reached for comment.
Jami Rubin, an analyst for Morgan Stanley, said in a research note, "Medco is a credible company and they wouldn't be saying this (and raising guidance) if it wasn't true or based just on pure speculation."
Medco made its comments about Plavix when discussing its second-quarter earnings, which rose 24% on sales growth, the Medicare prescription-drug benefit and patients' greater use of generic drugs. Medco, the nation's largest PBM based on its revenue last year, had second-quarter net income of $170.9 million, or 56 cents a share, compared with $137.4 million, or 48 cents a share, a year earlier. Revenue rose to $10.59 billion from $8.9 billion.
Source: Drug Pipeline Database
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