Ranbaxy Wins U.S. Approval for Generic Diovan for HeartAnna Edney
Ranbaxy Laboratories Ltd. surged to the highest in almost 18 months after winning U.S. approval to make a generic version of Novartis AG’s blood pressure drug Diovan, almost two years after the $3.5 billion medicine lost patent protection.
Ranbaxy gained 5.2 percent to 497.55 rupees in Mumbai, the highest since Jan. 11, 2013. Sun Pharmaceutical Industries Ltd., which agreed in April to purchase Ranbaxy, gained 4.1 percent to a record 660.85 rupees.
Ranbaxy held exclusive rights to copy Diovan for the first six months of the medicine’s generic period though it couldn’t manufacture the drug after plants in India failed inspections. Ranbaxy’s Ohm Laboratories in New Jersey received U.S. Food and Drug Administration approval to make the generic, which it will introduce “as soon as sufficient supplies are manufactured,” Ohm said in a statement today.
Novartis twice raised its sales estimates last year because of the lack of competition, and has said that every month without a Diovan generic leads to $100 million of sales.
Novartis Chief Financial Officer Harry Kirsch said in April that a Diovan generic would wipe about $2.7 billion from sales this year. Diovan and a version of the drug combined with a diuretic that is already generic generated $3.5 billion in revenue last year, making the combined therapies the second-best selling medicine for Basel, Switzerland-based Novartis. Analysts predict sales of $2.3 billion this year, according to data compiled by Bloomberg.
The Swiss drugmaker may introduce its own generic version of Diovan to compete with Ranbaxy’s, according to Asthika Goonewardene, an analyst at Bloomberg Industries.
Novartis was unchanged at 80.35 Swiss francs as of 4 p.m. in Zurich.
The approval of Ranbaxy’s generic “had been highly expected for almost two years,” Odile Rundquist, an analyst at Helvea in Geneva, wrote in a note today.
Ranbaxy may generate sales of $190 million during the 180 days in which it has exclusive rights to market the drug, Hitesh Mahida, an analyst at Antique Stock Broking in Mumbai, said in a note.
Ranbaxy had planned to produce generic Diovan at its plant in Mohali, Punjab. The FDA banned the facility from selling products in the U.S. in September 2013. Three more Ranbaxy plants in India are prohibited from U.S. sales dating back to 2009. The Gurgaon, India-based company has been cited for unsanitary conditions and manipulating quality tests.
Once Ranbaxy’s generic Diovan has been on the market for six months, other drugmakers are eligible to gain FDA approval and introduce their versions. Diovan lost patent protection in September 2012.