Astra Faces Off With FDA on Copies of $7 Million-a-Day Drug

  • Prices may drop by 85 percent if generic Crestor is available
  • Court ruling is pending on Astra’s lawsuit to block generics

AstraZeneca Plc is making a final push to protect a drug that makes $7 million a day in the U.S. against cheaper copies as pressure mounts on the U.K. drugmaker to meet its own projections of almost doubling revenue.

Astra has filed a lawsuit to stop the U.S. Food and Drug Administration from allowing the sale of generic versions of Crestor after the cholesterol pill’s exclusivity period ends as early as Friday. That may be its last recourse to avoid having the treatment offered at prices that are 85 percent lower, according to Siddhant Khandekar, an analyst with ICICI Securities Ltd. in Mumbai. Ten makers of copycat drugs including India’s Sun Pharmaceutical Industries Ltd. are awaiting a ruling in the case.

Losing revenue from its top-selling drug would be the latest blow to Astra, which has already seen its sales plunge from its 2011 heydays as patents began to expire on some of its top medicines. Chief Executive Officer Pascal Soriot, who spurned Pfizer Inc.’s takeover offer two years ago and pledged to boost revenue to $45 billion by 2023, warned this year that profit and sales would continue to drop, partly because of Crestor.

“There are a number of things that hang over Astra, including the massive patent exposure,” said Nick Turner, an analyst at Mirabaud Securities LLP in London. “There are real doubts over the long-term sales forecast.”

Growth Rebound

The company is developing new treatments in areas like oncology, cardiovascular disease, diabetes and respiratory ailments, while licensing out rights for late-stage development and sales of other therapies. These investments won’t result in growth for core earnings per share until 2018, analysts estimate.

Astra spokesman Neil Burrows declined to comment.

“The market has valued them on their immuno-oncology pipeline, but first mover advantage in many areas has disappeared,” Turner said.

Shares of Astra fell 0.4 percent to 4,574 pence in London trading on Friday. The stock has gained 9 percent in the past year, compared with a 9.7 percent decline in the Bloomberg Europe Pharmaceutical Index.

Biggest Drug

Crestor generated more than $5 billion last year, contributing about a fifth of Astra’s revenue. The expiry of its exclusivity as early as July 8 makes it one of the most lucrative prizes for generic drug makers -- and especially for the Indian companies that account for half the applicants awaiting approval.

The first copycat version of Crestor is already on the market, from Allergan Plc’s Watson Pharmaceuticals. A settlement in a patent infringement suit gave the manufacturer sole rights to start selling its version in early May, 67 days before the exclusivity ends, in what the Dublin-based company said it expects to be “the largest generic launch” of 2016.

In the first month of Watson’s copy being available, the number of Crestor prescriptions plunged by about a third to just over 1 million, Symphony Health Solutions data show.

The London-based drugmaker in 2014 managed to win seven years of additional exclusivity starting in May 2016 for Crestor as a treatment for a rare pediatric medical condition: extreme high cholesterol in children. But that doesn’t prevent the FDA from approving copies for use in adults.

‘Within Days’

Astra is now seeking a temporary court order to block the FDA from allowing more generics of Crestor entering the U.S. market until there’s a final decision on the drugmaker’s argument that it’s entitled to seven additional years of exclusivity because of that pediatric indication. The court on Thursday asked all parties for more information, due to be filed at 4 p.m. today in the District of Columbia.

The generics are unlikely to be cleared by the FDA at least until Monday, “though it’s likely within days, perhaps a week,” Charles Biro, a lawyer for the FDA, told the court on Thursday. FDA spokesman Christopher Kelly said the agency doesn’t comment on pending litigation.

‘Worth It’

Going to court “is commercially worth it, if generics can be delayed for any significant length of time,” said Turner.

Sales of Crestor are likely to plunge 30 percent to $3.5 billion this year, according the average of 17 analysts’ estimates compiled by Bloomberg. Revenue from Nexium, an Astra blockbuster for heartburn, plummeted 32 percent last year after cheaper copies became available.

Indian companies have the most to gain because their lower production costs preserves more profit as prices fall, according to ICICI’s Khandekar. Frederick Castro, a spokesman for India’s largest drugmaker Sun Pharma, declined to comment.

Of those, the firms with the smallest U.S. presence, like Alkem Laboratories Ltd. -- which gets less than 30 percent of its revenue outside India -- stand to see the biggest boost from entering the U.S. market for generic Crestor,  Khandekar said. Gagan Borana, a spokesman for Mumbai-based Alkem, didn’t respond to an e-mail seeking comment.

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