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 Ranbaxy, which is in the process of being acquired by Indian
drugmaker Sun Pharmaceutical Industries Ltd for $3.2 billion, will
be the first rival drugmaker to launch a copy of Diovan in the
United States and will be entitled to six months of exclusivity to
sell it.
The drug, whose chemical name is valsartan, should add about $200
million to Ranbaxy's sales and $100 million to its profit after tax
during the exclusive sale period, said Praful Bohra, a senior
research analyst at Mumbai-based brokerage Nirmal Bang.
Swiss firm Novartis's once-best selling drug Diovan lost patent
protection in September 2012, but it has been spared generic
competition because Ranbaxy, which holds the right to launch the
first generic of Diovan, was struggling with quality control issues
at its manufacturing sites.
The FDA has banned all of Ranbaxy's India-based plants under a wider
scrutiny of the country's $15 billion pharmaceutical industry, which
is the largest supplier of medicines to the United States.
Novartis will continue to market both its branded and generic
versions of Diovan, Dermot Doherty, a spokesman for the company in
Zurich, said in statement.
Novartis earned about $100 million each month for the last 20 months
without a generic rival of Diovan in the U.S. market, said Angel
Broking's pharmaceutical analyst Sarabjit Kour Nangra.
Ranbaxy could not manufacture the pharmaceutical ingredient required
for Diovan generic because of bans on its plants, but some analysts
said the company could have sourced the raw materials from another
domestic manufacturer.
A Ranbaxy spokesman did not respond to a request for comment on
ingredient sourcing.
Sourcing the ingredient from a third-party would mean Ranbaxy would
have to share a part of the drug's sales, according to analyst
Nangra.
Ranbaxy's shares were up 5 percent at 498 rupees at 0945 GMT, while
Sun Pharma was trading 4 percent higher at 660 rupees, pushing
India's healthcare sub-index to a record high. Novartis shares were
down 0.3 percent at 80 francs.
FIRST TO FILE
The finished dose of the drug will be made at Ranbaxy’s New
Jersey-based Ohm Labs unit, which is the only company-owned plant
allowed to make drugs for the United States, Ranbaxy said on Friday.
Bill Winter, a vice president at Ohm Labs, said in a statement the
Diovan generic would be launched "as soon as sufficient supplies are
manufactured to meet the needs of the market."
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Novartis in January forecast that total 2014 sales would grow at a
low to mid-single digit rate, assuming a generic Diovan launch at
the beginning of the second quarter of 2014.
The Ranbaxy statement did not say when the generic version of Diovan,
which had global sales of $3.5 billion in 2013, will be launched. A
Ranbaxy spokesman in India did not respond to a request for comment
on launch plans.
Ranbaxy was also the first company to file with FDA seeking approval
to launch generic versions of two other top-selling drugs -
AstraZeneca Plc's blockbuster heartburn drug Nexium and Roche's
antiviral Valcyte.
These two drugs are pending final approval from the FDA.
Last month, Ranbaxy Chief Executive Arun Sawhney said he was
"confident" that the company would be able to reap the benefits of
these exclusive marketing opportunities.
He did not elaborate.
Reuters reported in March that Ranbaxy was in talks with at least
two companies on sourcing ingredients for a generic version of
Nexium.
"I think the Diovan generic approval is definitely a validation of
their comment that they will be able to launch Valcyte and Nexium as
well," Nirmal Bang's Bohra said.
(Additional reporting by Caroline Copley in Zurich and Abhishek
Vishnoi in Mumbai; Editing by Sumeet Chatterjee and Matt Driskill)
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