Sanofi Can't Shake the Generics

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Just when Sanofi-Aventis (NYSE: SNY) seemed finally free of generic threats against its top drugs, new worries have now popped up. Since Friday, Sanofi's shares have fallen more than 4% after a new potential generic challenger to one of its lead drugs surfaced.

In a press release last week, Swiss generic drug manufacturer Schweizerhall said it was close to receiving final marketing approval in Germany for a version of Sanofi's anti-clotting drug Plavix. Because of European Union rules, if Schweizerhall gets marketing approval from the German health-care authorities, it could eventually market the drug in all of the other EU countries as well.

Sanofi booked 2.4 billion euros in Plavix sales last year, making the drug its second-most-important compound by revenue. The top seller, fellow anticoagulant drug Lovenox, is facing imminent generic pressures of its own.

This would be an unexpected blow to Sanofi, because the main European Plavix patents aren't expected to start expiring until 2013. Schweizerhall didn't say how it would avoid breaking Sanofi's patents on Plavix.

Sanofi and its Plavix marketing partner Bristol-Myers Squibb (NYSE: BMY) had to deal with a similar situation in the U.S. in the past two years, after Canadian generic drug manufacturer Apotex briefly flooded the market with generic versions of Plavix. A judge eventually blocked sales of the generic version and upheld Plavix's patents in the U.S.

Every time Sanofi seems to squash generic competition for Plavix or Lovenox, new avenues to attack these drugs always pop up. Sanofi has been mostly successful in escaping generic competition on its lead drugs thus far, but it's still dealing with Plavix patent challenges throughout other parts of the world, including South Korea and Canada. From this Fool's perspective, it seems Schweizerhall may have won the most recent round of Sanofi's ongoing generic wars.