Wyeth's Never-Ending Generic Woes

For Wyeth (NYSE: WYE  ) and Nycomed, generic attacks are coming from every direction. A few months after Teva Pharmaceuticals (Nasdaq: TEVA  ) made an at-risk launch of a generic version of the duo's heartburn medication, Protonix, Novartis (NYSE: NVS  ) now wants to sell a generic knockoff of the intravenous version of Protonix. Fortunately, the duo should be able to hold off Novartis long enough to keep the rival drugmaker from having an impact.

Teva's launch, along with a subsequent launch of a generic by Sun Pharmaceuticals through its American partner, Caraco Pharmaceutical Laboratories (AMEX: CPD  ) , caused sales of the drug to plummet. Wyeth and Nycomed tried to recover some of the lost revenue by releasing an authorized generic of Protonix, but it didn't help, and sales fell 66% year over year last quarter.

In order to keep Novartis at bay, the duo sued Novartis' generic drug unit, claiming -- as they did with Teva -- that the patent is valid until 2010. Novartis won't be able to make the same type of at-risk launch for a while. The lawsuit should trigger a 30-month stay before the FDA approves Novartis' generic version of the drug; the FDA could also approve its application, if the court overseeing the case against Teva and Sun rules that the patent is invalid. That case is expected to go to court in the middle of next year.

Challenging the patent on the intravenous version of Protonix seems like a good move by Novartis. It allows the drugmaker to be first in line to get its Abbreviated New Drug Application approved by the FDA, and Novartis probably won't have to expend much energy or cash on the court case because it'll likely be bound by the ruling that comes out of Teva's and Sun's lawsuit.

Unless the lawsuit with Teva and Sun drags out for a long time, it looks like Wyeth and Nycomed are probably safe from additional competition. Ultimately, whether they can keep additional competition from coming in and whether they'll be able to recover their losses will be determined by the courts next year.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.


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