Lipitor Starts Its Fall, Eh?

Pfizer (NYSE: PFE  ) will soon get a sneak preview of cholesterol drug Lipitor's impending tumble from its top-selling pedestal. Yesterday, Health Canada approved a few generic versions of Lipitor, including ones from Teva Pharmaceutical (Nasdaq: TEVA  ) , Watson Pharmaceuticals (NYSE: WPI  ) , and privately held Apotex.

Losing Lipitor in the Great White North won't kill Pfizer. With sales of about $1.2 billion in Canada, the drugmaker stands to lose about 10% of Lipitor's sales. But Pfizer's acquisition of Wyeth last year made it less dependent on the drug. Those Canadian sales make up less than 2% of expected revenue for this year, and Pfizer had already factored the loss into its guidance.

U.S. sales could suffer if generic versions of Lipitor slip over the border, but only slightly. Cheaper brand-name drugs in Canada don't dent U.S. sales much.

The big loss of revenue will come in November 2011, when the drug begins to face generic competition in the U.S. Stateside sales topped $5.6 billion last year, making off-brand Lipitor a major bounty for generic-drug makers like Teva, Novartis (NYSE: NVS  ) , and Mylan (Nasdaq: MYL  ) .

Pfizer will try to retain revenue from some patients by launching its own generic through its established product division. But the revenue decline could still be severe; investors should be happy if the company can retain 20% to 30% of sales in a given country when Lipitor's patent protection expires.

Other cholesterol drugs, including Merck's (NYSE: MRK  ) Vytorin and AstraZeneca's (NYSE: AZN  ) Crestor, could also be hurt by the availability of generic Lipitor. Doctors may be more likely to prescribe a cheap generic version of Lipitor over a more expensive brand-name drug from another company. That indirect generic competition affected Lipitor sales when Merck's Zocor went generic a few years ago.

The only good thing about drugs gaining generic competition is that investors can see it coming; it's not as bad as a drug suddenly being taken off the market because of unforeseen side effects. Pfizer will survive the loss of Lipitor; I'm just not sure how much increased revenue from other drugs will be able to compensate for the loss.

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


Read/Post Comments (5) | Recommend This Article (3)

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  • Report this Comment On May 20, 2010, at 3:52 PM, PeyDaFool wrote:

    Brian,

    I work in Cardiology and see patients everyday who have been prescribed all the drugs mentioned above in the article. Here's a few things you might find interesting:

    1. Generic versions of Lipitor (atorvastatin) have been out for decades. I routinely see patients on Lipitor generics, such as simvastatin (Zocor), pravastatin (Pravachol) and lovastatin.

    2. There is no reason to believe Lipitor works any better than any of the statins mentioned above, nor does is it safer than any of the other statins (Crestor may be the only exception, although it's not a very strong argument). Every doctor knows this.

    3. Vytorin and Lipitor are two completely different drugs who do not compete with each other in any way. Likewise, Vytorin has been receiving very bad press lately and I doubt it will be very popular for much longer.

    4. Crestor's sales will not likely be affected by generic versions of Lipitor, since these generics have been out for over twenty years. Crestor's appeal, and the reason it is prescribed over other statins, likely has to do with advertising, but Crestor also boasts a very (very) small reduction in side effect risk for patients since the dosage is lower. A small percentage of MDs prescribe Crestor if their patients cannot tolerate other statins, due to its ability to raise HDL-C ("good cholesterol") and its lower risk profile.

    It will be interesting to see what effect a generic Lipitor will have, although I doubt it will be as grand as your article dictates, since there are already plenty of generic alternatives out there. Guess we'll have to wait and see. Fool on!

  • Report this Comment On May 20, 2010, at 4:46 PM, toothwobbler wrote:

    PeyDaFool....you may be in Cardiology but you don't appear to understand drugs, or at least what the term 'generic' means in this context. None of the drugs you mention (Zocor etc.) are generic forms of Lipitor (Atorvastatin). They are in the same class of drug, but are different (brand) drugs of the same class that are 'alternatives' to Lipitor but not a generic form.

  • Report this Comment On May 20, 2010, at 6:07 PM, TMFBiologyFool wrote:

    I'm not a cardiologist, but I've always thought the data showed Lipitor and Crestor lowered cholesterol better than Zocor in the average patient. Not that all patients need that much of a reduction.

    If the doctors goal is to lower cholesterol, then Vytorin and Lipitor do compete directly. Whether the reduction in cholesterol is meaningful clinically (fewer heart attacks, etc) remains to be seen

    -Brian

  • Report this Comment On May 21, 2010, at 11:58 AM, PeyDaFool wrote:

    Brian,

    You're right in that both Vytorin and statins lower LDL-C ("bad cholesterol"), but they do it through very different mechanisms. Vytorin is a cholesterol blocker, which exhibits its effects in the digestive system, while statins inhibit hepatic, or liver, enzymes.

    Emerging research is suggesting Vytorin does not have the same benefit as a statin, even with the same reduction in LDL-C. It's my prediction very few doctors will use Vytorin in the future, as all the cardiologists I work with have begun searching for alternatives, such as Niaspan or higher doses of statin.

    You're also right: Crestor is stronger than Lipitor, which is stronger than Zocor. They are all HMG CoA reductase inhibitors, but, as you noted, there is not much difference in terms of efficacy. Crestor appears to raise "good" cholesterol a little more, but this may or may not pan out clinically.

  • Report this Comment On May 24, 2010, at 8:01 AM, EastSideHunky wrote:

    Brian is right, the cardiologist is wrong. When Crestor 1st came out the Pfizer reps tried to scare the docs into thinking it caused kidney failure when in fact the opposite was true: it is the most hydrophilic of the statins and thus has almost zero chance of myalgias, and rhabdo incidence. It also is the most powerful statin for LDL reduction AND HDL increase.

    Lipitor is the bane of health care $$$ misspent in the US and its generic will be welcomed by ALL payors and patients for pocket book effects, besides its pharmacological properties, which are good but not the best.

    --Dr Bo

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