Generic drug manufacturers operate in an interesting industry. Other generic and branded drug companies can be their competitors one day on some products, yet partners on other drugs another day. Normally generic drug competitors, yesterday Barr Pharmaceuticals
Barr, through its Pliva subsidiary, is going to market its generic version of Zofran, with Par manufacturing the drug, and both companies splitting the profits. The market for the Barr's Zofran is approximately $300 million a year in the U.S., but Barr and Par aren't the only generic manufacturers getting in on the Zofran generic fun, with Hospira
You might be wondering why Barr, the world's third-largest generic drug company, would need to team up with a competitor to help manufacture Zofran. That's because Barr's recently acquired Pliva subsidiary actually had filed the paragraph IV marketing certification for Zofran and made the agreement with Par before Barr acquired it.
Being the first to file an Abbreviated New Drug Application (ANDA) gives Barr the sought-after six months of marketing exclusivity for its version of Zofran. The significance of this marketing exclusivity is obviously diminished by the presence of other generic versions of the drug but can still be a lucrative contributor to revenues as a drug with even three generic competitors that sells for almost 50% of the branded drug's price.
There are billions of dollars in branded drug sales up for grabs as numerous blockbuster drugs lose patent protection over the coming years. In the first nine months of this year, Barr's generic drug sales have accounted for over 60% of its $1 billion in total revenues. Even before the Pliva acquisition, Barr was in the process of challenging over $6 billion worth of branded drug sales via patent litigation. The launch of generic Zofran can be considered some of the early fruits of the Pliva acquisition, and with Barr gaining access to Pliva's 21 ANDAs under file at the FDA, there will be more of these opportunities to come as a result of this deal.
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Fool contributor Brian Lawler does not own shares of any company mentioned in this article.