"Copycat" may have been an unflattering taunt in childhood, but when it comes to drug companies, copycats are more than just a minor annoyance. GlaxoSmithKline (NYSE:GSK) announced late Friday that its patent for antibiotic Augmentin is indeed invalid, despite its valiant attempts at an appeal in federal court.
A lower court had already ruled against Glaxo's Augmentin patent, leaving the company open to generic competition from Geneva Pharmaceuticals, Teva Pharmaceutical Industries (NASDAQ:TEVA), and Ranboxy Laboratories.
Generic competition is hardly unusual in the world of big pharma. Companies with blockbuster drugs that face patent expiration generally find a new application or more convenient dosage schedule, sometimes even a new name and marketing angle, in order to preserve revenues and give new life to an endangered drug. For example, Glaxo also has Augmentin ES and XR in its pharmaceutical lineup, which represent 35% of all prescriptions written for Augmentin, both branded and generic.
Back in September, a generic version of Paxil, one of Glaxo's most popular drugs, launched the company into another patent dispute.
Another of Glaxo's high-profile drugs that could face increased competition is Levitra, a drug for erectile dysfunction co-launched with Bayer (NYSE:BAY) several months ago amid a flurry of media fanfare and slightly risque advertising. Levitra is pitted against Pfizer's (NYSE:PFE) first-mover in the market, Viagra.
On Friday came word of the Food and Drug Administration approval and imminent launch of yet another impotence drug, Cialis, masterminded by Eli Lilly (NYSE:LLY) and ICOS Corp. (NASDAQ:ICOS). That drug is expected to appear on pharmacy shelves -- and potentially steal some market share -- as early as December.
Much like Merck (NYSE:MRK), which revealed new troubles last week, Glaxo is a pharmaceutical giant facing competition from both generic and branded competitors and a weakening pipeline for potential new blockbusters. Investors considering some of the big pharmaceutical names should probably be prepared for quite a rollercoaster ride as these issues play out.
Discuss the outlook for Glaxo with other Fools on the GlaxoSmithKline discussion board.
Alyce Lomax welcomes your feedback at [email protected].
