On Friday, Abraxis BioScience (NASDAQ:ABBI) received tentative approval from the Food and Drug Administration for its generic version of Pfizer's (NYSE:PFE) Camptosar. Camptosar is a chemotherapy treatment for cancer and has a patent set to expire in February, at which time Abraxis hopes to cash in. This event is probably more significant for Abraxis than it is for Pfizer, but it still demonstrates the increasing competition that big pharma is facing for its name-brand products.
Camptosar achieved $903 million in sales for Pfizer in 2006, but this represents less than 2% of the drugmaker's total revenue. This injectible drug, also called irinotecan hydrochloride, will become a part of Abraxis' hospital-based business segment, which has been experiencing torrid growth. For its most recently reported quarter, sales in this segment grew by 32.6% to $159.3 million. The company has unveiled plans to split off this particular segment as its own publicly traded company in an attempt to fetch a higher valuation for shareholders.
The outlook for Abraxis and its hospital-based segment are very promising. It has been a big year for the company in terms of pushing forward with new generic options -- much to the dismay of big pharma in the ensuing quarters. The hospital-based segment has 26 ANDAs pending with the FDA, as well as 60 product candidates in various stages of development. In August, this segment of Abraxis announced its plans to market the first and only injectible generic Cefotetan Disodium, which has received approval from the FDA. The drug is an antibiotic used to prevent and treat bacterial infections. It is the generic equivalent of AstraZeneca's (NYSE:AZN) Cefotan, and IMS Health has projected Cefotetan's market potential to be in excess of $40 million, which would be significant for Abraxis.
Many of the large-cap pharmaceutical companies are diversified to such a degree that they, like Abraxis, present interesting plays on the threat posed by generics.
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