Source: Teva Pharmaceutical Industries ltd.

Last month, the Food and Drug Administration gave the go-ahead to Novartis' (NYSE:NVS) and Momenta Pharmaceuticals' (NASDAQ:MNTA) Glatopa, a drug for the treatment of multiple sclerosis that matches up similarly to Teva Pharmaceuticals (NYSE:TEVA) Copaxone.

Glatopa's approval helps clear the way for generic versions of other biologic drugs, which are known as biosimilars because they aren't exact copies. Since this field is still so new, it's not clear how quickly Glatopa will cut into Teva Pharmaceuticals' Copaxone sales, which totaled more than $4 billion last year.

Waiting, waiting, waiting...
Glatopa's approval isn't too surprising given that biosimilars to Copaxone are already available in some foreign markets, but the timing of a U.S. approval has been a major bone of contention.

 Teva Pharmaceuticals fought tooth-and-nail to keep Copaxone biosimilars from reaching the market because Copaxone is its top-selling drug and it accounts for 20% of the company's revenue.

Teva Pharmaceuticals' efforts to block Glatopa included lawsuits that eventually led to a Supreme Court ruling in January. That ruling reversed a previous lower court decision to bump the patent expiration of Copaxone from September 2015 to May 2014. However, after ruling in Teva Pharmaceuticals' favor, the Supreme Court kicked the case back to that lower court. That lower court may not weigh in on the case prior to the September patent expiration, so the Supreme Court's decision probably means that Glatopa won't reach the market until fall. 

Blunting the impact
Eventually, Glatopa will become available, and when it does it could make a big dent in Teva Pharmaceuticals' sales; however, the impact on Teva Pharmaceuticals' market share could be less than analysts previously thought.

That's because Teva Pharmaceuticals has been working night and day to convert existing 20-milligram Copaxone patients to a new, long-lasting 40 mg version of the drug.

Convincing patients to swap to the new 40 mg version hasn't proven to be much of a challenge. The new formulation can be dosed up to 50% less often per week than the 20 mg original formulation, so it significantly lightens patient treatment burden. As a result, Teva Pharmaceuticals has converted about 60% of its patients to the 40 mg formulation, protecting billions of dollars in Copaxone sales from biosimilars in the process.

Additionally, although Glatopa is likely to have more competitive pricing that could help it win share among newly diagnosed patients, the dosing advantage of the 40 mg formulation of Copaxone could give it a valuable edge. If so, that would help ensure future Copaxone sales given that doctors are often reticent to shift MS patients from therapy to therapy if their current medication is working. Copaxone's global market share among new patients was 25.9% exiting 2014, and much of that share is likely for the long-lasting version. Since 200 people are newly diagnosed with MS in the U.S. every week, 40 mg Copaxone could remain a blockbuster therapy long after biosimilars hit pharmacy shelves.

How big is the threat?
Novartis' Sandoz unit is one of the globe's leading biosimilar and generic companies, and that means it has plenty of experience in successfully launching these types of medications.

Although the U.S. has been slow to adopt biosimilars, European regulators have been more willing to approve them. In those markets, biosimilars have typically captured between 30% and 40% market share from brand name drugs. Usually, market share for branded drugs falls more quickly once multiple generic versions are approved, and it's hard to believe that wouldn't also be the case for biosimilars.

If so, then an eventual approval of Mylan's application for a second Copaxone biosimilar could accelerate Teva Pharmaceuticals' market share losses next year. For that reason, upcoming launches could carve away $1 billion or more in Teva Pharmaceuticals' sales, depending pricing and generic drugmakers' marketing efforts.

Looking ahead
Teva Pharmaceuticals has patent protection on its 40 mg Copaxone formula until 2030, so the company appears to have plenty of leg room to capitalize on demand for the drug. But that doesn't mean Novartis and Momenta won't still have a winner on their hands, or that they won't try to challenge the 40 mg patents.

How much money Glatopa will ultimately rake in for Novartis and Momenta will depend a great deal on how active healthcare payers support the product. There's always the potential that payers' eagerness for cost-cutting will mean Glatopa receives preferential standing to Copaxone on drug formularies, and thus higher Copaxone copays could result in greater demand for Glatopa, which Momenta has previously said could be priced at 25% discount to 20 mg Copaxone's $65,000 price tag.

Overall, the uncertainty surrounding Copaxone and Glatopa's market share in the coming year makes investing in Teva Pharmaceuticals a bit risky, and for that reason I'm sitting on the sidelines until we see how this pans out.