Pain Is Pfizer’s Gain
Diane is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
For Pfizer (NYSE: PFE), the old saw “no pain, no gain” is so true.
That’s why the pharmaceutical giant’s blockbuster pain reliever Celebrex is so important. Last year, U.S. sales of Celebrex amounted to $1.75 billion. Worldwide sales totaled a whopping $2.72 billion.
Those significant sales were projected to start dwindling starting in May 2014. That is when Pfizer's patent on the opiate was set to expire. Analysts at boutique firm Leerink Swann estimated global sales of Celebrex would drop to $1.85 billion in 2014 from the $2.83 billion forecast for 2013.
But Pfizer just got a very welcome reprieve. The U.S. Trademark Office granted Pfizer a “reissue patent” that would extend U.S. patent protection for Celebrex to Dec. 2, 2015, giving Pfizer an additional 18 months of exclusivity.
Pfizer moved to protect its Celebrex position by filing a patent infringement lawsuit in Virginia’s federal court seeking to block generic version of Celebrex from hitting the market.
The reissue was granted based on “methods of treating osteoarthritis and other approved conditions with celecoxib,” the active ingredient in Celebrex. Those methods were claimed by a prior patent that was tossed out of a federal court in 2008.
The reissue was music to Pfizer’s ears. It was also like a shot in the arm, sending shares of Pfizer up 1.3% on the news. But it struck a seriously sour note among rivals Teva Pharmaceutical (NYSE: TEVA) and Mylan (NASDAQ: MYL). Both have already secured tentative U.S. Food and Drug Administration approval to sell generic versions of the drug.
The news is especially hurtful for Teva.
Teva has been facing some troubling times, so the Celebrex news was painful indeed.
The world’s largest maker of generic drugs has embarked on an ambitious plan to slash costs by as much as $2 billion over the next five years amid a fresh strategy to increase long-term profitably.
The Israel based company is preparing to lay-off workers and close factories in its home market. The costs saving moves aim to offset the effect of generic competition on sales of its bestselling multiple sclerosis injection Copaxone. Newer oral drugs and generics threatened Copaxone, which Teva has the patent on until 2015.
Teva challenged patents for Celebrex in 2008, when it attempted to sell generic copies. Pfizer sued and won, but only until May 2014. The court maintained a "method-of-use" patent due to expire in December 2015 was invalid. So, the latest extension is more salt on ailing Teva's wounds.
Mylan meanwhile is on a mission to keep growing in spite of the Celebrex setback. The Pennsylvania based firm recently acquired Bangalore based Agila Specialties Pvt. Ltd, a maker of generic injectable drugs. The firm expects the injectable drug market to climb 13% a year through 2017. Needham & Co called the deal a “game changer” for Mylan, adding it “sustainably accelerates” the company’s goals of hitting $1 billion in sales for its injectbales business.
The acquisition came on the heels of robust Q4 earnings which jumped 25% on increased revenues and growing presence in the generic market. However, a generic Celebrex is expected to generated substantial revenue to Mylan's bottom-line. So Pfizer's extension is costly for Mylan.
Celebrex is pricey. Without insurance, the arthritis treatment can cost up to $200 per perscription.
The anti-inflammatory, analgesic painkiller went on sale in the late 1990s. Sales waned in the mid 2000s amid safety concerns of increased risk of heart attacks and strokes from other same category drugs. But sales have roared back. Patients taking Celebrex find it effective and many say it improves the quality of life.
While behemoth Pfizer has a plentiful pipeline, the Celebrex exclusivity extension is a coup. Even if, like a great deal of pain, it's temporary.
Diane does not hold shares of any of the above mentioned securties.