Bristol-Myers Squibb and partner Sanofi-Aventis are facing generic competition to their flagship cardiovascular drug Plavix – the second biggest-selling drug in the world – now that Canadian firm Apotex has launched its own version onto the US market.
Shares in B-MS closed down 7% yesterday at $21.21, as investors, staring down the barrel of a sizeable cut in 2006 profits, dived for cover. B-MS sells Plavix (clopidogrel) in the USA on behalf of Sanofi-Aventis and derives almost a third of its profits from the drug. Meanwhile, Sanofi was off one-and-a-half percentage points this morning.
Ironically, a $40 million agreement between the three companies that was aimed at keeping Apotex’ version off the market in the USA until 2011 – which was revoked by order of the state attorneys general last week for being unlawful – seems to have accelerated the generic company’s launch plans for Plavix (clopidogrel).
Apotex said that the terms of the agreement with B-MS and Sanofi would strengthen its case in any resumption of patent litigation over Plavix, something which B-MS said it was considering as soon its settlement with Apotex was overturned, and also would reduce its liabilities should it lose the case.
In a quarterly Securities & Exchange Commission filing, B-MS said that along with Sanofi it would ‘vigorously pursue enforcement’ of Plavix patent rights. But this document also reveals that B-MS and Sanofi capped any potential liability to Apotex if it launched generic clopidogrel early at 70% of net sales, and waived their right to seek treble damages if they prevailed in patent litigation. It also prevents them from seeking an injunction to block sales of Apotex’ product for five days.
So-called ‘sweetheart deals’ between brandname drugmakers and generic rivals to keep copycat products off the market are becoming increasingly common, but this case suggests that they could backfire. The Federal Trade Commission has been looking into the possible antitrust implications of the deals – despite recently suffering a setback in the US Supreme Court – while members of the Senate Judiciary Committee have also announced legislation aimed at thwarting them.
Plavix sales in the USA are currently running at around $2.7 billion a year, and the impact on B-MS of the early generic entry would be significant, as in the past big-name products have lost up to 70%-80% of their sales once generic competition starts. In the second quarter of 2006 alone, Plavix broke the $1 billion barrier, bringing $1.1 billion into B-MS' coffers.
That said, as the only generic player with US approval for a clopidogrel product at present, Apotex is not expected to massively undercut Plavix’ $4-a-tablet price, so the impact in the initial period may be less dramatic, although Sanofi and B-MS are still fending off a number of other patent infringement lawsuits concerning the product.