Dr Reddy's Laboratories Ltd, which is fighting a case for launching its generic version of Pfizer's amlodipine brand Norvasc in the US market, may acquire a detailing company (a company that has medical representatives to market the drug to doctors) in that country if it wins the case.
Norvasc is the second largest product of Pfizer Inc and is indicated for hypertension and angina.
It is learnt that the Indian generics company was willing to spend $ 100-150 million for the acquisition. The company believes it has a sufficient pipeline of molecules under section 505(b)(2) filing that it can promote through this company.
However, a leading analyst said that he is not bullish on such a large acquisition, even if DRL is successful in the case.
Amlodipine besylate (Norvasc), of Pfizer has US sales of around $ 2 billlion and global sales of $ 3.6 billion. Norvasc, launched in July 1992, is growing at 10% annually. The patent expiries listed in the US FDA's Orange Book are in July 2006 (Patent no 4,572,909 referenced as '909) and March 2007 (4,879,303 referenced as '303). Pediatric exclusivity results in patent extension by another six months. Patent '909 describes maleate salt and '303 describes besylate salt.
The only bone of contention between Pfizer and DRL is that while '909 patent expires on 25 Feb'03, it was given an extension till July '06. DRL contends that patent extensions are only for products that are in the market place.
However, as Pfizer is only marketing besylate salt, the patent extension is only valid for besylate salt and not for the maleate salt. Pfizer seems to hold that the US FDA has delayed approval for the basic amlodipine product and hence the patent extension for this basic substance is warranted.
In December '01, DRL had filed para III against '909 patent and para IV against '303 patent. Within 45 days, Pfizer sued DRL stating patent infringement and triggering a 30-month-stay period. In May '02, DRL recertified para IV against '909. Continuous dialogue with US FDA resulted in this recertification.
A "paragraph three" certification states the date the patent will expire, with the understanding that the company submitting the application is not seeking final approval until patent expiration. A paragraph IV certification asserts that the listed patent is invalid, or that it will not be infringed by the product the ANDA or the section 505(b)(2) applicant seeks to bring to market, or that it is not enforceable.
The filing of a lawsuit as a result of the paragraph IV notice has a substantial effect on the time of approval of the ANDA or 505(b)(2) application. If a lawsuit is brought by the innovator drug company, FDA's final approval is stayed for two-and-a-half years. If the patent court determines that the patent would be infringed by the product proposed in the ANDA or 505(b)(2) application, FDA will not approve the application until the patent expires.
Mylan has filed para IV against Norvasc (amlodipine besylate) of Pfizer and Pfizer has sued Mylan for patent infringement. Earlier in December '01, Dr Reddy's had certified for generic amlodipine maleate under section 505(b)(2) with Pfizer suing it for patent infringement in May'02. This case is expected to be long-winded as Norvasc is the second biggest product for Pfizer.
DRL is highly leveraged on this case. If it wins the litigations and secures all approvals for a three-year exclusivity and Mylan loses its case, then the stock will easily double its worth. However, if it loses or is delayed in this product, the stock could come under some pressure in the near term.
If DRL wins all litigations and gets approvals for a 3-year exclusivity and Mylan loses its case, then the upsides will be significant. This is a make or break case for DRL.
According to an analyst, if DRL did not believe in its strengths on its amlodipine maleate filing, then it would have filed a regular para IV against amlodipine besylate to hedge itself.
The US law defines a "patented product" as the active ingredient of a new human drug including any salt or ester of the active ingredient, as a single entity or in combination with another active ingredient.
This "product" means the active ingredient found in the final dosage form prior to the administration of the product to the patient, not the resultant form the drug may take after administration.
Furthermore, the "product" is the active ingredient rather than the entire composition of the drug product approved by FDA. Within Norvasc tablets, amlodipine ion and besylate ions are separate identifiable entities and in DRL's product, amlodipine ion and maleate ion are separate identifiable ions. Thus, while DRL seems to claim that amlodipine besylate is the "patented product", Pfizer seems to state that amlodipine is the "product."
Considering the simplicity of the issue and to save time, DRL has asked for a "summary judgement." In such judgements, a decision is made on the basis of statements and evidence presented for the record by the two parties without any trial. Thus the judgment comes in much sooner than that from a full trial.
DRL and Pfizer are believed to have presented their arguments and the judgement is awaited. The judge has to now issue the summary judgement or call for a "full trial."
Says an analyst, "Even if the summary judgement goes in favour of DRL, we are quite sure that Pfizer will appeal the decision in the higher court (ie Federal Circuit, FC). In the recent past, GSK won the summary judgement for Augmentin in Dec'01 in the lower court only to lose its case at the FC in May'02."
If DRL wins its case and Mylan loses, DRL can then launch its product at risk as Pfizer is sure to appeal to the FC. In case DRL decides to launch the product, it will have to brand and market it as amlodipine maleate not bioequivalent to Pfizer's Norvasc (a different salt). Thus it will take time to gain market share and marketing costs will be much higher than that for a regular generic.
If DRL gets the three-year exclusivity for the product under section 505(b)(2), then it is the best-case scenario for DRL.
If DRL does not secure the three-year exclusivity for the product under section 505(b)(2) as Pfizer has already completed all the clinical trials even for amlodipine maleate, then other generics manufacturers can follow DRL by filing para III against DRL's product and proving bioequivalence with DRL's product.
While theoretically there is no exclusivity for DRL, other generics may take some time to file and launch their amlodipine maleate (this may be around 4 quarters post the launch by DRL). This is the 2nd best scenario for DRL.
Mylan's product is fully bio-equivalent to Norvasc and can fully replace Pfizer's Norvasc. However as DRL's product is not fully bio-equivalent, it will have to market its product - a high cost approach. In such a scenario, there is no rationale for DRL to launch its generic as it will have to compete with amlodipine besylate generics, which will have lower cost (due to no marketing effort required for them unlike DRL).