The permission granted by US FDA to Schering-Plough to shift world's number one allergy treatment, Claritin (loratadine), entirely from the prescription to the OTC market is expected to be a negative for bulk exporter Morepen Laboratories Ltd.

The US FDA approval for the OTC switch means that generics will also have to launch only their OTC version. This approval, which comes weeks before the patent expiry is a setback to generics companies as very few of them have OTC marketing infrastructure, an analyst source said here.

A month's supply of Claritin costs an uninsured patient $60 in the US compared to $11 in Canada. Last Wednesday, Schering-Plough Corp (SP) won US approval to sell a non-prescription version of Claritin. SP will launch this OTC version at prices lower than the prescription version by mid-December.

Morepen was one of the eight bulk drug companies to have a DMF filing for this complex product. The other six were SP, four Spanish players (Quimica, Inke, Medichem and Rolabo) and three Indian companies (Morepen, Cadila and Ranbaxy). Of these, only a couple (including SP and Morepen) is believed to have sufficient capacities in place.

Ranbaxy has clearly stated that it does not export bulk drug to the developed countries in products in which it has a formulation, the analyst says. Thus Morepen was expected to be one of the major bulk drug suppliers to most of the generic companies. This setback for generic companies is a negative for Morepen.

However, another analyst said it is a positive for Morepen as conversion to OTC would mean a larger volume offtake.

Morepen's Director of Operations Sanjay Suri says the shift of Loratadine to OTC has not come all of a sudden from US FDA. All the companies (including Morepen) involved in the business of Loratadine were well aware of this announcement since March 2002. "During this period we tied up with OTC companies also and at the same time Rx companies also made their marketing arrangements with OTC companies or private label companies, not to forget that most of the companies have their own OTC arms. Since beginning, this shift was taken as a boon for this product in the industry because this is going to be the first non-sedative product in this category under OTC."

"Most of the companies are ready to launch the product in the market, the only risk can be the one or two month delay for some companies but this shift is for life ever, so does not make any difference. Since we have the advantage of being the largest generic manufacturer of this product in the world with US FDA approved facilities, so this is a welcome change for Morepen," Suri added.

This move results in SP being ahead of Wyeth and Johnson & Johnson, who had applied to make generic, non-prescription forms of Claritin. Thus it is a big positive for SP.

With SP winning this effort, the analysts believe that even Pfizer and Aventis will undertake similar efforts as these drugs come close to patent expiry. It could also see brand-name companies (MNC patent holders) take drugs in specific segments such as pain management, anti-pyretic, etc to the OTC route as the patents for these products expire.

Claritin had global sales of US $16 billion last year with sales in US at US $2.7bn.

The US FDA had approved the medication for seasonal allergies and will approve for other indications (treating hives, an allergic skin reaction) if SP can prove that consumers can use it properly.

All along, SP resisted moves to launch the cheaper OTC version despite petitions asking for the switch. A number of consumer groups wanted antihistamines (Claritin, Zyrtec of Pfizer, Allegra of Aventis etc) to be launched as OTC products as these had fewer side effects and consumers would gain on account of the low prices.