AstraZeneca has announced that it will launch a generic version of its own heart drug Toprol XL.
SummaryAstraZeneca's third biggest-selling drug, Toprol XL, has come up against generic competition sooner than anticipated after losing its protection against copycat launches. AstraZeneca has responded by reaching an agreement with US generic firm Par Pharmaceutical to distribute and supply a 25mg generic version of Toprol XL, a strategy that could be used with its other drugs facing patent expiry.
The 25mg dose currently accounts for 25% of AstraZeneca's sales for Toprol XL in the US market. The launch of Novartis' generic could have a substantial impact on AstraZeneca's top line and the company now expects that its full year earnings per share will sit at the lower end of the $3.85 to $3.95 range. The introduction of its own generic version will help AstraZeneca dampen the extent of the sales erosion.
With governments pushing for cost containment, generic prescribing is set to increase over the years to come, and AstraZeneca's move to introduce a generic version of its own drug Toprol could become a new trend across the big pharma industry.
Although 'authorized generics' pose a threat to generics companies, those concentrated on ethical pharmaceuticals will be able to gain some protection from plummeting sales following patent expiry. It is estimated that a drug could lose almost 80% of its of its sales volume when faced with generic competition, as generic manufacturers are able to supply drugs at a much lower cost than the branded drugs already on the market.
Analysis of AstraZeneca's launch, core and expiry drug schedule reveals that the potential for generic threat in the future is high. Despite the current success of Nexium, Symbicort and Crestor, each franchise has begun to mature and has progressed further along its respective product lifecycle. Consequently, as patent expiry nears, each of these products will be vulnerable to sales erosion. AstraZeneca's strategy to launch its own generic Toprol XL could well be extended to more of its expiry products as an attempt to dampen the impact of generic penetration.
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