Schering-Plough: facing the challenges of blockbus

With the recent patent expiry of Claritin, a drug that netted Schering-Plough some $5 billion in sales in 2001-2002, the antihistamine market will soon be flooded by a raft of cheap generic copies of this one-time blockbuster. Datamonitor investigates the market in light of this patent expiry and the challenge facing Schering-Plough as a result. The expiration of Claritin's patent and subsequent switch to OTC status will dramatically alter the non-sedating antihistamine market both now and in the future. The ramifications of these changes are analyzed in depth in the brief Claritin: Easing the pain of blockbuster patent expiry. Past leadership Schering-Plough's blockbuster antihistamine Claritin (loratadine), launched in Europe in 1988, first gained US approval in 1993 for use in allergic rhinitis indications. Claritin posted sales of over $3.2 billion in 2001, making it the top selling antihistamine with a market share in excess of 40%. In the past few years, sales of Claritin have accounted for approximately 30% of Schering-Plough's revenues. Claritin is a second-generation antihistamine indicated for the treatment of seasonal allergic rhinitis and chronic idiopathic urticaria in patients aged 2 and older. The drug has greatly benefited from a lack of sedating effects, as well as once-daily dosing and a range of formulations, including Claritin-D (combined antihistamine and decongestant product) and Claritin Redi-Tabs (mouth soluble tablets). Despite increasing competition from Pfizer's Zyrtec and Aventis' Allegra in recent years, Claritin maintained its top selling status within the class owing to high levels of brand loyalty and aggressive direct-to-consumer marketing. Schering-Plough was however, all too aware that the loss of patent protection would bring an end to Claritin's market-leading status and a significant revenue loss. The company had therefore been preparing various strategies intended to supplement earnings and soften the blow. Alternative strategies In July 2002, Schering-Plough received approval to sell Claritin in Japan, a large market that accounted for more than 10% of global allergic rhinitis sales in 2001. Unfortunately, this market is already well developed with a high degree of brand loyalty for products such as Boehringer Ingelheim's Alesion (epinastine). In May 2000, Schering-Plough entered a joint venture with Merck & Co. to develop a drug that is a combination of Claritin and Singulair (montelukast). Clinical trials for this drug have so far proven disappointing. Datamonitor believes that it is likely that the development of the combination pill will be discontinued, especially as Merck has launched Singulair as a treatment for allergic rhinitis in its own right. Clarinex (desloratadine) was launched in the US in January 2002 as a successor drug to Claritin with the aim of getting patients to switch to this drug before Claritin's patent expired. Clinical trial results have yet to show any superiority for Clarinex over the other non-sedating antihistamines, and there is currently little reason for a Claritin user to switch to this drug when Claritin is available cheaper and OTC. On November 27, 2002, Schering-Plough received US FDA approval to sell Claritin as an over-the-counter medicine. This approval enabled Claritin to become the only non-drowsy OTC antihistamine on the US market, while the major competing products Zyrtec and Allegra remained patent-protected. Claritin was on drugstore shelves in the US by the end of 2002. Generic onslaught The transition of Claritin to OTC status has however, the potential to significantly reduce the value of the non-sedating antihistamine market as well as to cause Schering-Plough to incur noticeable losses. The FDA approval of a number of generic formulations of Claritin in December 2002 and early 2003 will rub salt in Schering-Plough's patent expiry wounds. Generic versions of loratadine will be priced below OTC Claritin and further reduce the value of the antihistamine market. A large number of generic competitors are set to take advantage of Claritin's patent expiry. Alavert, Wyeth's generic loratadine, became available in late December 2002 and Andrx received FDA approval for generic loratadine on November 18, 2002 and will be shipped out in mid-2003. In addition to these companies, both Johnson & Johnson and Teva Pharmaceuticals are set to launch a generic version of the drug in the near future. Too little too late Other tactics Schering-Plough might pursue to delay the decline in revenues from Claritin would be to seek additional patent extensions, or even to launch spoiling litigations in the courts. While these actions would be unlikely to prove successful in the long term, they would nevertheless have the effect of temporarily delaying any generic launch, as under US rules any such launch is prohibited while court action is pending. For example, Schering-Plough managed to obtain a formulation patent for Claritin-D through 2012, although Datamonitor believes this move will do little to reduce the ultimate effect of the expiry of loratadine itself. And even though Schering-Plough had lodged a total of 15 lawsuits against drugmakers wishing to market generic loratadine between 1998 and 2001, Wyeth was still able to bring its generic product to market in December 2002, not soon after Claritin became available OTC. In spite of all Schering-Plough's efforts Datamonitor believes there is little the company can do to recoup the sales lost in Claritin's switch to OTC status. It seems unlikely that OTC Claritin can achieve more than $500 million next year. Despite the various strategies used to regain lost revenues, any extra sales gleaned from these efforts will be more than cancelled out by the magnitude of the damage caused by Claritin's patent expiry. It even appears unlikely that Schering-Plough will be able to benefit from the Japanese market since Zyrtec and Allegra have beaten the drug to this highly lucrative market. If you found this week's Expert View useful, you may be interested in Datamonitor's reports, all available from www.datamonitor.com/healthcare :

Claritin: Easing the Pain of Blockbuster Patent Expiry priced $1,500

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