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Lipitor gets 1st competitor

| Friday, Dec. 2, 2011

Pfizer Inc.'s $10.7 billion cholesterol pill Lipitor gained a rival on Thursday after Ranbaxy Laboratories Ltd. was cleared by U.S. regulators to sell copies of the drug.

Pfizer, the world's biggest drug maker, lost on another front when WellPoint Inc., the largest insurer by enrollment, said it will support use of a generic version by its members by assigning a lower co-pay to the copycat than to the branded drug.

The Food and Drug Administration clearance for Ranbaxy, India's biggest drug maker, followed a dispute over whether the company could produce the copies, given questions about its manufacturing plants. A deal to share profits with Teva Pharmaceutical Industries Ltd., a generic drug maker based in Israel, helped overcome that hurdle.

Mylan Inc. of Canonsburg and other generic drug makers are seeking FDA approval to sell Lipitor copies once Ranbaxy's six-month exclusivity expires, according to U.S. court filings. Mylan declined comment yesterday.

The FDA approval gives Ranbaxy exclusive rights to sell copies for 180 days, competing with Lipitor and a Pfizer-authorized version sold by Watson Pharmaceuticals Inc. Pfizer, the world's biggest drug maker, took advantage of the dispute by making agreements with insurers to block competing generic versions in return for price cuts for the branded medicine.

"Had it been a clear situation that Ranbaxy would not have been able to make it, they could have commanded a better price," said Jason Gerberry, an analyst with Leerink Swann & Co. in Boston.

Copycat Lipitor may generate as much as $650 million for Ranbaxy in its first 180 days of sale, according to the median estimate of five Mumbai-based analysts surveyed by Bloomberg.

Ranbaxy, 64 percent owned by Daiichi Sankyo Co. and based near New Delhi, sought to convince the FDA that approval should not be thwarted by an ongoing dispute about plant violations in India. The FDA approval may have been contingent on the Teva deal, said Bino Pathiparampil, an analyst at IIFL Ltd. in Mumbai.

The source for the active ingredient is approved to be produced in two sites, one of which is a Ranbaxy plant in Toansa, India, Sandy Walsh, a spokeswoman for FDA, wrote in an e- mail. The other is undisclosed as part of Ranbaxy's confidential application, she said.

Teva is not providing the active ingredient, Denise Bradley, a spokeswoman for the Israeli drug maker, wrote in an e-mail. A spokesman at Ranbaxy declined to elaborate, and terms of the companies' agreement have not been disclosed.

Michael Meyers, chief executive officer of Arcoda Capital Management in New York, estimated Teva will receive 35 percent of Ranbaxy profit from generic Lipitor during the first six months that the Indian drug maker has the rights to exclusively sell it. That would make Teva's cut equivalent to $105 million in revenue, he said.

Meyers said Ranbaxy probably is producing all of the active ingredient.

New York-based Pfizer fell less than 1 percent to $20.06 at 1:50 p.m. in trading. The stock had gained 15 percent this year before yesterday.

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