Death of Celebrex appears slightly exaggerated

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Anyone who had either forgotten about Celebrex or had written off its importance to Pfizer got a jolt yesterday with the granting of a US patent covering the Cox-2 inhibitor until December 2015.

The extra period of exclusivity might be short – a mere 18 months – but it has added $1.4bn to the drug’s NPV, according to EvaluatePharma data. Less fortunate was AstraZeneca, which saw patents covering its statin blockbuster Crestor held invalid in Australia, yet its investors did not seem to mind, pushing the shares up 1%.

Celebrex is by far the biggest of the co-called coxib class of anti-arthritis drugs still on the market, generating sales of $2.7bn in 2012, with revenue expected to grow 4% this year. But its basic US patent expires in May 2014, and this is when generics had widely been expected to enter (Clouds break as patent storm eases in 2013, January 30, 2013).

In an unexpected ruling, however, the US Patent and Trademark Office has granted Pfizer a new method-of-use patent that gives coverage, including six months’ paediatric exclusivity, until December 2, 2015. On the back of this, Pfizer has sued the ANDA filers Teva, Mylan, Watson (Actavis), Lupin and Apotex, which had sought to start selling generic celecoxib from May 2014.

UBS analysts wrote that the additional 18 months on the market should increase sales of Celebrex in 2014 and 2015 by $1.3bn and $1.6bn respectively, and boost Pfizer’s EPS by 12 and 17 cents over the same period.

Based on previous consensus forecasts, which had assumed generic erosion starting in mid-2014, Celebrex had an NPV of $2.8bn. Using EvaluatePharma’s NPV Editorto shift patent expiry out to December 2015 gives a new NPV of $4.2bn, and Pfizer’s investors seemed to take an even more positive attitude yesterday, sending the company’s shares up 1.4% – equivalent to a $2.8bn market cap change.

A swift end

Nevertheless, when generics do come the end will be swift, with sales of branded Celebrex expected to fall off sharply in a typical scenario for a blockbuster drug.

AstraZeneca’s Crestor is an even bigger product, with revenue of $6.7bn last year. It has already been hit by generic versions of Pfizer’s Lipitor, and things are set to get even worse for the UK firm when its own US patent expires in 2016.

The end for Crestor was brought a little closer yesterday when the Federal Court of Australia found invalid three patents, claiming to protect it until 2020/21, that had been challenged by Apotex, Actavis and Ascent Pharma. Panmure called this a bolt out of the blue, and said Australia now looked set to join Canada and Brazil in allowing Crestor generics.

Still, with Crestor sales of $350m the country represents barely 6% of the franchise, perhaps explaining why the market shrugged off the bad news. In fact, many might see the development as a wake-up call for management to get cracking with acquisitions (Vantage Point – Stars align for AstraZeneca to team up with Bristol for Shire swoop, January 24, 2013).

With just 15 days to go to AstraZeneca’s keenly-awaited strategy update the pressure to make a transformational move is high, and if one does not come investors might not be quite so forgiving.

To contact the writer of this story email Jacob Plieth in London at jacobp@epvantage.com or follow @JacobEPVantage on Twitter

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