A determined FDA takes down Teva’s blockbuster

Earlier-than-expected US approval for Mylan's generic version of Teva's Copaxone is a blow to the struggling Israeli firm.

Last week Humira, this week Copaxone. News that the US FDA has approved Mylan’s generic versions of Teva’s multiple sclerosis medicine signals that the end is nigh for another huge blockbuster franchise, the longevity of which has also been fought over for many years.

Mylan shares opened up 17% today, and the company pledged to launch imminently – as the first to get a green light for the valuable 40mg dose, the opportunity could be rich if others fail to follow quickly. For Teva the news is yet another blow, dashing hopes of further delays to this huge threat to its crumbling cash flows.

Shares in the Israeli company were down 13% this morning – many were not expecting the FDA verdict until next year. Umer Raffat at Evercore ISI attempted to quantify the damage: earlier than expected loss of revenues could result in an annualised $480m to $640m being shaved from consensus operating profit estimates, he believes.

Copaxone is a hugely profitable product for Teva, with operating margins at around 80%. Consensus currently has sales reaching $3.7bn this year, according to EvaluatePharma, before dropping away steeply next year.

Over at Mylan, the question is for how long it can enjoy this exclusivity – the 180 days it holds on the 40mg dose is likely shared with multiple other generics companies that filed at the same time. It also won approval for its 20mg jab, and will be only the second to market this dosage, after Momenta’s Glatopa, which is sold by Novartis’s Sandoz division.

Momenta is on Mylan’s heels with its own 40mg dose version, but FDA approval has been held up by issues at a Pfizer manufacturing plant. The company said recently that it remained confident of winning approval before the end of the year, but shares slumped 21% this morning on this missed opportunity.

Teva is likely to seek an injunction, and several litigations remain ongoing, although these efforts are unlikely to hold off Mylan for long, analysts believe.

A fading franchise – current forecasts for Copaxone and generics
Sales/alliance revenue ($m)
Product Company 2016 2017e 2018e 2022e
Copaxone Teva 4,223 3,692 2,234 897
Glatopa Momenta* 75 107 165 201
Copemyl Mylan 0 4 118 198
Copaxone Takeda** 23 35 55 103
*Books alliance revenue; Sandoz sales not available. **Japan rights. Source: EvaluatePharma.

Notably, the approval for Mylan comes a day after the FDA commissioner, Scott Gottlieb, released draft guidance to help speed the approval of complex generics like Copaxone. If any were needed, this earlier than expected green light provides further evidence that the US regulator is determined in its efforts to smooth the path to market for a wider range of copycat medicines.

This all signals a fair wind for manufacturers capable of such development work, typically the larger groups, Berstein’s Ronny Gal commented this morning. And while Teva is suffering today, it has a pipeline of such projects, such as Victoza and Advair, and should benefit in the longer term, he pointed out.

Still, this will provide little comfort to Teva's newly appointed chief executive, Kåre Schultz, on whom the pressure has just ratcheted up another notch. Hard choices have to be made in the Teva boardroom – choices that just got more urgent.

To contact the writer of this story email Amy Brown in London at AmyB@epvantage.com or follow @ByAmyBrown on Twitter

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