Teva announced Thursday that U.S. regulators granted tentative approval to its generic version of Pfizer’s Lipitor (atorvastatin).
The company plans to launch its version of the product in May when Ranbaxy, which on Wednesday launched a generic version of the drug in the US, loses its 180-day market exclusivity. Under an agreement between the two drugmakers a portion of the profits from sales of Ranbaxy’s version of Lipitor during the first six months will be given to Teva.
Although terms of the deal remain confidential, Teva spokeswoman Denise Bradley said the Israeli company isn’t supplying ingredients for Ranbaxy’s drug, a scenario that some analysts had suggested. According to FDA spokeswoman Sandy Walsh, the active ingredient in Ranbaxy’s Lipitor generic has been approved to be produced at two sites, one of which is at the company’s plant in Toansa in India. The other is undisclosed, she added. The agency noted that Ranbaxy will complete manufacturing of the drug at its unit in New Jersey, the U.S.
“It appears that the Teva deal was like an insurance policy for Ranbaxy in case the approval didn’t come,” remarked Kotak Institutional Securities analyst Priti Arora. “Now that Ranbaxy got the clearance, it’s possibly free money for Teva,” the analyst commented.
Credit Suisse had estimated that a generic version of Lipitor launched by Ranbaxy where Teva manufactures the product could generate about $100 million in pretax profit for the Israeli company. With Ranbaxy receiving approval for in-house manufacturing of the drug, Teva’s share of profit in the fourth quarter will possibly be “some amount less than the top end of the range,” Credit Suisse analysts Michael Faerm and Judah C. Frommer said.