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Generic Prozac upheld
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May 31, 2001: 4:41 p.m. ET
Shares of Barr and Pharmaceutical Resources rise, but Lilly stable
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NEW YORK (CNNfn) - Shares of Barr Laboratories Inc. and Pharmaceutical Research Inc. both jumped Thursday on news an appeals court panel upheld a ruling allowing marketing of generic Prozac. But shares of Eli Lilly and Co., makers of the antidepressant, barely budged.
Barr said Wednesday it intends to launch the drug Aug. 2, while Lilly said it would review legal options, which include a rehearing or appealing to the Supreme Court. On Thursday, Pharmaceutical Research said it intended to market a generic version in the third quarter.
Barr (BRL: up $3.57 to $71.27, Research, Estimates) shares rose about 5 percent, and Pharmaceutical Research (PRX: up $3.86 to $24.96, Research, Estimates) stock soared about 18 percent, but Lilly (LLY: unchanged at $84.70, Research, Estimates) edged down less than 1 percent.
Mark Ravara, analyst with Mehte Partners, told CNNfn's Street Sweep the decision by the panel was expected and priced into Lilly's stock.
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With five or six generic versions of Prozac on the market, the price could fall 80 percent. | |
"When the decision first came out it was a surprise, but once the decision came out Lilly and all the analysts decided the chances of overturning that decision were all very small," Ravara said.
Prozac, with sales of about $2.5 billion last year, has boosted Lilly into the top 10 U.S. drugmakers.
But Ravara said Lilly's strong pipeline should help the company overcome the Prozac setback.
"They will have a lot of new drugs that will be coming out in the next couple of years that will help take up the slack of the Prozac expiration," he said.
Pomona, N.Y.-based Barr said it expected to receive 180 days of exclusivity as the only seller of a generic Prozac.
Pharmaceutical Resources said it plans to offer a generic form of the drug in the third quarter, including a larger 40 mg tablet.
Ravara said when five or six generic versions of Prozac come on the market, the price could drop about 80 percent.
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Lilly noted in a statement that the three-judge panel used different reasoning than in its previous decision in 2000. Both decisions deny the validity of a patent slated to expire in late 2003 that covers the way Prozac works in the brain, said Lilly spokesman Edward West.
Prozac is a "selective serotonin reuptake inhibitor," or SSRI, meaning that it regulates the amount of the chemical serotonin available in the brain. Some cases of depression have been traced to serotonin levels.
In August 2000, the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., determined that Lilly had "double-patented" Prozac. The court peeled back patent protection to 2001 from December 2003, sending Lilly's stock reeling and Barr's soaring. Lilly's stock fell to $75 from $107 on August 9, 2000, while Barr's stock surged to $72.13 from $46.44.
Analysts have said they expect Lilly to lose as much as 80 percent of its Prozac sales once the Indianapolis-based drugmaker faces several generic competitors.
Mike Krensavage of the brokerage firm Raymond James & Co. estimated this week that Lilly's sales of Prozac would fall as low as $590 million next year if generics were on the market, about 77 percent lower than 2000. 
-- from staff and wire reports
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