Alembic Pharma’s Shares Jump Over Potential Pristiq Para IV Opportunity

The shares of Alembic Pharma rose as high as by 6 per cent today after the company reported that it has a possible Para IV filing on its ANDA for Desvenlafaxine Succinate extended-release tablets of 50 mg and 100 mg (Brand Pristiq – Brand Pfizer).  Pristiq is an anti-depressant drug. The market for Pristiq was USD 577 million in 2011 and it has the potential to touch USD 1 billon annually.

Alembic is a sponsor and manufacturer of the ANDA and it will be marketed by the U.S. company Breckenridge. Both these companies are co-defendants against the Pristiq patent. Pfizer has filed litigation against 11 companies as per recent news reports to defend the Pristiq patent. Two giant American drug companies, Mylan and Watson, are also seeking approval for this product and they may also be having a Para IV filing which will give them 180 days of exclusivity. The Indian pharmaceutical company Zydus Cadila’s wholly-owned subsidiary, Zydus Pharmaceuticals (US), has also been sued by Pfizer for the same patent infringement.

Pfizer in a shock verdict lost the patent for its blockbuster drug Lipitor to the Indian company Ranbaxy in December last year. The potential revenue loss for the company was huge as it could not maintain its market share over the last six months. With many companies now entering the Lipitor market, Alembic Pharma may see further erosion of its market share.

We spoke to the Investor Relations Department of Alembic Pharma and understood that the company has not confirmed the exclusive FTF status and that many companies, including Alembic, Watson and Mylan, would get to sell this drug by the second half of 2014. The patent of this drug was to expire in 2022.

Considering that this product may touch 1 billion of revenues and three companies will start selling the product, the potential revenues for Alembic and Breckenridge would be about Rs 150-190 crore. It is not clear how this partnership would work in terms of revenue sharing. With about 50 per cent of the revenue to be shared with Breckenridge, Alembic would earn about Rs 75-95 crore (5-6 per cent of the FY12 topline) after it launches the product.