Merck & Co. Inc. (NYSE: MRK) is seeing one more drug drive off the patent cliff. News was released on Monday by Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) that it and Perrigo Co. (NYSE: PRGO) have launched a generic equivalent to Merck’s Temodar (temozolomide). Teva was first to file, making the product eligible for 180 days of marketing exclusivity under FDA guidelines.
Merck’s product website shows that Temodar is a prescription medicine used to treat adults with certain brain cancer tumors. The drug blocks cell growth, especially cells that grow fast, such as cancer cells. Merck also said that Temodar may decrease the size of certain brain tumors in some patients.
Teva will manufacture, market and distribute the product in the United States. Teva and Perrigo will share equally in the cost and profitability of the product. Temodar was represented as having annual U.S. sales of about $423 million, according to IMS data as of December 31, 2012.
While a $423 million drug sounds big, it is not even half of a “blockbuster drug,” at least not as it is concerned here regarding the U.S. sales. Merck’s total sales in 2012 were more than $47.2 billion. Teva’s annual 2012 sales were more than $20.3 billion, and Perrigo’s 2012 sales were just under $3.2 billion in its fiscal 2012 that ended in June. Teva’s market cap is more than $34 billion and Perrigo’s market cap is over $12 billion.
It is honestly hard to see any major expectation of a big dollar change here for the companies. When generics launch, they are always a portion rather than a match to the sale price of a drug. You also have a situation where the name-brand drugs get lowered in price once patent protection is off. This is effectively six months of marketing exclusivity and does not seem large enough to move the needle for any of the players on a substantial basis.