What a Generic Celebrex Means for Pfizer and for Actavis

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While this was generally a known event coming down the pipe, Celebrex now has a generic competitor in America. The drug company Actavis PLC (NYSE: ACT) announced on Wednesday that it has launched a generic version of Celebrex in 50 mg, 100 mg, 200 mg and 400 mg capsules. The generic COX-2 selective nonsteroidal anti-inflammatory drug (NSAID) is part of a settlement agreement with Pfizer Inc. (NYSE: PFE). 24/7 Wall St. wanted to see what this means for Pfizer and Actavis alike, knowing that this is one of Pfizer’s top drugs by annual sales.

IMS Health data showed that Celebrex had U.S. sales of roughly $2.4 billion for the 12-month period ending June 30, 2014. What matters here is that this is one of Pfizer’s best-selling drugs, with blockbuster drug status (over $1 billion in annual sales).

Celebrex is used for relief in the treatment of osteoarthritis, rheumatoid arthritis and ankylosing spondylitis, as well as for the management of acute pain in adults. Again this move was largely expected, and Pfizer did note in its 2013 annual report that it expected to lose exclusivity for Celebrex in developed Europe in 2014. Celebrex is also on generic in some countries outside the United States.

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Drugs.com has Celebrex as ranked 21st in sales among all U.S. pharmaceuticals, but that was as of the fourth quarter of 2013. Thomson Reuters has consensus estimates for Pfizer of $49.3 billion in 2014 total revenues and $48.3 billion in 2015 total revenues. This generic Celebrex is one of the contributing factors for that decline.

With Dublin-based Actavis as the winner here, we wanted to see what the generic launch could mean for the company. First and foremost, the stock was down 1.2% at $260.40 after the news broke, against a 52-week range of $156.40 to $272.75. The Thomson Reuters consensus estimates for Actavis revenues were $12.6 billion in 2014 and $15.5 billion for 2015.

What is unknown is how the public will react in its prescriptions. Some consumers and patients rebel against generic drugs until they have more time to see how they are tolerated. Pfizer’s 2013 annual report stated:

In 2013, Lyrica, the Prevnar family, Enbrel, Celebrex and Lipitor each delivered at least $2 billion in revenues, while Viagra, Zyvox, Norvasc, Sutent and the Premarin family each delivered over $1 billion in revenues. Viagra lost exclusivity in most major EU markets in June 2013. We lost exclusivity for Lyrica in Canada in February 2013.

Pfizer shares were down 0.3% to $31.85 at the time that the Dow Jones Industrial Average was down 0.7%. Had this been an unexpected event, Pfizer shares would almost certainly be down much more than the broader stock market.

The big pharma giant’s 52-week trading range is $27.51 to $32.96, and the consensus analyst price target is $34.19. Pfizer also comes with a 3.3% dividend yield.

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