Shares of Ranbaxy Laboratories on Thursday fell 7.67 per cent on the Bombay Stock Exchange to Rs 552.25 at close, after top investment banks like JP Morgan and CLSA said the out-of-court settlement with Pfizer over cholesterol pill Lipitor announced on Wednesday would delay the launch of the drug in the US by well over a year.
Had the deal not been struck, analysts said, Ranbaxy could have launched its generic Lipitor (atorvastatin) in the US by March 2010. Now, it will be able to do so only in November 2011 -- a delay of 21 months.
With Lipitor sales in the US declining, thanks to Merck & Co's rival cholesterol pill Zocor, any delay will further crimp Ranbaxy's generic Lipitor revenues, they feared.
At the same time, there is a huge upside for Pfizer in the deal. Lipitor is the world's largest-selling drug (2007 sales: $12.7 billion) and the delay in the launch of the generic clone could help it save as much as $5 billion in profit, the analysts added. The Pfizer stock was down 0.16 per cent in early trade in New York.
Some analysts even said that Pfizer was now unlikely to make a counter-bid for Ranbaxy -- Japanese drug maker Daiichi-Sankyo had last week said it would acquire the Singh family's 34.5 per cent stake in a friendly takeover.
The two companies had on Wednesday announced that Ranbaxy would drop all challenges to Pfizer's patents on Lipitor. In turn, Ranbaxy would be free to launch the drug in the US, the world's largest drug market, by 2011 with 180-day exclusivity, though it would not get any cash compensation upfront.
"The contours of the settlement are not clear," said Devinder Singh Brar, former Ranbaxy CEO, who had launched the Lipitor challenge in 2003, adding: "From what is known, this is a case of deferred revenue."
A few others also said that it was not clear if Pfizer was free to "authorise" another pharmaceutical company to launch generic Lipitor during Ranbaxy's exclusive 180 marketing days.