Ranbaxy Laboratories and Dr Reddy's Labs may soon be pitted against each other in a battle in the United States to capture the unlocked opportunity of cholesterol drug, Simvastatin, which goes off patent in late June this year. Simvastatin, sold as Zocor by innovator Merck & Co, generates $5 billion in global sales every year.
Dr Reddy's will be the first Indian company to market authorised generics of Zocor, which is a generic version launched in conjunction with the innovator company.
Ranbaxy, on the other hand, has received a favourable verdict in a district court in the US that entitles the company to a 180-day exclusivity period in the market once the patent expires.
The court called it an 'unlawful' ruling against the US Food & Drug Administration order denying the exclusivity period to the generic challenger.
The court has sent the issue back to the US FDA. Grant of the exclusivity period would mean a windfall for Ranbaxy and Teva in the six-month period.
Ranbaxy will have the exclusive rights to market the drug for the 80 mg dosage, while Teva, through its acquisition of Ivax, will have similar rights to 10, 20 and 40 mg dosages.
Dr Reddy's being the authorised generics company, owing to an agreement with the Merck, will be the third player.
The patent on Simvastatin was delisted last year from the US book of patents, called the Orange Book. This had created a furore and was viewed as a way to fend off challenges by the generic players.
"The 80 mg Simvastatin market is worth about $500 million. We are very happy with the court's decision and would await the US FDA final approval before the launch," said Malvinder M Singh, chief executive officer, Ranbaxy.
Dr Reddy's, given its 10-year experience in the US market, is confident of emerging as a market leader. A Mumbai-based analyst said the favorable ruling could push up Ranbaxy's earnings per share from the current Rs 16 to Rs 19.50.
Once the six-month period is over, a slate of other generic players - including Indian companies such as Aurobindo, Biocon - would jump in, leading to an eventual dip in revenues.
In the past, drugs going off patent have seen a price erosion of up to 95 per cent, leaving the 180-day exclusivity as the main revenue earner.
The shares of Ranbaxy climbed 10.46 per cent to Rs 522 on Tuesday, while Dr Reddy's rose by 17.5 per cent to Rs 1,682 on the Bombay Stock Exchange.