NEW YORK – Alpharma Inc. (ALO) on Friday began selling a cheaper generic version of Pfizer Inc.'s (PFE) $3 billion a year epilepsy drug Neurontin (search) without waiting for a court ruling on Pfizer's request to block the copycat medicine.
Pfizer (search), meanwhile, said it was considering launching its own generic version of the drug, known as gabapentin — a move that would allow it to retain some of the massive revenue it stands to lose due to competition from cheap generics.
A temporary restraining order Pfizer had sought to halt the sale prior to the U.S. District Court ruling was denied on Friday, Alpharma (search) said, adding that it continues to sell its generic Neurontin.
Alpharma spokeswoman Kathleen Makrakis said their drug had already been shipped to wholesalers in 100, 300 and 400 milogram doses.
"We suspect Pfizer will lose the majority share of $2.4 billion in U.S. sales," said Sena Lund, an analyst for Cathay Financial.
The world's biggest drug maker said it will seek legal remedies, including damages based on lost profits, should a federal judge rule that Alpharma's product infringes on Pfizer's patent.
U.S. District Court Judge John Liftland is expected to rule on Pfizer's request to block Alpharma's drug in the near future but his court clerk said that ruling would not come on Friday and might not even be issued next week.
Pfizer's stock has fallen in recent weeks in anticipation that generic competition for one of its biggest drugs was imminent. It dropped another 19 cents on Friday after being up about 1 percent for most of the day.
But Pfizer's aggressive response took its toll on shares of Alpharma, which finished down 6 percent.
"There is concern out there on what happens with pricing if Pfizer launches its own generic and what the opportunity is for Alpharma," said Ken Cacciatore, an analyst for SG Cowen.
He said investors may also be worried about the risk Alpharma now faces should the court rule against it.
"Some investors may be concerned they are jumping the gun and trying to force the judge's hand and that that could get a negative reaction from the court," Cacciatore said.
As the first company granted permission by U.S. regulators to sell a generic version of the drug, Alpharma would have 180 days of exclusivity before other generics can hit the market.
But analysts said Pfizer would be under no obligation to wait should it decide to sell a generic of its own drug.
Pfizer had been hoping to get a follow-up prescription epilepsy and pain drug called Lyrica on the market before Neurontin faced generic competition.
But Lyrica was hit with a regulatory setback last month when the FDA issued an approvable letter rather than outright approval, indicating that certain conditions must still be met before the drug can be sold in the United States.
"It's going to be harder to launch Lyrica with the existence of generic gabapentin," SG Cowen analyst Steve Scala said. "If the drug (Lyrica) is really better, then presumably there will be a market for it. But it depends on the perception of prescribers."
Scala said having Neurontin patients switch to Lyrica before the generic gabapentin was available "would have been a much better scenario for Pfizer."
Generic drug maker Ivax Corp. (IVX) said it would begin selling gabapentin capsules once Alpharma's 180-day exclusivity period ends. Others are sure to follow suit.
Alpharma said it will update its financial 2004 outlook in the next several weeks as the gabapentin market develops.
Pfizer's closed at $29.80 while Alpharma shares closed down $1.10 at $17.12 on the New York Stock Exchange.