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  • frankposting frankposting Sep 10, 2012 4:29 PM Flag

    The Second Wave Will Hit FRX on September 14

    Lexapro used to be the best seller for Forest Labs (FRX). It made $2.4B in 2011 (more than one third of Forest Labs revenue).

    The RE34712 patent for Lexapro expired on March 14, 2012. According with the rule, FDA usually grants 180-day exclusivity to the company who filed generic version at first. For Lexapro generic, Teva was the first filer. Just prior to patent expiration date, Forest Labs allowed Mylan to sell an authorized generic with about 35% discount, in order to save some market share for the brand. However, when Teva launched the first Lexapro generic on March 14, the actual discount rate was about 65%. Lexapro's revenue was down to about $300M for the March-quarter and further down to about $100M for the June-Quarter, 2012, comparing to about $600M in each of the March-quarter and June-Quarter in 2011.

    FDA allows non-first-to-file generics to enter the market followed the end of the exclusivity. September 14, 2012, is the end of the 180-day exclusivity for the first Lexapro generic. Therefore, about two-dozen generic versions (other than Teva's) of Lexapro will rush out of the gate to flood the market on September 14. The pharmacy distributors are well preparing for that. They will empty their inventory before the date, and load up their warehouse with cheap new generics.

    The competition is so strong with so many version, some small companies just
    discount the price as low as possible for grabbing any piece of the market. How low will Lexapro-generics' price go? Some analysts estimate that it will cut Lexapro Brand revenue to less than $30M quarterly. In previous experience from other generics, some small companies may cut the price into pennies a pill. That will make Lexapro Brand revenue meaningless for Forest Labs soon.

    The second wave of Lexapro generics will hit Forest Labs badly.

    Unfortunately, the generic waves will come back again in 2015 with Namenda generics in 2015 ($1.5B in risks on May 16, 2015, for the first wave, and on November 16, 2015, for the second wave).

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