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Actavis Challenges Patents

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Actavis, Inc. (ACT) recently announced that it is seeking FDA approval for its generic versions of Fresenius Kabi’s Diprivan and Bayer’s (BAYRY) Safyral. While Diprivan is an intravenously administered sedative and anesthetic, Safyral is an oral contraceptive.

Both Fresenius Kabi and Bayer have filed patent infringement lawsuits against Actavis for their respective drugs. The filing of the lawsuits within the stipulated time period under the Hatch-Waxman Act ensures that the FDA cannot grant final approval to Actavis’ generics for up to 30 months or the court’s decision, whichever is earlier.

According to IMS Health, total US sales of branded and generic versions of Diprivan during the 12 months ended Apr 30, 2013 were $212 million. Meanwhile, Safyral sales in the US during the same time period were about $19 million, according to IMS Health. Actavis believes it was first-to-file an abbreviated new drug application (ANDA) for a generic version of Safyral - if this is the case, Actavis would be entitled to 180 days of exclusivity on gaining FDA approval for its candidate.

Meanwhile, Actavis also launched its generic version of Novartis’ (NVS) Zometa in several countries in the EU. Actavis was first to market in Germany, Spain, Sweden, Romania and Austria. Zometa is approved for the prevention of skeletal related events in adults with advanced malignancies involving bone and the treatment of adults with tumor-induced hypercalcemia. Zometa sales in Europe, as per IMS Health, were €269.5 million in 2012.

While Actavis continues to work on driving generic product sales, the company is also working on strengthening its branded product portfolio. Last month, Actavis announced its intention to acquire Warner Chilcott plc (WCRX) which will result in the creation of a leading global specialty pharmaceutical company with combined annual revenues of about $11 billion. The combined company will hold the third position in the US specialty pharmaceutical market with annual revenues of about $3 billion.

Actavis currently carries a Zacks Rank #2 (Buy). We are positive on the Warner-Chilcott deal which makes strategic and financial sense.

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