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Is Pfizer’s patent loss Ranbaxy’s gain: The battle for Lipitor





(Image source: Benzinga.com)

Way back when I was in B school the burning question in the Indian pharmaceutical industry was the expiring patents of the global pharmaceutical companies. The top among the list was Lipitor the cholesterol lowering drug that was fuelling most of Pfizer’s revenues.

Lipitor was the first drug to exceed $10 billion a year in sales, and accounted for almost one-quarter of Pfizer’s revenue in the last decade. But all that has changed once Lipitor comes off the patent list on November 30th. This allows companies like Ranbaxy to launch the generic version of Lipitor with a 180 day exclusive window.

Not to be outdone Pfizer has been preparing for this eventuality for some time and has already taken a series of steps to protect its revenues and its margins

The most notable among them is the tie up with Pharmacy benefit management (PBM) companies to pass on the discounts on to members of the pharmacy plans. The discounts are pretty significant and might lower the co- pay for members from $10 to $4. This might result in maintaining the current levels of subscription through the PBMs.

The other angle that Pfizer will do is to lower the price of the drug itself. This will help it compete against the prices set by the generic manufacturers Watson Pharmaceuticals and Ranbaxy.

Interestingly Watson has a licensing agreement with Pfizer under which Watson has to share profits from the sale of the generic version of Lipitor.

Ranbaxy has its own challenges and are currently under an FDA investigation.

The industry has been taking note of this issue. In September IBM came out with a life sciences study which indicated that the current challenges facing the global life sciences are here to stay unless the firms themselves change their model.

The study also indicates that firms might need to start viewing themselves as healthcare solutions providers and focus on health rather than on disease. For more on the study please visit http://ibm.co/pxQcxD.

While the Lipitor issue might settle down in a few years, larger issues remain in the global pharmaceutical industry.

What are your views on the same? Can the current Pharma model sustain itself or will there be a seismic transformation. Please do let me know.