The Hindu Business Line : As Zocor patent expires, Merck plays price-game

What's involved
Zocor is a $4.5-billion drug
Merck is reported to have offered Zocor at $10, as compared to its earlier price of $25
This will blunt the onslaught of generic companies

Mumbai , June 22

Price woes hover over Indian generic companies that plan to launch the generic version of cholesterol-lowering drug Zocor, even before Merck's patent on the drug expires today. Low-cost generic drugs are allowed to make a medicine when the patent on it expires and this usually drives price down by up to 90 per cent.

Price war

Zocor is a $4.5-billion drug. Merck seems to have taken some thunder out of generic companies like Israel's Teva and India's Ranbaxy by cutting its price on the drug being offered to some managed-healthcare companies in the US, even before its patent on Zocor expires today.

The company is reported to have offered Zocor at $10, as compared to its earlier price of $25, according to international agency reports.

This will blunt the onslaught of generic companies, agreed an analyst tracking the development. Merck's move will also hurt Dr Reddy's Laboratories (DRL), even though the Hyderabad-based company has an agreement with Merck to make the generic version of Zocor for it. Even this strategy of "authorising" generics is an initiative to beat low-cost drug-makers at their own game.

DRL now has to offer the generic version to Merck at a price below than Merck's offer, he observed. Sensing this, the company's shares on the Bombay Stock Exchange (BSE) closed 6.23 per cent down, at Rs 1,264.35.

Mired in litigation

Zocor's generic version, Simvastatin, is already mired in litigation with Teva trying to get 180 days exclusivity on four strengths (5 mg, 10 mg, 20 mg and 40 mg) of the drug and Ranbaxy looking at exclusivity on 80 mg of the same drug (estimated to be only $500 million of the total Simvastatin market).

An approval is awaited from the regulatory United States Food and Drugs Administration (USFDA) and only then Teva and Ranbaxy can get exclusivity on their versions of the drug. But with the patent expiring on Thursday, generic companies with preliminary USFDA approvals would be able to get into the fray anyway, said an analyst of what is a complex legal maze. Ranbaxy's share was down 1.20 per cent on the BSE at Rs 370.55.

Other Indian generic companies such as Aurobindo and Biocon are also believed to be waiting in the wings, but they are not looking at exclusivity, the analyst said. So they can expect a 90 per cent fall in price of Simvastatin in the US, an experience that was seen with antibiotic ciprofloxacin when its patent expired in the same month two years ago.