Rival puts AstraZeneca under pressure

Pharmaceuticals giant AstraZeneca saw its share price fall 2% today after a rival applied to make a copycat version of its key ulcer treatment.

Astra said Ranbaxy Laboratories, based in India, had filed an application to the US authorities to create a rival to Nexium, used to treat stomach ulcers and heartburn.

However, Astra said it was confident in its ability to protect Nexium, which is protected by patent until 2018.

It has 45 days to decide whether to start a patent infringement lawsuit that would automatically bar approval of Ranbaxy’s Abbreviated New Drug Application (ANDA) for 30 months or until a court decision, which may come before then.

Nexium is one of Astra’s flagship products and is available in more than 75 markets including the United States, Canada and major European countries. It reported sales of $2.25bn (€1.9bn) in the first half of Astra’s current financial year.

Astra said in a statement to the stock exchange: “AstraZeneca is evaluating Ranbaxy’s notice and continues to have full confidence in its intellectual property protecting Nexium.”

Rival companies are allowed to produce copies of existing drugs once patents have expired, although these rulings are frequently challenged.

Ranbaxy is the second company to attempt to copy Nexium. Nexium is already challenging an application by India’s Dr Reddy’s Laboratories.

Analysts said Ranbaxy’s move was widely expected.

Morten Herholdt, analyst at Barclays stockbrokers, said the possibility of generic competition to Nexium was clearly a risk overhanging the stock but added: “On balance, we do not expect it will materialise in the medium term.”

Ranbaxy’s products are sold in more than 100 countries and the group has manufacturing operations in seven countries.

AstraZeneca was amongst the heaviest FTSE 100 fallers today, its stock 61p lower at 2606p.