Nexium could face early generic challenge, say analysts

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AstraZeneca's Nexium could face generic competition much sooner than expected, and would-be investors should be wary, said brokerage firm Sanford C. Bernstein in an analyst note.

The PPI, AstraZeneca's top-selling drug and one of the biggest brands in prescription drug advertising, isn't due to lose patent protection until 2018, but given Teva's surprise “at risk” generic launch against Wyeth's Nexium rival Protonix in December, Bernstein analysts say it's even odds that Nexium could face generic competition sooner – perhaps as early as April.

Ranbaxy, Bernstein notes, has “first filer” status against Nexium, and their 30-month stay ends in April. Teva's 30-month stay ends in July. The Feb. 25 note speculates that Ranbaxy and Teva could team up for an April launch.

An early generic launch against Nexium could hit AstraZeneca's earnings per share by 11% annually, the firm projected, and Merck's EPS by around 5%. Merck collects a 27% royalty on US sales of the drug, which boasts US sales of around $3 billion annually.

From Q1 2006 through Q3 2007, consumer advertising for the brand totaled $230 million, according to TNS Media Intelligence – placing Nexium behind only Ambien and Lunesta in DTC spending. Saatchi & Saatchi Healthcare Communications handles both consumer and professional advertising for the brand.
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