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AZ faces early competition to Nexium in the US

Korea's Hanmi and Amneal Pharmaceuticals launches first generic rival

AstraZeneca Nexium production The first copy of AstraZeneca's big-selling gastrointestinal treatment Nexium has been launched in the US by Korea's Hanmi and Amneal Pharmaceuticals.

Hanmi's product is not a direct generic of Nexium (pictured right) - which has esomeprazole sodium as its active ingredient. Rather, it is a esomeprazole strontium product which was approved in the US via a route known as 505(b)2, which relies in part on data from existing drugs and so require a much smaller clinical dossier.

AZ tried to block the launch of the product, but at the end of September an appeals court lifted an injunction first imposed in 2012. Patent infringement litigation between the companies is still outstanding - with a verdict due early next year - so Hanmi and Amneal are at risk of legal comeback if that decision goes AZ's way.

Analysts at Panmure Gordon (PG) note that - as it is not directly equivalent (i.e. an AB rated generic) to Nexium - esomeprazole strontium is unlikely to make big inroads into the brand, which is AZ's second biggest product.

"It is unclear what sort of quantities Hanmi has risk appetite for so this may be a storm in a tea cup," writes analyst Savvas Neophytou in a note to clients this morning. However, he adds that the launch could place pricing pressure on Nexium in the US and threaten arrangements with managed care organisations.

"In a worst case scenario, this week's launch may also trigger other generics entering the market," said Neophytou, pointing out that while the first copy of a drug launched at-risk onto the market faces the possibility of triple damages if 'wilful' brand damage can be claimed, the risk scales down for subsequent entrants.

AZ's American Depository Receipts (ADRs) were unmoved by news of the launch, suggesting investors stateside are choosing to believe that the impact on Nexium will be limited.

AstraZeneca's first patent for Nexium in the US is scheduled to expire on 27 May 2014, at which point an AB-rated generic from Teva is due to be launched under license from AZ. Other AZ patents provide protection for the drug (unless successfully challenged) out to 2019.

Article by
Phil Taylor

18th December 2013

From: Sales

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