Recently,
AstraZeneca
(
AZN
) received disappointing news related to Seroquel XR which is
approved for schizophrenia, bipolar disorder and major depressive
disorder. The UK High Court has ruled against the formulation
patent protecting Seroquel XR (quetiapine fumarate) and rendered it
invalid. Seroquel XR is marketed as Seroquel XL in the UK.
Teva UK Limited and
Teva Pharmaceuticals Limited
(
TEVA
) had challenged AstraZeneca's Seroquel XR patent in December 2010.
Similar challenges were made by Accord Healthcare Limited, Intas
Pharmaceuticals Limited, Hexal AG and Sandoz Ltd. in March and
April 2011. We note that the patent covering the formulation of
Seroquel XR expires in 2017 in both the EU and the US.
In contrast to this decision, on March 7, 2012, the District
Court in The Hague, Netherlands, had ruled in favor of AstraZeneca
and found Seroquel XR's formulation patent to be valid. The company
is engaged in several other lawsuits related to Seroquel XR's
patent.
Just a few days ago, AstraZeneca took legal action against the
US Food and Drug Administration (FDA) challenging the agency's
decision to reject AstraZeneca's Citizen Petitions on March 7,
2012. The company had filed a lawsuit in the US District Court for
the District of Columbia.
The Citizen Petitions were filed by the company for Seroquel IR
and Seroquel XR. They were filed to bar the FDA from approving any
generic versions of the drug that do not include warnings related
to hyperglycemia and suicidality in its label. The Seroquel
franchise generated sales of $5.8 billion in 2011. The loss of
patent protection and entry of generic drugs in the market will hit
AstraZeneca's top-line.
Neutral on AstraZeneca
We currently have a Neutral recommendation on AstraZeneca. The
stock carries a Zacks #3 Rank (Hold rating) in the short run. Even
though we are encouraged by the company's focus on the
high-potential emerging markets, we remain concerned about the
generic competition faced by its key products. In 2011, the company
lost almost $2 billion revenues to generic competition.
The company is looking to drive the bottom-line through
cost-cutting initiatives and share buybacks. The weak late-stage
pipeline coupled with the slow Brilinta uptake also bothers us.
ASTRAZENECA PLC (
AZN
): Free Stock Analysis Report
TEVA PHARM ADR (
TEVA
): Free Stock Analysis Report
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