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The US Court of Appeals ruling on August 9 2000, reducing
Prozac's (fluoxetine) patent protection by almost three years,
means that the antidepressant market could face competition
from generic Prozac as early as 2001.
Antidepressants were the world's third largest therapeutic
class in 1999 according to IMS HEALTH's World
Review, with sales of $11.7 billion - up 16% from 1998.
Eli Lilly intends to appeal against the ruling - the effect
on its sales and the impact on the antidepressant market overall
remains to be seen.
Although Prozac is still the leading antidepressant, its global
market share has been declining since 1995. This is due to
increasing competition from more recent entrants into the
market and generics. Additional competition is also expected
in the near future with the US launch of Vestra (reboxetine)
from Pharmacia.
Source: MIDAS
The USA is the largest market for antidepressants, with the
highest level of growth, and is the main driver behind overall
growth in this therapeutic class. Markets in Europe have shown
much lower levels of growth and Japan has been relatively
flat over the past five years.
Key Drivers to the US Generics Market
As physicians and patients are presented with a choice
between generic and brand for the first time, what are the
market drivers that will come into play?
According to IMS HEALTH's Generics Insight, the US generics
market is being positively influenced by the following events:
- Generics are the key cost containment mechanism for
multisource drugs in pharmaceutical benefit plans, and
the move of patients to a managed care environment is
driving generic growth
- Reimbursement and dispensing fees for pharmacists are
structured so that it is in the pharmacists' interests
to provide a generic product. A number of states oblige
pharmacists by law to dispense a generic
- Higher co-payment or reimbursement differentials between
generics and brands will increase the rate of generic
uptake by patients.
Most doctors are now comfortable with the quality and role
of generics in keeping costs down, and accept generic substitution.
Patients are also becoming increasingly willing to be given
generics, especially in view of co-payment differentials.
However, around 10% of patients continue to insist on a branded
product.
Strategies to Combat Generic Erosion
For the brand owner, a variety of options are available to
combat generic erosion:
- Pricing strategies to reduce revenue erosion
- Product differentiation, including the launch of a
new generation of product or new formulations
- Market segmentation including new product indications
- Promotional campaigns
- Launching own version of generic
Although the threat of generic fluoxetine has come sooner
rather than later for Lilly, it has come as no surprise and
Lilly has been preparing to maximize the potential of Prozac
for some time.
One approach Lilly has already taken to defend its lucrative
franchise is additional indications. Approval has already
been gained for obsessive-compulsive disorder, bulimia and
most recently premenstrual dysphoric
disorder (PMDD). Approval was granted in July 2000 for
Lilly to market fluoxetine under the trade name Sarafem, making
it the first prescription medication for PMDD.
Lilly has also filed for six months of additional marketing
exclusivity after performing clinical trials in the pediatric
population. This has been successfully attempted recently
by Schering-Plough, which has been granted a six month extension
on its Claritin (loratadine) patent. If granted, Lilly's marketing
exclusivity would last until August 2001.
A new formulation of Prozac, a 10mg tablet, was launched in
the USA in June 1999. The scored tablet can be split in half
so it offers greater dosing convenience for physicians. This
may prove to be particularly important because the generic
fluoxetine will be in capsule form. A once-a-week formulation
of Prozac is expected in 2001 and a combination product with
Lilly's antipsychotic Zyprexa (olanzapine) for refractory
unipolar depressed patients is also in development.
Lilly may also speed up the development of R-fluoxetine, licensed-in
from Sepracor, by reducing the initial indications to include
major depression only, in order to launch the product earlier.
Lilly's Future is Bright
Some analysts have speculated a potential loss for Lilly of
over $2 billion in sales in the first year following patent
expiry.
Lilly's Executive VP and CFO Charles E. Golden, stated: "We
expect to continue our strong earnings growth in the first
half of 2001 leading up to the generic entry in August. Then,
we'll likely see earnings decline in the second half of 2001
and the first half of 2002." He stressed that Lilly expects
continued strong growth of its newer products and is expecting
the launch of several others in 2001 and 2002. By 2003, double-digit
EPS growth should have resumed.
Lilly's recent growth has been less reliant on Prozac and
has started to come from some of their newer products. These
include Zyprexa, Evista (raloxifene) and the cancer drug Gemzar
(gemcitabine), plus its diabetes franchise - including the
co-promotional arrangement in the USA for Takeda's oral antidiabetic
Actos (pioglitazone). In a recent report from IMS HEALTH Consulting,
Actos was included on the list of products expected to achieve
blockbuster status by 2004.
Lilly spent nearly $1.8 billion on R&D in 1999 and analysts
have praised its pipeline as one of the best in the industry.
According to IMS HEALTH's R&Dfocus,
Lilly has over 30 unlaunched compounds in active clinical
development. Lilly has said it will focus on Prozac until
its last day of exclusivity, but that the drug is not its
future - it expects to submit up to 10 new products by the
end of 2002, and will expand its sales force both in the US
and internationally.
Finally…
Lilly faces the prospect of generic fluoxetine sooner
than expected but will put up a good fight to maximize Prozac's
remaining potential. Although this event may have a short
term effect on its revenue, Lilly has a number of new products
that are performing well and showing strong growth.
In terms of the overall antidepressant market, the effects
are likely to be minimal. The US market has a high level of
growth that should continue as newer products come onto the
market.
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