Forest Laboratories Inc. (FRX) and partner Merz GmbH & Co. KGaA recently entered into a patent litigation settlement agreement with about 10 companies that were seeking to launch their generic versions of Alzheimer’s drug Namenda (memantine). As per the settlement agreement, the generic version of the drug will enter the market on January 11, 2015, three months before the patent expires in April 2010. This settlement agreement is subject to review by the US government.
While Forest Labs and Merz settled the litigation with Watson Pharmaceuticals Inc. (WPI), Dr. Reddy’s Laboratories Ltd. (RDY), Mylan Inc. (MYL), Teva Pharmaceutical Industries Ltd. (TEVA) and a few other companies, the dispute is still ongoing with certain other generic manufacturers. We believe Forest Labs and Merz will seek to settle with these companies as well in the near future.
Namenda is a major contributor to Forest Labs’ top-line. The product accounted for about 29% of total revenues in fiscal 2010. The drug exited fiscal 2010 with a 34.8% share of total prescriptions in the Alzheimer’s market. During the recently reported first quarter of fiscal 2011, Namenda sales came in at $307.8 million, representing a year-over-year increase of 18.7%.
The company recently gained US approval for a once-daily extended-release (XR) formulation of Namenda (28 mg). Forest Labs and Merz are currently working on a suitable commercialization plan for the product.
We currently have a Neutral recommendation on Forest Labs. We remain concerned about the strength of Forest Labs’ pipeline relative to the loss in sales that will come with the Lexapro (2012) and Namenda (2015) patent expirations. With Lexapro losing patent protection in March 2012, roughly half the company’s top line will be at risk from generic competition. Given the situation, we believe that Forest Labs will continue to seek in-licensing and acquisition activities to grow its pipeline.
While Forest Labs and Merz settled the litigation with Watson Pharmaceuticals Inc. (WPI), Dr. Reddy’s Laboratories Ltd. (RDY), Mylan Inc. (MYL), Teva Pharmaceutical Industries Ltd. (TEVA) and a few other companies, the dispute is still ongoing with certain other generic manufacturers. We believe Forest Labs and Merz will seek to settle with these companies as well in the near future.
Namenda is a major contributor to Forest Labs’ top-line. The product accounted for about 29% of total revenues in fiscal 2010. The drug exited fiscal 2010 with a 34.8% share of total prescriptions in the Alzheimer’s market. During the recently reported first quarter of fiscal 2011, Namenda sales came in at $307.8 million, representing a year-over-year increase of 18.7%.
The company recently gained US approval for a once-daily extended-release (XR) formulation of Namenda (28 mg). Forest Labs and Merz are currently working on a suitable commercialization plan for the product.
We currently have a Neutral recommendation on Forest Labs. We remain concerned about the strength of Forest Labs’ pipeline relative to the loss in sales that will come with the Lexapro (2012) and Namenda (2015) patent expirations. With Lexapro losing patent protection in March 2012, roughly half the company’s top line will be at risk from generic competition. Given the situation, we believe that Forest Labs will continue to seek in-licensing and acquisition activities to grow its pipeline.
Read the full analyst report on “FRX”
Read the full analyst report on “WPI”
Read the full analyst report on “RDY”
Read the full analyst report on “MYL”
Read the full analyst report on “TEVA”
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