Wyeth (WYE) is unexpectedly facing generic competition for its top drugs, most notably its blockbuster heartburn treatment Protonix. Generic Protonix is expected to contribute to flat sales and a possible earnings decline for Wyeth in 2008. Wyeth plans to reduce its work force by 4% to 6% by mid-year to cut costs. THE DRUG: Protonix is usually taken as a tablet, once-daily, for treatment of erosive acid reflux, a condition that can cause heartburn. It belongs to a class of drugs called proton-pump inhibitors, or PPIs, which were introduced in the late 1980s and work by turning off acid-producing pumps in the stomach. Protonix's active ingredient is pantoprazole, and it also comes in an intravenous formulation. Approved by the U.S. Food and Drug Administration in 2000, Protonix costs about $4.50 per tablet, Wyeth said. Generic Protonix is listed on drugstore.com at about $3.60 per pill. THE OPPORTUNITY AND CHALLENGE: The global market for PPIs is huge: About $24.1 billion in 2006, making it the fourth-biggest therapy class, according to drug-data firm IMS Health. On Christmas Eve, Teva Pharmaceutical Industries Ltd. (TEVA) said it had begun selling generic Protonix in the U.S., despite the existence of a patent for Protonix that doesn't expire until 2010. Teva soon halted shipments amid talks with Wyeth to settle patent-infringement litigation, but no settlement has been announced. Wyeth itself began selling an "authorized" generic Protonix in partnership with Prasco Laboratories last week, while Caraco Pharmaceutical (CPD), owned by Sun Pharmaceutical Industries Ltd. (524715.BY), jumped in with a generic, too. PRESCRIPTIONS: Branded Protonix's share of total U.S. PPI prescriptions dropped to 6.7% in the week ended Feb. 1 from 16.7% in the week ended Dec. 21, according to drug-data firm Verispan. Generic Protonix, meanwhile, has already grabbed 10.5% of U.S. total prescription volume for PPIs. In comparison, market share for AstraZeneca PLC's (AZN) Nexium - the top branded PPI - was 27.9% last week. PROTONIX SALES: $461 million for fourth quarter ended Dec. 31, up 10% from a year earlier. Full-year 2007 sales rose 6% to $1.9 billion. THE COMPETITION: AstraZeneca's Nexium had 4Q sales of $1.3 billion, down 9% from a year earlier. Prevacid, marketed by a joint venture of Abbott Laboratories (ABT) and Takeda Pharmaceutical, had fourth-quarter sales of $550 million, down 22%. Johnson & Johnson's (JNJ) Aciphex, called Pariet in some regions, had 4Q sales of $347 million, up 9%. Other heartburn drugs include Santarus Inc.'s (SNTX) Zegerid and AstraZeneca's Prilosec. Procter & Gamble (PG) markets an over-the-counter version of Prilosec. WHAT WYETH SAYS: "While we will not be able to fully address the impact of the resulting loss of profits from the Protonix franchise, we have already made significant adjustments to our cost structure for 2008 to address the potential loss of revenue." - Wyeth Chief Executive Bernard Poussot, Jan. 31. WHAT WALL STREET SAYS: "The premature genericization of Protonix is not good news for the branded drug industry, already under pricing and regulatory pressure." - Morgan Stanley analyst Jami Rubin, Jan. 29. Goldman Sachs predicts branded Protonix sales will plunge 80% to $382 million in 2008. WHAT'S NEXT: Wyeth said last week that it intends to seek lost profits and other damages from Teva and Sun in a trial in federal court expected in the second half of this year. Teva said late last week that it hasn't re-launched generic Protonix and doesn't intend to ship additional product at this time. Some analysts believe a settlement is still possible that would restore Wyeth's market exclusivity. (This column is a periodic snapshot of the market performance of selected drugs and vaccines.) -By Peter Loftus, Dow Jones Newswires; +1-215-656-8289; peter.loftus@dowjones.com
