Zocor price cut may not hit Ranbaxy

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Ranbaxy Laboratories will not lose much by Merck & Co's attempts to lower price of its simvastatin drug sold under Zocor brand, a Ranbaxy official said on Wednesday.

The US Food and Drug Administration has on Friday awarded Ranbaxy 180 days of marketing exclusivity for 80-milligram simvastatin.

"It is very natural for prices of a drug to go down when its generic hits the market. This is the dynamics of the market and we have factored that in our plans," the Ranbaxy official said.

Merck, whose cholesterol-lowering drug Zocor went off-patent last Friday, has been charged by a US senator of anti-competition policies by colluding with insurance firms to create lower copay for Zocor than for its generics.

Copay is part of the healthcare cost paid by an insured person, while the insurance companies pay the balance. Copays can differ from one prescription to another.

If Merck succeeds in bringing a large number of insurance companies into its fold, it will seriously impact sales of Zocor copycats.

"Merck has so far tied up with one insurance firm. There are hundreds of other insurance companies, and it may not be possible for Merck to have similar agreements with all of them," the Ranbaxy official said.

According to IMS-MAT data, annualised sales for simvastatin in March were US $4.6 billion, of which the 80-milligram tablet accounted for $513 million. Teva Pharmaceuticals will have the 180-day marketing exclusivity for other strengths"�5 mg, 10 mg, 20 mg and 40 mg.

Analysts feel Merck's decision to lower prices will certainly reduce the marketshare for Ranbaxy, but the impact is not seen significant.

"Studies have shown people who take lower strengths of Lipitor (atorvastatin) can get similar results from the highest strength of simvastatin (80mg)," said Surya Patra, analyst, Networth Stock broking.

He said at least 30 per cent Lipitor patients take the lower strength of the drug and many of them are likely to shift to a much cheaper alternative from Ranbaxy.

Lipitor, the largest medicine brand in the world, is a patented statin drug from Pfizer, and hence, expensive. On the other hand, the impact is seen greater on Dr Reddy's Laboratories, which will sell the authorised generic of Zocor.

This is because Dr Reddy's will have to benchmark its prices against Merck's. Authorised generics are copycats of an off-patent drug that the innovator authorises another company to manufacture and market in lieu of royalty.

"Dr Reddy's authorised generics will be vying against Merck's original drug, and people will most likely opt for the latter. This doesn't bode acwell for Dr Reddy's," said an analyst from a domestic brokerage.

The patent expiration and then the subsequent price competition will also make simvastatin one of the lowest-priced medication for high cholesterol, giving it a significant lead over other high-priced statin prescriptions such as Lipitor, Vytorin and Crestor.