A generic version of Teva Pharmaceutical Industries Ltd (ADR)(NYSE:TEVA)’s Copaxone which has been developed by Mylan N.V.(NASDAQ:MYL) has been approved by the U.S. Food and Drug Administration. Copaxone is a blockbuster drug that is used in the treatment of multiple sclerosis.
The approval of the copaxone generic was a surprise to both Teva and Mylan since they had not been expecting it to happen so soon. This came a day after the FDA announced that measures would be introduced with a view to speeding up the approval of generics of complex drugs such as copaxone so that they can get to the market faster and assist in addressing the increasing cost of drugs.
Blockbuster drug
Copaxone is not only the leading therapy for multiple sclerosis in the world but is also the best-selling drug ever developed by Teva. Last year it generated revenues amounting to over $4 billion for the pharmaceutical giant headquartered in Tel Aviv, Israel.
According to Teva, the launch of the generic version of Copaxone was being done prior to the resolution of a couple of patent appeals. This implies that Mylan would end up paying significant damages in the event that Teva prevailed.
Two varying doses of the generic were approved by the FDA and this include the 40 mg dose and the 20mg dose. In this year’s second quarter, over 85% of the Copaxone prescriptions were made for the 40 mg dose.
Loss for Teva
According to analysts the approval amounted to a win for Mylan and a loss for Teva and projected that this would be reflected in both this year’s and next year’s earnings. Mylan’s first generic-version application for Copaxone was filed in 2009.
“Bottom line, this is incrementally positive for Mylan while for Teva both a negative surprise and a cash flow hit to 2018,” wrote Randall Stanicky, an RBC analyst, in a client note.
Two months ago U.S. Congress launched an investigation on drug pricing and Teva was among the pharmaceutical companies contacted over the cost of its multiple sclerosis drug. In 2017 the annual cost for the 20 mg dose of Copaxone is over $90,000 despite the fact that it was unveiled in 1996 and back then it used to cost approximately $8,000.
On Wednesday shares of Mylan N.V. rose by 16.20% to close the day at $37.80.