Unfavorable Ruling for Pfizer - Analyst Blog

Pfizer Inc. PFE could start facing generic competition for Celebrex earlier than expected. The United States District Court for the Eastern District of Virginia has ruled that the reissue patent for the drug, which was to expire on Dec 2, 2015 (including 6 months pediatric exclusivity), is invalid.

Companies like Teva TEVA and Mylan MYL among others (Lupin, Apotex, and Watson) are looking to launch their generic versions of the drug in the U.S. on May 30, 2014 following the expiry of the basic compound patent (including 6 months pediatric exclusivity). This is a full 18 months before the expiry of the reissue patent. Pfizer intends to appeal the ruling.

Celebrex, a non-steroidal anti-inflammatory drug, is approved for the relief of the signs and symptoms of osteoarthritis, rheumatoid arthritis, and ankylosing spondylitis, and for the management of acute pain in adults. Celebrex sales in the U.S. were $1.9 billion in 2013, up 11%.

Pfizer is already facing generic competition for several products in its portfolio including Lipitor, Norvasc and Zoloft. These products are all facing declining sales due to generic competition. Additional patent expiries are expected in the coming years. The loss of patent exclusivity will make it challenging for the company to drive top-line growth. Pfizer, which currently expects earnings of $2.20 - $2.30 per share on total revenues of $49.2 billion - $51.2 billion in 2014 will most likely have to adjust its guidance if generic versions of Celebrex enter the market this year. Pfizer's shares were down 1.4%.

While Pfizer is a Zacks Rank #3 (Hold) stock, Teva and Mylan are better-ranked with both being Zacks Rank #2 (Buy) stocks. Another better-ranked stock in the health care sector is Gilead Sciences Inc. GILD - a Zacks Rank #1 (Strong Buy) stock.