Pharma investors fear the day a company's top-selling drug faces competition for the first time. At Indivior (INDV), that day is approaching worrying quickly. US drugs regulators have granted approval to two unbranded versions of the group’s opioid dependence remedy, Suboxone, sparking fresh concerns that it might face generic competition to its biggest product before its new release, Sublocade, has had time to generate sales momentum.
Indivior is no stranger to patent disputes. Ever since it was spun out of consumer goods giant Reckitt Benckiser (RB.) in 2014, it has been fighting the rise in the number of copycat versions of its drug. In 2016, its decision to halt the production of the original tablet version of Suboxone and switch patients to the tongue film strip (to halt competition from generic tablets) was criticised as anticompetitive and resulted in legal action from 35 states.
The ongoing disputes mean that both Dr Reddy’s and Mylan (the two companies that have received regulatory approval for their medicines) would be launching their products 'at risk', meaning they could face further legal backlash if they were found to be in breach of Indivior’s patent. But Dr Reddy’s was prepared to go ahead with its launch anyway, informing the market on 15 June that it had begun selling its product in the US. A worrying weekend for Indivior's investors ensued (not to mention the 20 per cent one day share price fall) before management secured a temporary restraining order to halt Dr Reddy’s generics sales until 28 June.
It’s understandable that management at Indivior are tetchy about competition. For a long time Suboxone was Indivior’s single marketed drug and it only recently managed to gain approval for Sublocade, the new improved version of the treatment. The arrival of a generic entrant is expected to take away 40 per cent of Suboxone’s market share, according to Numis, and the broker said it would be forced to cut its 2018 revenue and EPS forecasts by 22 per cent and 38 per cent, respectively, if just one competitor came to the market.
It’s true, Sublocade does have good sales potential – it only needs to be taken once a month, meaning patients are far more likely to stick with the treatment – but as it has only been on the market for three months, it’s sales are only minor. Mid-term growth is still heavily reliant on Suboxone.
