Tuesday, November 23, 2004

Line extensions the wave of pharma's future?

Text by Cutting Edge asserts --71% of these same companies expect line extensions to be their predominant defense strategy over the next three years.--

In the case cited by Cutting Edge of Prilosec/Nexium, Astrazeneca BOTH litigated against the generics over Prilosec AND launched a line extension of sorts (they obtained a patent on the active ingredient in Nexium, which is an enantiomer of the racemate in Prilosec). This particular type of "line extension" will not be available for all drug companies. In fact, with key patents running out on many drugs in the next few years, "line extension" may be an imposed strategy, rather than a strategy of choice.

from PRnewsire:

Although patent litigation remains the most commonly used generic defense strategy among pharmaceutical companies -- 71% of drug companies have used legal battles to defend their patents in the past three years -- many feel that line extensions offer the greatest strategic opportunity for the future, according to research from pharmaceutical business intelligence firm Cutting Edge Information.

Aside from litigation, line extensions are the most common, and potentially most lucrative, strategy pharmaceutical companies pursue. Cutting Edge Information's study, "Combating Generics: Pharmaceutical Brand Defense," available at http://www.PharmaGenerics.com , reveals that 57% of surveyed companies have begun researching line extensions for products close to expiration. 71% of these same companies expect line extensions to be their predominant defense strategy over the next three years. When implemented correctly, line extensions can salvage much of the revenue stream exposed to generic competition. AstraZeneca, for example, successfully shifted 40% of its Prilosec users to Nexium prior to Prilosec's patent expiration.

"Ethical pharmaceutical firms are looking for any way possible to lengthen revenue streams for their products," says Jon Hess, senior analyst at Cutting Edge Information. "After all, drug-makers spend an average of 12 years turning a patented compound into a marketable drug and a few more producing and marketing it. In reality, innovative drugs have just five to seven years to earn returns before the core compound's patent expires."


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