Par Pharmaceutical Companies, Inc., incorporated in 1978 as Par Pharmaceutical, Inc., is a Delaware holding company that, principally through its wholly owned operating subsidiary, Par Pharmaceutical, Inc., is in the business of developing, licensing, manufacturing and distributing generic and branded drugs in the United States. We have two reportable business segments: Par Pharmaceutical, our generic products division, and Strativa Pharmaceuticals, our proprietary (branded) products division.
Prescription pharmaceutical products are sold as either generic products or branded products. Since our inception, we have manufactured, licensed and distributed generic pharmaceutical products. We created a proprietary products division in 2005 focusing on the licensing and commercialization of branded products. We shipped our first branded product in the third quarter of 2005 and named our proprietary products division Strativa Pharmaceuticals in 2007. In October 2008, we announced a resizing of Par Pharmaceutical, our generic products division, which included the reduction of our internal research and development operations. At the end of 2005, we divested one of our subsidiaries, FineTech Laboratories, Ltd. to a former officer and director. As a result of the divestiture, the FineTech business is being reported herein as a discontinued operation for all periods presented, as applicable.
Our principal executive offices are located at 300 Tice Boulevard, Woodcliff Lake, NJ 07677, and our telephone number is (201) 802-4000. Additional information concerning our company can be found on our website at www.parpharm.com, including our Corporate Governance Guidelines, charters for the Audit Committee, Compensation and Management Development Committee, and Nominating and Corporate Governance Committee of our Board of Directors, and our Code of Ethics. Our Code of Ethics applies to all of our directors, officers, employees and representatives. Amendments to our Code of Ethics and any grant of a waiver from a provision of the Code requiring disclosure under applicable SEC rules will be disclosed on our website. Any of these materials may also be requested in print by writing to Par Pharmaceutical Companies, Inc., Attention: Thomas Haughey, Chief Administrative Officer, Executive Vice President, General Counsel and Secretary, at 300 Tice Boulevard, Woodcliff Lake, NJ 07677.
Our fiscal year ends on December 31 of each year presented. Our fiscal quarters end on the Saturday closest to each calendar quarter end for all periods up to and including 2009. Beginning in 2010, our fiscal quarters will end on each calendar quarter end (March 31st, June 30th, and September 30th).
Par Pharmaceutical - Generic Products Division
Generic drugs are the pharmaceutical and therapeutic equivalents of brand name drugs and are usually marketed under their generic (chemical) names rather than by brand names. Typically, a generic drug may not be marketed until the expiration of applicable patent(s) on the corresponding brand name drug. Generic drugs must meet the same governmental standards as brand name drugs, but they are sold generally at prices below those of the corresponding brand name drugs. Generic drugs provide a cost-effective alternative for consumers, while maintaining the safety and effectiveness of the brand name drug.
Our generic product line as of December 31, 2009, comprised prescription drugs consisting of approximately 50 product names (molecules), each with an associated Abbreviated New Drug Application (“ANDA”) approved by the U.S. Food and Drug Administration (“FDA”), and approximately 175 SKUs (packaging sizes). Products sold by our generic products division are manufactured principally in the solid oral dosage form (tablet, caplet and two-piece hard shell capsule). In addition, we market several oral suspension products and products in the semi-solid form of a cream. We manufacture some of our own products, and we have strategic alliances and relationships with several pharmaceutical and chemical companies that provide us with products for sale through various distribution, manufacturing, development and licensing agreements.
In December 2009, we announced that the key strategy for our generic products division will be to focus on intelligent product selection and entrepreneurial business development. As a result, our internal research and development is intended to target high-value, “first-to-file” or “first-to-market” generic product opportunities. A “first-to-file” product opportunity refers to an ANDA containing a Paragraph IV patent challenge to the corresponding brand product, which offers the opportunity for 180 days of generic marketing exclusivity if approved by the FDA and if we are successful in litigating the patent challenge. See “Competition” below. A “first-to-market” product opportunity refers to a product that is the first marketed generic equivalent of a brand product for reasons apart from statutory marketing exclusivity, such as the generic equivalent of a brand product that is difficult to formulate or manufacture. Externally, our generic products division will concentrate on acquiring assets and/or partnership arrangements with technology based companies that can deliver similar product opportunities. As of December 2009, we have 12 confirmed first-to-file and two potential first-to-market product opportunities. Additionally, Par Pharmaceutical is committed to high product quality standards and allocates significant capital and resources in terms of quality assurance/quality control and manufacturing excellence.
A practice within the industry is the use of “authorized generics.” Brand drug companies do not face any regulatory barriers to introducing a generic version of their own brand drugs, and they often license this right to a subsidiary or a generic distributor. Authorized generics may be sold during (and after) the statutory exclusivity period granted to the developer of a generic equivalent to the brand product. In the past, we have marketed authorized generics, including metformin ER (Glucophage XRÒ) and glyburide & metformin HCl (GlucovanceÒ) licensed through Bristol-Myers Squibb Company, fluticasone (FlonaseÒ) and ranitidine HCl syrup (ZantacÒ) licensed from GlaxoSmithKline plc, and we currently market metoprolol succinate ER (Toprol XLÒ) licensed through AstraZeneca.
Our generic products division markets our products primarily to wholesalers, drug store chains, supermarket chains, mass merchandisers, distributors, managed health care organizations, mail order accounts, and government, principally through its internal staff. Our generic products division also promotes the sales efforts of wholesalers and drug distributors that sell our products to clinics, governmental agencies and other managed health care organizations.
Strativa Pharmaceuticals – Proprietary Products Division
Brand products usually benefit from patent protection, which greatly reduces competition and provides a significant amount of market exclusivity for the products. This exclusivity generally allows a brand product to remain profitable for a relatively longer period of time as compared to generic products. In addition, due to the public awareness of the brand name and resulting consumer and physician loyalty, brand products may remain profitable even after the cessation of their patent related market exclusivity. We believe that brand products generally have limited competition, longer product life cycles and longer-term higher profitability than generic products. Strativa’s products are marketed by its sales force, which communicates the therapeutic, health and economic benefits of our products to healthcare providers and managed care organizations.
Since its creation in 2005, Strativa has focused on supportive care, marketing three products as of December 31, 2009:
Megace® ES, Strativa’s first brand product, is a megestrol acetate oral suspension NanoCrystal® Dispersion indicated for the treatment of anorexia, cachexia or any unexplained significant weight loss in patients with a diagnosis of AIDS. Strativa has promoted Megace® ES and generated prescription growth from launch following FDA approval in 2005 through 2007. Net sales growth tempered in 2008 and 2009, principally due to a more challenging reimbursement environment, including a change in reimbursement status of Megace® ES that was implemented by a major Medicare Part D plan.
Nascobal® Nasal Spray is a prescription vitamin B12 treatment indicated for maintenance of remission in certain pernicious anemia patients, as well as a supplement for a variety of B12 deficiencies. We acquired Nascobal® Nasal Spray from QOL Medical, LLC on March 31, 2009.
Strativa also co-promotes Solvay Pharmaceuticals’ Androgel®, a testosterone 1% gel indicated for replacement therapy in males for conditions associated with a deficiency or absence of endogenous testosterone, under a co-promotion agreement with Solvay.
Strativa expects to launch the following two products in 2010:
ZuplenzTM is a new oral soluble thin film formulation of ondansetron in development for the prevention of chemotherapy-induced nausea and vomiting, prevention of nausea and vomiting associated with radiotherapy, and post-operative nausea and vomiting. In 2008, we acquired the U.S. commercialization rights to Zuplenz™ under an exclusive licensing agreement with MonoSol Rx. In the first quarter of 2009, Phase III studies were completed by MonoSol, and a New Drug Application (“NDA”) for ZuplenzTM was submitted and is under review. In February 2010, we announced that the FDA issued a complete response letter regarding the NDA. Due to an FDA restriction on foreign travel in India, the FDA has been unable to perform a recent inspection of the clinical and analytical sites for the bioequivalence study related to ZuplenzTM. The NDA cannot be approved until the FDA receives a satisfactory inspection report of the clinical and analytical sites for the bioequivalence study related to ZuplenzTM. The FDA restriction on foreign travel in India has been subsequently lifted and the inspection of the clinical and analytical sites for the bioequivalence study related to ZuplenzTM is in the process of being scheduled. No issues related to the study data or film product were identified.
OravigTM is a miconozole antifungal therapy in development for the treatment of oropharyngeal candidiasis, an opportunistic infection commonly found in immunocompromised patients, including those with HIV and cancer. In 2007, Strativa acquired an exclusive license to the U.S. commercialization rights to Oravig™ from BioAlliance Pharma S.A. Phase III studies were completed by BioAlliance, and BioAlliance submitted an NDA for OravigTM in February 2009. The NDA is under review by the FDA, with a scheduled action date in the second quarter of 2010.
We continue to pursue product or business acquisitions or licensing arrangements to expand Strativa’s brand product line. We anticipate that the growth of Strativa Pharmaceuticals will be based largely on the in-licensing and acquisition of new compounds and approval of new compounds under license, as well as marketing our current brand products.
We distribute numerous drugs at various dosage strengths, some of which are manufactured by us and some of which are manufactured for us by other companies. Set forth below is a list of the drugs that we manufactured and/or distributed, including the brand name products Megace® ES and Nascobal® Nasal Spray, for which we hold the NDA as of December 31, 2009. The names of all of the drugs under the caption “Competitive Brand Name Drug” are trademarked. The holders of the trademarks are non-affiliated pharmaceutical companies. We hold the ANDAs and NDAs for the drugs that we manufacture.