Generic Cholesterol Drugs Pressuring Not Only Merck, But Also Pfizer (MRK, PFE, TEVA)

Includes: AZN, MRK, PFE, RDY, TEVA
by: Mick Weinstein

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

Zocor, Lipitor Feel Pinch from Generics

  • Summary: Despite steep price cuts by Merck to protect its Zocor (simvastatin) cholesterol drug from generics, the generics have captured fully 49% of new simvastatin prescriptions in the U.S. since they became available at the end of June. Israeli generic drugmaker Teva Pharmaceutical captured 32% of those new prescriptions, while Dr. Reddy's of India gained 14% and the remaining 3% went to India's Ranbaxy. Pfizer's Lipitor, the most popular treatment, also saw its share of new prescriptions drop, from 42% the week before to 40% the week the generics were released. Pressure against Lipitor is mounting as insurers encourage a move to the reduced-price Zocor or a generic simvastatin. AstraZeneca's statin Crestor has also been gaining share recently, especially among newly diagnosed patients.
  • Comment on related stocks/ETFs: Negative for Merck (NYSE:MRK) and Pfizer (NYSE:PFE), a significant positive for Teva (NYSE:TEVA) and Dr. Reddy's (NYSE:RDY), and incrementally positive for AstraZeneca (NYSE:AZN). Israeli journalist/analyst Shlomo Greenberg recently called Teva's stock fall in the wake of the Merck price cut 'patently absurd' and a great buying opportunity - will he be proven right? Note, however, that Teva had some bad news yesterday on the legal front in a suit with Forest Labs.