Good news on generics
NEW YORK (Reuters) - Generic drug stocks have rallied as investor sentiment improved with the possibility of new laws from Washington aiding the industry, analysts said.
``There is a wave of patent expirations (for branded drugs) coming and that bodes well for generics,'' said Michael Tong, specialty pharmaceuticals analyst from First Union Securities.
Analysts said proposed legislation from Sens. John McCain (news - web sites) (R-Ariz.) and Charles Schumer (D-N.Y.) would make it easier for generic drugs to enter the market after branded pharmaceuticals lose their patent protection.
Exploiting a loophole in the present law, branded drug makers often will file lawsuits or additional patents to block competition from generic drugs.
Tong said it is unlikely that a bill would be approved ahead of the election in November, but ``it's something that raises the profile for the generics.''
``As long as there is talk about a Medicare drug benefit and the government footing a big chunk of that bill, generics will benefit,'' Timothy Chiang, analyst at Banc of America Securities, said. Drug prices will be a factor that the government examines closely if Medicare is paying for them, Chiang said.
Generic stocks rallied, while the American Stock Exchange Pharmaceuticals Index (^DRG - news) fell 0.70 percent, or 2.69 points to 382.29.
Shares of Barr Laboratories Inc. (NYSE:BRL - news), which could have a generic version of Eli Lilly and Co.'s (NYSE:LLY - news) top-selling antidepressant Prozac, rose $4-5/16 to $78. Barr benefited this summer from a court ruling that eliminated a patent on Prozac that would have prolonged Lilly's exclusive rights to the drug.
Watson Pharmaceuticals Inc. (NYSE:WPI - news) shares rebounded after a sharp selloff the prior two days to $54-3/4, up $2-3/4. The stock fell on Tuesday and Wednesday after the company forecast weaker than expected earnings.
Alpharma Inc. (NYSE:ALO - news), the largest maker of generic liquid and topical pharmaceuticals, rose $3-5/8 to $55-13/16.
IVAX Corp. (AMEX:IVX - news) shares rose $1 to $41-7/8 as a court denied a motion from a rival drug maker about a patent on Taxol that would have further delayed IVAX's generic version of the cancer treatment from reaching the market. Bristol-Myers Squibb Co.'s (NYSE:BMY - news) exclusive marketing rights for Taxol have expired, but the matter has been litigated for months.
``The problem with the generic companies still is that it is pretty evident that the Waxman-Hatch Act needs to be reformed,'' Chiang said about a law regulating the patents on drugs. |
