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Sandoz, the generic arm of Novartis (NVS - Analyst Report), recently announced that it is voluntarily recalling one lot of its oral contraceptive drug, Estarylla (norgestimate and ethinyl estradiol), in the US.

The recall was initiated after a customer reported the presence of a placebo tablet in a row of active tablets on one pack.

We note that Sandoz launched Estarylla and Tri-Estarylla (norgestimate and ethinyl estradiol), generic versions of oral contraceptives Ortho Cyclen and Ortho Tri-Cyclen, in Mar 2013, following US Food and Drug Administration (FDA) approval.

The launch of Estarylla and Tri-Estarylla brought the total number of oral contraceptives launched by Sandoz in the US since Jan 2011 to 6.

Since the probability of adverse health events is minimal, we believe Sandoz will resolve the issue soon.

Meanwhile, we are encouraged by the recent progress at Sandoz. The company launched metronidazole 1% topical gel, a generic version of Metrogel 1% in early July 2013 in the US.

Last month, Sandoz initiated a phase II study for its biosimilar version of Amgen’s (AMGN - Analyst Report) Enbrel (etanercept).

Enbrel is approved for several indications including the treatment of moderate-to-severe active rheumatoid arthritis and psoriasis.

The main aim of the phase III study is to establish biosimilarity on safety, efficacy and immunogenicity compared to Enbrel for the treatment of patients with moderate-to-severe chronic plaque-type psoriasis. Positive results from this study will support regulatory filings in the US and EU.

Sandoz is also developing biosimilar versions of Amgen's Neulasta (pegfilgrastim) and Neupogen (filgrastim).

Both drugs are approved for stimulating white blood cell production in the body. Sandoz has three marketed products which account for about 50% of all biosimilars in the combined regions of North America, Europe, Japan and Australia.

Sandoz currently has seven phase III studies across five biosimilar molecules in its pipeline. We are encouraged by Sandoz’ efforts to broaden its portfolio, which should boost sales in the coming years.

Novartis currently carries a Zacks Rank #3 (Hold). Right now, Mylan Inc. (MYL - Analyst Report) and Simcere Pharmaceuticals look attractive with a Zacks Rank #2 (Buy).

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