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Analyst Blog

ViiV Healthcare, a company focused on the treatment of HIV, was established by GlaxoSmithKline (GSK - Analyst Report) and Pfizer (PFE - Analyst Report) in 2009. After certain amendments in Oct 2012, Glaxo, Pfizer and Shionogi now own 76.5%, 13.5% and 10% of ViiV Healthcare, respectively. Sales at ViiV Healthcare have been on the decline over the past few quarters due to generic erosion of Combivir, Epivir and several other products in the U.S.

To add to ViiV Healthcare’s woes the U.S. District Court for the District of Delaware ruled that Lupin Pharmaceuticals, Inc.’s generic version of Trizivir (a triple combination of lamivudine, abacavir and zidovudine) did not infringe a combination patent. ViiV Healthcare intends to appeal this decision.

Apart from this the court also upheld the validity of the U.S. Patent No. 6,417,191 B1, which is set to expire in Mar 2016. The patent protects Epzicom (a double combination of  lamivudine and abacavir) and Trizivir.

Currently prescribed therapies for HIV include Intelence, Stribild and Complera.

Glaxo carries a Zacks Rank #3 (Hold). We are concerned about the loss of revenues in the third quarter due to investigation in China regarding fraudulent behavior and ethical misconduct. We are also disappointed with pipeline setbacks for two late stage candidates (drisapersen and darapladib). Meanwhile, Glaxo continues to face challenges in the form of EU pricing pressure and generic competition. We expect recent approvals, restructuring and cost-cutting efforts to offset some of the negatives.

Some better-ranked stocks include Vanda Pharmaceuticals, Inc. and Jazz Pharmaceuticals (JAZZ - Analyst Report). Both carry a Zacks Rank #1 (Strong Buy).

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