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Teva Pharmaceutical Industries Ltd. (TEVA - Analyst Report) recently announced that it has launched its generic version of Forest Laboratories’ Lexapro. Teva will enjoy six months of marketing exclusivity as it was the first generic company to have filed an Abbreviated New Drug Application (ANDA) for Lexapro with a paragraph IV challenge.

Lexapro has been a major revenue generator for Forest Labs with the product generating sales of $1.8 billion in the first nine months of fiscal 2012. Besides Teva’s generic version, Mylan’s (MYL - Analyst Report) authorized generic version of Lexapro is available in the market.

Mylan had announced the launch of its authorized generic version in late February 2011. According to its settlement agreement with Forest Labs, Mylan will market its product until the compound patent loses pediatric exclusivity.

Lexapro is indicated for the acute and maintenance treatment of major depressive disorder (MDD) and acute treatment of generalized anxiety disorder. Lexapro sales will be impacted significantly with the entry of Teva’s generic version. The product accounted for 55% of Forest Labs’ total sales in fiscal 2011.

Another key product, Namenda, in Forest Labs’ portfolio could start facing generic competition in early 2015. To reduce the impact of genericization, Forest Labs has been working on developing its pipeline. The company has two important FDA action dates coming up in the second quarter of 2012. While linaclotide (partnered with Ironwood Pharmaceuticals (IRWD - Analyst Report)) is under review for the treatment of constipation-predominant irritable bowel syndrome and chronic constipation, aclidinium (partnered with Almirall) is under regulatory review for chronic obstructive pulmonary disease (COPD).

Meanwhile, the company expects to file two more new drug applications (NDAs) in the second half of 2012 (levomilnacipran and cariprazine).

We currently have Neutral recommendations on Forest Labs as well as Teva. Both companies carry a Zacks #3 Rank (short-term “Hold’’ rating).

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