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AstraZeneca (AZN - Analyst Report) recently received some positive news when the Court of Appeals for the Federal Circuit maintained an earlier ruling that the US substance patent (RE37, 314) related to Crestor (rosuvastatin calcium) is valid. The ‘314 patent is set to expire in 2016, until which no generic version of Crestor will be approved by the US Food and Drug Administration (FDA).

Several generic drug makers including Apotex, Aurobindo, Cobalt, Glenmark, Mylan Pharma (MYL - Analyst Report), Sandoz, the generic arm of Novartis (NVS - Analyst Report), Teva Pharmaceuticals (TEVA - Analyst Report) and Torrent had submitted Abbreviated New Drug Applications (ANDAs) seeking approval for their generic versions of Crestor. These companies can now approach the US Supreme Court for rehearing.

Our Take

Crestor is the lead revenue grosser at AstraZeneca. It currently faces stiff competition given the presence of Merck’s (MRK - Analyst Report) Zocor/Vytorin and generic versions of Pfizer’s (PFE - Analyst Report) Lipitor.

Meanwhile, several products in AstraZeneca’s portfolio are already facing or are likely to face generic competition. In 2011, the company lost revenues worth almost $2 billion, to generic competition. The weak late-stage pipeline coupled with the slow Brilinta uptake also bothers us.

In such a scenario, we feel additional competition in the form of Crestor generic would have hit the top-line significantly. We believe that the court ruling in favor of AstraZeneca removes the uncertainty regarding entry of generics and is a positive for the company.

Currently, we have a Neutral stance on AstraZeneca in the long run. The stock carries a Zacks #3 Rank (Hold) in the short run.

Large-cap pharma stocks currently holding a Zacks #2 Rank include companies like Novo-Nordisk (NVO - Analyst Report).
 

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