Bristol, Sanofi hit by Plavix worries

The financial outlooks for Bristol-Myers Squibb and Sanofi-Aventis remained clouded on Friday due to uncertainty over inventories of generic Plavix, a version of their most important drug.

A US court on Thursday ordered a halt to sales of a generic version of Plavix, the world’s second-best selling medicine but refused to order a recall of stocks already sold by Apotex, a Canadian drugmaker.

The size of those stocks is one of the biggest questions overhanging the US and French drugmakers, who co-market Plavix in the US, because the stocks could damage their revenues during the next two years.

Sanofi on Friday sharply cut its profits forecast, while Bristol continued to weigh the potential damage.

The French group cut its estimate for earnings a share growth in 2006 to 2 per cent from a previous target of 12 per cent, also citing new generic competition to drugs such as its allergy relief, Allegra, and diabetes treatment Amaryl.

“Based on information circulating on the market, it is possible that, prior to the imposition of the injunction, Apotex had already sold sufficient quantities in the US to satisfy substantially all market demand through to the end of 2006,” Sanofi said.

Bristol and Sanofi are locked in a patent battle with Apotex of Canada, which launched a generic version of the bloodthinner on August 8 in spite of unresolved litigation.

Under terms negotiated between Apotex, Bristol and Sanofi, Apotex was allowed a window to launch its version of Plavix before Bristol and Sanofi challenged the launch in court.

This provision allowed Apotex to “flood the market”, according to Bristol’s lawyers, with cheaper generic Plavix. Apotex’s generic Plavix had already captured up to 78 per cent market share for new prescriptions and could continue to hold that depending on how much stock it sold.

Chris Schott, analyst at Bank of America, estimated that Bristol could lose 80 per cent of its second-half Plavix sales this year. Plavix generated about $4bn in US sales last year and was expected to near $5bn this year.

Paul Diggle, analyst at Nomura, estimated that Sanofi could lose $1.1bn of Plavix sales in 2006.

Nevertheless, the US federal court order of an injunction was seen as an endorsement of Bristol and Sanofi’s Plavix patent and its chances to beat Apotex in a patent trial scheduled for January.

In spite of ordering Bristol and Sanofi to pay Apotex $400m for lost sales in case it won at trial, the court found that the two branded drugmakers could suffer “irreparable harm” from the generic launch.

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