Denmark backs generic lung drug in threat to GSK sales

Reuters
Signage is pictured on the company headquarters of GlaxoSmithKline in west London
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Signage is pictured on the company headquarters of GlaxoSmithKline in west London July 21, 2008. REUTERS/Toby Melville

By Ben Hirschler and Paul Sandle

LONDON (Reuters) - Denmark has approved the sale of an inhaled lung drug that analysts think is a generic copy of GlaxoSmithKline's (LSE:GSK) $8 billion-a-year blockbuster Advair, threatening its future sales.

UK firm Vectura (LSE:VEC) said on Wednesday that its partner Sandoz - the generics division of Novartis (VTX:NOVN) - had received approval for AirFluSal Forspiro, which was previously known as VR315.

The green light marks the first approval of the product in Europe and analysts said more European approvals were likely to follow, with other Nordic countries and Germany seen among initial markets.

Investors in GSK, Britain's biggest drugmaker, have been bracing for generic competition to Advair, which is also is also known as Seretide and Viani, but exactly when generics would reach the market has been uncertain.

Inhaled drugs such as Advair are difficult to copy because of the complexity of making a device that works effectively to deliver the medicine directly into the lungs.

"The regulatory pathway to generic respiratory medicine is quite complicated, so it's certainly an important milestone for Vectura to have this one approved," said analyst Charles Weston at Numis.

The approval poses a threat to GSK but Weston said generic cannibalisation was likely to be fairly slow.

Alistair Campbell of Berenberg Bank also said the generic product would not be directly substitutable at pharmacies for Advair.

Berenberg had been assuming a 40 percent chance of approval in Europe and 2017 sales of around $250 million, or roughly 10 percent of Advair's current European sales.

GSK AWAITING DETAILS

"VR315 in Europe, with a 40 percent chance of approval, makes up 19 pence of our Vectura valuation. On an un-risked basis, this climbs to 46 pence," Campbell said in a research note.

Vectura said its new advanced inhaler was designed for patients with asthma and chronic obstructive pulmonary disease (COPD), but it did not specify it was a copy of Advair. It said it would release further details in due course.

Shares in GSK were down 1.6 percent at 1540.5 pence by 1312 GMT, underperforming a 0.6 percent advance in the Stoxx 600 Europe healthcare sector index (.SXDP), while Vectura was up 8 percent at 130.875 pence. Novartis was up 1 percent at 68.45 Swiss francs.

A spokesman for GSK said it was waiting to see more details before commenting on developments.

GSK has for many years been a market leader in respiratory medicine and the company hopes to maintain its leading position with the introduction of a new generation of products for asthma and COPD. New GSK lung drugs include Relvar/Breo and Anoro.

There are currently no generic versions of Advair in the United States but the prospect of copies reaching the world's biggest market were increased in September by a draft guidance document from the Food and Drug Administration (FDA) setting out requirements for such copies.

(Editing by Kate Kelland and Greg Mahlich)

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