Temodar Generic Cleared Down Under
Perrigo Company (PRGO) received some encouraging news recently when the Australian regulatory body (Australian Therapeutic Goods Administration) cleared Perrigo’s generic version of Merck’s (MRK) oncology drug Temodar (temozolomide).
The marketing approval for the drug was granted through an "Approval for Registration" letter. Through the letter, the Australian regulatory body also stated that Perrigo’s generic version and its branded counterpart (Temodar) were found to be bioequivalent.
Temodar is approved for treating patients suffering from malignant glioma – a common form of primary malignant brain cancer in adults. Almost three fourth of primary malignant brain cancer cases in adults are due to this dreaded disease. The approval of the generic version of Temodar would be easy on the pockets of Australian patients as generic drugs are much cheaper than their branded counterparts.
The availability of generics in Australia would eat into the market share of the branded product. We note that Merck is/will be facing significant patent cliffs. The 2009 acquisition of Schering-Plough, which added the brain cancer drug (Temodar) to Merck’s product portfolio, was a smart move aimed at minimizing the impact of genericization of its key drugs. The deal has also helped diversify Merck’s revenue sources geographically. Merck expects to achieve annual savings of $3.5 billion by the end of 2012.
Neutral on Merck and Perrigo
Currently, we are Neutral on both Merck and Perrigo in the long run. However the stocks carry different short-term ratings. While Perrigo carries a Zacks #2 Rank (Buy rating), Merck carries a Zacks #3 Rank (Hold rating) in the short-run.
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