Novartis to start rival to AstraZeneca's Losec

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AstraZeneca, the UK's number two drug company, appeared yesterday to have finally lost the battle to protect sales of Losec, its pioneering ulcer treatment that was once the biggest selling drug in the world.

The product, which lost patent protection last year, faces a third copycat competitor in the lucrative US market, after Novartis, a Swiss-based rival, said it would launch a generic Losec within weeks.

The arrival of the new product comes just a fortnight after Mylan Pharmaceuticals of the US said it was launching its generic version of Losec. Germany's Schwarz Pharma had previously been AstraZeneca's rival, having launched its version of the ulcer pill late last year.

The new arrivals - whose decision to launch has surprised observers who believed they would wait for the outcome of patent litigation with AstraZeneca - are sure to spark a price war in generic Losec, driving down sales and profits for AstraZeneca and Schwarz. AstraZeneca shares were off 11p at 2,570p in London yesterday, but the news hit the smaller Schwarz even harder. That company's shares, which had fallen 23 per cent when Mylan announced its launch on 4 August, were down a further 18 per cent in Frankfurt.

The fall-out on the London market extended to shares in Yule Catto, the chemicals company that supplies ingredients for Schwarz. Yule Catto stock was off 10p at 315p.

AstraZeneca has already said it will pursue Mylan for "triple damages" if it is found to have infringed AstraZeneca's patents on the way Losec is made. It is likely to make a similar threat to Novartis. No date has yet been set for the US court showdown between AstraZeneca and Mylan, Novartis and two other companies who are also preparing copies of Losec.

Analysts said that although Novartis will not initially price its generic Losec at a significant discount to the Schwarz product, price competition would inevitably follow.

And Luisa Betts, analyst at Lehman Brothers, worried that cheap generic Losec available for doctors to prescribe, and a new over-the-counter Losec available direct to patients in the US from next month, would also hit income from Nexium, AstraZeneca's stronger ulcer pill, which has sales of £5m a day.

She said: "These events are all occurring at a time when AstraZeneca is launching Crestor [its cholesterol-lowering product] and is likely to be reducing its promotional effort behind Nexium, potentially leaving the drug vulnerable."

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