Watson launches first generic Lipitor

Watson Pharmaceuticals, the New Jersey-based drug manufacturer, did not even wait for dawn before trumpeting its first shipments yesterday of Lipitor, the cholesterol-lowering pill that became the world's biggest selling medicine.

After years of legal and scientific battles, Lipitor's creator Pfizer yesterday relinquished its stranglehold over production of the pill, as its patent on the drug in the US finally expired. And at 5.30am, Watson announced it "began shipping the product today," and called it the "largest generic product launch in US history".

That claim is certainly true, since Lipitor, the brand name for atorvastatin calcium, still had $7.8bn (£5bn) sales in the year to September, after peaking at $10.7bn last decade. Millions of Americans pop the pills to keep their cholesterol under control and to reduce the risks of heart attacks and strokes.

But as well as being the biggest generic product launch, this is also proving to be the most unusual, as Pfizer works to maintain as big a chunk of Lipitor sales as possible. For starters, it is serving as the exclusive supplier of the medicine to Watson, at least until 2016, and it has also adopted a range of novel tactics to keep another rival, India's Ranbaxy, from taking market share. Since drugs with an estimated $80bn of sales will be going off-patent in the next two years, Pfizer is being closely watched by other pharmaceuticals giants, including GlaxoSmithKline and AstraZeneca in the UK.

Pfizer has tied up a series of deals with American health insurers and pharmacy chains to supply branded Lipitor at a discount. Generic copies typically price slightly lower than the original drug for a few months after patent expiry until additional manufacturers emerge. In deals with Medco and Express Scripts, two big pharmacy benefits managers, Pfizer has agreed to match the generics' prices.

It is also subsidising the amount consumers have to contribute to the cost of the medicine, so that Americans on Lipitor are not encouraged to switch. However, Pharmacists United for Truth and Transparency says it is a "blatant attempt" to keep health insurers paying for more expensive branded drugs.