AstraZeneca (AZN) recently announced that it has taken legal action against the US Food and Drug Administration (FDA) challenging the agency’s decision to reject AstraZeneca’s Citizen Petitions on March 7, 2012. The company filed a lawsuit in the US District Court for the District of Columbia.
The Citizen Petitions were filed by the company for Seroquel (quetiapine fumarate) and Seroquel XR. The Citizen Petitions were filed to bar the FDA from approving any generic versions of the drug that do not include warnings related to hyperglycemia and suicidality in its label. With this move, AstraZeneca was looking to delay the launch of generic versions of Seroquel considering the company has marketing exclusivity for the data associated with the hyperglycemia warning till December 2, 2012.
Seroquel and Seroquel XR’s active ingredient patent expired in September 2011. Including pediatric exclusivity, the patent will expire on March 28, 2012. The Seroquel franchise generated sales of $5.8 billion in 2011. Thus, gaining another nine months of exclusivity will be beneficial for the company.
Neutral on AstraZeneca
We currently have a Neutral recommendation on AstraZeneca. The stock carries a Zacks #3 Rank (Hold rating) in the short run. Even though we are encouraged by the strong cardiovascular franchise at AstraZeneca and the company’s focus on the high-potential emerging markets, we remain concerned about the generic competition faced by its key products.
In 2011, the company lost almost $1 billion revenues to generic competition (primarily for Nexium, Arimidex, and Merrem). AstraZeneca is looking to lessen the impact of genericization by reducing cost through restructuring initiatives.
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