The entry of generic competition for key products always delivers a major blow to the branded company’s financials. Usually, the innovator company explores different avenues to reduce the impact of genericization of key products. These include the launch of authorized generic versions as well as the signing of deals targeted to boost the pipeline or product portfolio. Sometimes, the innovator companies sign settlement agreements with generic companies to delay the entry of generics.
Late last week, Sucampo Pharmaceuticals, Inc. (SCMP) announced that along with its partners R-Tech Ueno, Ltd. and Takeda Pharmaceutical Company Ltd. (TKPYY), the company has entered into a settlement and license agreement with Anchen Pharmaceuticals, Inc. and Par Pharmaceutical Companies, Inc. regarding a patent litigation related to Sucampo’s Amitiza (8 mcg and 24 mcg soft gelatin capsules).
We remind investors that in Feb 2013, Sucampo and its partners had filed a patent infringement lawsuit against Anchen and Par in the U.S. District Court for the District of Delaware. Anchen and Par were looking to get their generic versions of Amitiza approved in the U.S. However, with the companies signing a settlement agreement, the lawsuit will be dismissed.
Terms of the Settlement
Sucampo and R-Tech will grant a non-exclusive license to Par to market its generic version of Amitiza in the U.S. for the approved indications starting Jan 1, 2021 (or earlier under certain circumstances). Gross profits from product sales will be divided between Par and Sucampo until the expiry of each of the patents covering Amitiza.
Additionally, under the terms of a manufacturing and supply agreement, Sucampo will supply an authorized generic version of Amitiza to Par at a negotiated price, if necessary.
Meanwhile, Sucampo received a Paragraph IV certification from Dr. Reddy's Laboratories Ltd. (RDY) which is looking to get its generic version of Amitiza (8 mcg and 24 mcg soft gelatin capsules) approved. Sucampo is currently reviewing the letter.
Our Take
Sucampo has two marketed products – Amitiza and Rescula. Amitiza, Sucampo’s flagship product, generated net sales of $152 million in the first half of 2014, up 16% year-over-year. With Amitiza being a key product for Sucampo, the earlier-than-expected entry of generics would be a major setback for the company.
Sucampo carries a Zacks Rank #3 (Hold). A better-ranked stock in the healthcare sector is Lannett Company, Inc. (LCI), carrying a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment