Concerns that neither Pfizer nor Ranbaxy might have got a better deal than the other depressed investor confidence that took a toll on the stock prices of the two companies on their respective stock exchanges.
The share prices of both Pfizer and Ranbaxy reacted sharply a day after the two companies made a statement settling all pending cases about Lipitor, Pfizer’s best-selling cholesterol drug.
Ranbaxy fell sharply, by 7.6 per cent by end of trade Thursday on the Bombay Stock Exchange. The Pfizer stock, which had opened sharply up at $18.54, up from $17.60 at close the previous day, lost its gains to close 0.3 per cent up at $17.77 by end of trade Wednesday on the New York Stock Exchange.
“We are negatively surprised by the new November 2011 date,” said Bloomberg, quoting a note to clients today from Neelkanth Mishra, an analyst at Credit Suisse Group in Mumbai. Mishra had expected Ranbaxy to start selling Lipitor in the U.S. in March 2010. “Lipitor sales are falling in the US, so a delay reduces the market.”
The Ranbaxy stock fell on concerns that the Indian company would have to delay the launch of the low-cost version of the $12 billion a year Lipitor by almost 20 months. Investors in Pfizer, though, are concerned about the trade-off built into the deal, according to analysts.
According to the deal, though Pfizer has been able to push back Ranbaxy’s competing low-price drug by 20 months, it also means that any possibility to further delaying the launch of the low-cost competitor by four more years to 2016 is no longer there. Pfizer was defending a series of process-related patents, which expire in 2016.
Other analysts feel that the market has failed to factor in the millions of dollars saved in legal expenses by the two companies. The deal also shows that the fundamental regulations in the US pharmaceutical markets are changing.
“The deal also shows that U.S. regulators are being proactive to bring in better medicines to that country. Rather than favouring MNCs or generic companies, the regulators there are now in favour of providing the best medicines at an affordable cost to people. This is beneficial for both Pfizer and Ranbaxy in the long run,” said Shivani Raval, Industry Manager (healthcare), at Frost and Sullivan.