Novartis to Expand Generics Business

If all goes as planned for Novartis (Basel, Switzerland, www.novartis.com), it could soon become the world’s largest generic pharmaceuticals manufacturer. The company announced on Monday plans to buy Hexal (Munich, Germany) and Eon Labs (New York, NY). The $8.4-billion cash purchase, expected to close by the end of the year, would add more than 120 products, including antidepressants, painkillers, and cholesterol-reducing medicines, and a pipeline of new generic therapies of brand-name drugs set to lose their patents between 2005 and 2009. 

Coupled with Novartis’s existing drug unit, Sandoz, the new expansion is projected to bring more than $5 billion in sales and hold an estimated 10% of the $100-billion generics market by 2010. Generics reportedly already make up 50% of pharmaceutical sales volume in the United States.

Generic drugs would account for only 15% of Novartis’ sales after the acquisition, and analysts were quick to point out that the biggest risk in this expansion would be competition—a fact shown just two days after the announcement.

Just yesterday (February 23), the name of Novartis’ main competitor, Teva Pharmaceutical Industry (Netanya, Israel) came up when UK-based Shire Pharmaceuticals announced that it had received a Paragraph IV Notice letter from Teva. The notice advised of Teva’s filing of an abbreviated new drug application (ANDA) for its amphetamine combination product, which is a generic version of Shire’s attention deficit and hyperactivity disorder drug "ADDERALL XR." Teva joins a group of other generics makers such as Barr Laboratories and IMPAX Laboratories that also have filed ANDAs for their respective generic versions of ADDERALL XR.

—Maribel Rios