Barr Pharmaceuticals received FDA approval to introduce generic version of Merck & Co.'s Proscar, a treatment for enlarged prostates – according to Bloomberg. Barr said it introduced the drug under an agreement with Gedeon Richter.
Our view: Proscar enjoyed US$ 400m in sales in the US in 2005, the last "peaceful" year before patent expired. Last year, however, Teva successfully attacked Merck's patent rights on Proscar (finasteride) and got the approval from FDA to market its generic version in June. Following to this Teva has been awarded 180 days of marketing exclusivity. Other producers such as Barr Labs are able to enter the market from January this year. In our view, the potential market for this drug could be US$ 200-300m annually after the patent expiration due to the price fall the appearance of generic companies indicate. Out of this sum Teva and Merck are expected to retain 50-70%, so the potential market for other generics is roughly US$ 100m, according to our draft estimate.
Depending on how many other companies aim to enter the market, Barr could capture some US$ 20-30m, we guess. Calculating with 20% net margin on generic Proscar and an equal split of profits between Barr and Richter, the Hungarian company could gain some US$ 2-3m on the deal annually. This is less than 1% of expected net profit of Richter. We expect a moderately positive market reaction to the news.