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Barr, Teva Unveil Allegra Generic

Posted on: Thursday, 8 September 2005, 15:00 CDT

Sep. 7--In a surprising and legally risky move, Barr Pharmaceuticals and a partner launched generic versions of the blockbuster allergy pill Allegra despite patents remaining on the prescription drug.

Announced Tuesday, the launch sent Woodcliff Lake-based Barr's stock soaring 9.7 percent and portended a broad impact for allergy sufferers and potentially the health-care system with the introduction of lower-cost generics earlier than expected.

Barr and Teva Pharmaceuticals Industries, the Israel-based generic drug giant, jointly announced their agreement Tuesday for generics of Allegra tablets, which had $1.4 billion in sales for the 12 months ending in June and are sold by the French pharmaceutical giant Sanofi-Aventis.

"This agreement and launch represent an extraordinary opportunity for consumers and for both companies," Bruce Downey, Barr's CEO and chairman, said in a statement. "The agreement with Teva enables us to maximize the opportunity, while sharing the risk of the ongoing litigation."

The launch caught Wall Street off guard because it occurred with court proceedings pending on several patents protecting Allegra. Should court rulings go against the generic companies, they could be liable for heavy damages. Previously, Barr had won summary judgment rulings on other patents protecting the drug. Barr said last Thursday it won Food and Drug Administration approval for its generic Allegra.

Tim Anderson, an analyst with Prudential Financial, said in a note to investors that he had not expected generic rivals to Allegra until 2007, in keeping with Sanofi-Aventis' projections.

"This is a surprising move because seldom are 'at risk' launches done ahead of having even a district court ruling," Anderson wrote.

Teva will manufacture and market the drug, known generically as fexofenadine hydrochloride, and Barr will get an undisclosed percentage of gross profits. As the first generic company to challenge the Allegra patents, Barr won the right to be the only generic version for 180 days -- a right it transferred to Teva. Teva began shipping generic Allegra on Thursday, said Barr spokeswoman Carol Cox.

Shares of Barr, trading of which was halted briefly at the outset, rose $4.42 to $50.05 on Tuesday as analysts scurried to gauge the profit bounce Barr would receive from Allegra. The company is expected to shed more light Thursday, when it reports its fourth-quarter earnings.

Barr might have been pressured to take the aggressive action on Allegra by changes in the generic drug industry, including increasing competition and mergers by other top companies, said Les Funtleyder, a health-care strategist with Miller Tabak.

"Barr needed to be a little bit more aggressive and not let the world pass them by," Funtleyder said.

One potential advantage of the surprise launch is it may mute the impact of any so-called authorized generic from Sanofi-Aventis, which bases its U.S. headquarters in Bridgewater. Brand companies increasingly are involved in launching their own generic versions of medicines once they lose patent protection -- which cuts into revenues for generic companies.

It was unclear Tuesday whether Sanofi-Aventis would launch an authorized Allegra generic.

A Sanofi-Aventis spokeswoman did not return calls for comment.

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BRL, TEVA, SNY, SAN,

Source: The Record - Hackensack, New Jersey

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