EDT sales drop as generic competition begins to bite

By Nick Taylor

- Last updated on GMT

Elan Drug Technologies’ (EDT) revenues dropped in the first quarter as generic competition wiped out Skelaxin (metaxalone) earnings.

Launch of a generic version of King Pharmaceuticals’ muscle relaxant knocked $4.8m (€3.3m) off first quarter revenues at EDT. Loss of Skelaxin​ manufacturing revenue and royalties contributed to a 14 per cent drop in EDT sales and more generic competition is on the horizon.

Potential generic competitors have challenged the existing patent protection for several of the products from which EDT earns manufacturing revenue and royalties​”, said the company. Elan and its clients will defend these challenges but revenues will be hit if generic versions emerge.

For instance, in the first quarter EDT received $11.3m in manufacturing revenues and royalties, flat year-on-year, for Abbott Laboratories’ TriCor. Abbott and Elan have fought several patent cases but the eventual launch of a generic competitor is inevitable.

In a conference call with investors this week, Thomas Freyman, chief financial officer at Abbott, said he expects generic competitors to TriCor to launch in mid-2012. An agreement between Abbott and Teva set July 1 2012 as the latest the generic giant will receive rights to launch​.

The future of EDT

The 2010 launch of Ampyra (dalfampridine) by Acorda Therapeutics provided EDT with an extra revenue source. However, in the first quarter revenues from Ampyra dropped 12 per cent after an initial spike in sales as EDT manufactured a stockpile for launch of the product.

In 2008 and 2010 Elan considered selling the EDT unit but on both occasions chose to keep the business. Elan continues to invest in EDT and believes funds are needed to develop its pipeline and technologies.

If there was a way to position the business more optimally we would explore that but as of now our focus is to run the business, grow the business and try to extract value​”, said Kelly Martin, CEO of Elan, in a conference call with investors.

Revenues for Elan as a whole increased slightly year-on-year. Shares in Elan closed up 2.8 per cent at $8.40.

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