Shares of Pfizer, the world's largest pharmaceutical company, fell 3 per cent on the New York Stock Exchange on Friday after Smith Barney said its bestselling anti-cholesterol drug, Lipitor, could soon face competition from a generic version of the drug from India's largest pharmaceuticals company, Ranbaxy Laboratories.
Smith Barney's drug analyst George Grofik, who cut his rating on Pfizer to "in-line" from "outperform," said a generic challenge to Lipitor from Ranbaxy should not be dismissed as frivolous.
"After reviewing the relevant court documents and consulting our patent attorney, we believe there are significant risks to the Lipitor patent estate," he said in a report.
Lipitor is the world's biggest pharmaceutical brand with annual sales of $10 billion. The patent on the drug expires in 2011.
Ranbaxy has filed an application with the US Food and Drug Administration, which, if granted, could give it exclusive rights to market the drug in the US for a fixed period once the patent expires.
However, Ranbaxy's filing has been challenged by Pfizer in a Delaware court.
"We strongly disagree with the conclusions of the Smith Barney report concerning Lipitor," said Paul Fitzhenry, a Pfizer spokesman.
"We believe our patents for Lipitor are valid and have been infringed by Ranbaxy, and we have filed suits accordingly."
Grofik said he expected not just Lipitor but a group of drugs representing 42 percent of Pfizer's 2003 sales to be exposed to generic competition by the end of 2007.
Such competition would potentially halve Pfizer's earnings per share growth rate to 4 per cent between 2004 and 2008, he said.
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