ViewPoints: Can Teva's lifecycle strategy for Copaxone reduce generic threat?

In outlining two guidance scenarios for 2014, Teva has provided its first assessment of what impact generic competition could have on US sales of its multiple sclerosis treatment Copaxone next year.

A number of moving parts will dictate how accurately Teva's forecasts prove to be, including the number of generic competitors that enter the market, whether any of these generic products are AB-rated (and thus substitutable) and how successful the company is in switching patients to its reformulated version of Copaxone, which is dosed three-times a week rather than once daily.

A handful of analysts are suggesting that Teva is projecting a somewhat bullish switch rate, but market research by FirstWord suggests that uptake of generic Copaxone may be slower than many are predicting.

Insight, Analysis & Opinion

Based on the launch of at least two AB-rated generic competitors in June of next year, Teva anticipates that sales of branded Copaxone will decline by around $500 million during the second half of 2014.

Initial feedback from analysts suggests that Teva may be providing something of an optimistic view if this is indeed a 'worst case' scenario, with the company in particular expecting too much traction for its reformulated version of Copaxone, which is dosed less frequency.

Analysts at JP Morgan note that Teva's projections are based on the company switching around 40,000 existing Copaxone patients to the new version, a potentially challenging scenario, adds JP Morgan's Chris Schott, given the slowly evolving nature of the MS market.

By the same token, however, are neurologists likely to flock to generic Copaxone – even if approved products are therapeutically substitutable? Speaking to FirstWord last year, David Hafler – chief and chair of neurology at Yale-New Haven Hospital and Yale School of Medicine – illustrated that some scepticism towards generic Copaxone does still exist, even if the FDA is broadly expected to approve one – if not two – versions in 2014.

"Copaxone is a mishmash of random copolymer, no one really knows what it really is, you can't really define it. We have some idea of the mechanism of action of the drug and I don't think we know whether the parameters that we have elucidated, which will tell if the generic is really going to work, really work the same way, Hafler says.

While Teva provided no guidance for the projected Copaxone three-times weekly switch rate on Tuesday, analysts at Morgan Stanley note that during a recent conference (September), the company's head of CNS Jon Congleton suggested that Teva had become increasingly bullish on the opportunity for its reformulation. Having initially believed that it could switch between 30 percent and 35 percent, Congleton inferred that some indicators suggest a conversion rate closer to 50 percent.

FirstWord's own analysis – a poll of 100 neurologists carried out in August – points towards Teva retaining around 40 percent of existing patients; which also takes into account anticipated switching of patients from branded Copaxone to newer, branded oral therapies, such as Biogen Idec's Tecfidera - Physician Views Poll Results – Generic Copaxone may struggle to gain market share in light of Teva's new formulation and oral switching trends

Uncertainty therefore continues to shape Teva's outlook, albeit if recognition of potential generic Copaxone is a step in the right direction for those investors and analysts looking for a potential recovery in share price during 2014. Initial focus next year will sharpen on regulatory approval for the reformulated version of Copaxone, which is expected early in 2014.

See also

ViewPoints: Teva outlines NTE strategy, but analysts and investors remain focused on short-term issues

ViewPoints: Teva files fifth Citizen Petition as it seeks to delay generic Copaxone ahead of much anticipated 2014 guidance

ViewPoints: Could departure of Teva's Levin come at a worse time?

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