Generic Prozac Clears Path for Sale, Eli Lilly Stock Takes a Hit

Strategic Insights -

A federal appeals court ruling cleared the way for the sale of a generic version of Prozac, the world's top-selling antidepressant, as early as next summer. The ruling, which was in favor of Barr Laboratories, the company that will sell the first generic version of Prozac, is expected to cause a significant reduction in sales of the brand-name version. Eli Lilly, the maker of Prozac, is set to appeal the decision, but the company's stock price has already taken a hit, plummeting 30 percent to $76 per share.

Key Takeaways:

  • The federal appeals court ruling will allow Barr Laboratories to sell a generic version of Prozac as early as next summer, two years earlier than expected.
  • The generic version of Prozac could be priced at less than one-third the current price, making it more accessible to the 38 million people worldwide who have taken the drug.
  • Eli Lilly's stock price has taken a hit, plunging 30 percent to $76 per share, in anticipation of reduced sales of the brand-name version of Prozac.
  • The company expects sales of Prozac to fall quickly in the second half of next year as people begin to buy the generic version.
  • Barr Laboratories' stock rose 66 percent to $76.25 per share as a result of the ruling.
  • Eli Lilly has a contingency plan in place in case the appeal fails, which includes getting regulatory approval for two different versions of Prozac and beginning sales of Sarafem, a treatment for premenstrual dysphoric disorder.
  • The company also plans to offset any reduction in sales of Prozac with new drugs in development, including Zovant and Forteo.

Statistics:

  • Eli Lilly sold $2.6 billion of Prozac last year, making up about 26 percent of the company's revenue. (Source: The New York Times)
  • The generic version of Prozac could be priced at less than one-third the current price of $90 for a 30-day supply. (Source: The New York Times)
  • Barr Laboratories' stock rose $30.25 per share to $76.25 per share, a 66 percent increase. (Source: The New York Times)
  • Eli Lilly's stock price plunged 30 percent to $76 per share in anticipation of reduced sales of the brand-name version of Prozac. (Source: The New York Times)
  • The company expects revenue to begin increasing again by 10 percent or more by late 2002, thanks to new drugs in development. (Source: The New York Times)

Sources:

  • "A generic Prozac Is Approved by a Federal Appeals Court", The New York Times, [no date]
  • "Barr Laboratories to Sell Generic Prozac", The New York Times, [no date]
  • "Eli Lilly's Stock Price Takes a Hit After Ruling on Prozac", The New York Times, [no date]