Glaxo breathes easier as threat to Advair recedes

* Lung drug may not face competition in U.S. before 2016

* Teva says not planning to make generic version for U.S.

* Glaxo shares up 2.3 percent

By Ben Hirschler

LONDON, Nov 5 (BestGrowthStock) – GlaxoSmithKline Plc’s (GSK.L: )
top-selling lung drug Advair is set to enjoy a longer lease of
life than widely expected, due to the difficulties facing
generic companies seeking to make cut-price copies.

Fears of competition to the 5 billion pounds-a-year ($8.1
billion) blockbuster have long overhung the shares, but a
strategy update from Teva Pharmaceutical Industries Ltd (TEVA.O: )
suggests the threat is limited and not imminent.

Crucially, Teva believes the regulatory hurdles for winning
approval for an inhaled drug such as Advair in the key U.S.
market are so high it will not be possible to develop a generic
copy that can be substituted for the original.

Instead, the world’s biggest maker of generic drugs told
investors on Thursday it would work on a branded competitor that
could be filed for U.S. approval in 2014, which analysts said
suggested approval in 2016.

Glaxo shares were 2.3 percent higher by 1350 GMT on the
news, outperforming a 1 percent advance in the European drugs
sector (.SXDP: ).

“The world’s top generic company has now admitted that
there will be no rapid erosion of Advair by generics, which
should assuage the fears of even the most sceptical fund
manager,” said Citigroup analyst Kevin Wilson.

Teva’s strategy removes a key threat to Advair and follows a
decision by Novartis AG’s (NOVN.VX: ) generics unit Sandoz in
March to drop development of a generic version of Advair it was
working on with Vectura Group Plc (VEC.L: ). [ID:nLDE62H0DZ]

In Europe, Teva plans to file a generic form of Advair for
approval in 2012, implying a launch in 2013 or 2014, which is
two or three years later than some Glaxo investors had feared.

Overall, Teva expects respiratory products to contribute
about $2.4 billion to its $31 billion revenue target for 2015.
[ID:nN04261999]

VINDICATION

The latest news is a vindication for Glaxo Chief Executive
Andrew Witty, who has always argued Advair will remain a major
product, despite losing U.S. patent protection in 2011, because
of the technical difficulties of making inhaled drugs.

Continued strong sales of Advair, which accounted for 18
percent of revenue in 2009, will give Witty an important buffer
as he pushes to diversify the British-based drugmaker and secure
new sources of revenue.

Lack of imminent generic competition could also help ease
the transition to a new treatment for asthma and chronic
obstructive pulmonary disease (COPD) that Glaxo is developing
with Theravance Inc (THRX.O: ).

Glaxo recently gave a promising glimpse of its once-daily
successor to Advair, called Relovair, which it expects to be the
first next-generation combination respiratory medicine to reach
the market. [ID:nLDE68L1N6] [ID:nLDE69K1SZ]

It has started final-stage Phase III clinical testing of
Relovair and analysts believe the drug could get to market by
2013, at which point the drugmaker will try to switch as many
patients as possible to the new product.

($1=.6198 Pound)

(Editing by David Hulmes)

Glaxo breathes easier as threat to Advair recedes