GlaxoSmithKline's top-selling drug by far is the asthma medication Advair, which accounts for about 20 percent of company revenue. Generic competition got a bit closer to reality on Monday.
Advair is delivered to patients through an inhaler. Besides any existing patents, brand-name drug companies like GSK have hoped that the combination of drug and device would delay U.S. Food and Drug Administration issuance of guidelines for generic manufacturers who hope to make equivalent products.
The FDA issued such guidance on Monday, though the guidance is not final. A link to the technical document is here.
GSK, which is based in London and has operations around Philadelphia, had $10.2 billion in total revenue in the second quarter of 2013. Advair accounted for $2.1 billion of that total, with $1.1 billion coming from sales in the United States. The second quarter financial statement is here.
GSK's second biggest revenue generator in the second quarter was Avodart ($340 million), which is used by men to treat urinary problems related to an enlarged prostate.
Like other brand-name companies with complex drugs that have delivery systems, GSK had hoped the FDA would require any generic companies to prove their versions of Advair can stand on their own - meaning with the same long, expensive clinical trials that original drugs require.
"Unfortunately for GSK, this new draft guidance document suggests otherwise," Bernstein Research analyst Tim Anderson wrote in a note to clients.
Anderson figures it will be 2016, when the patent expires, that generics would first enter the market but he allowed for generic companies taking longer to sort out the complexities of the medicine. Anderson noted that because many other analysts had not predicted any generic competitors in the U.S., the stock might take a hit. And on Monday it did fall $1.21 to $50.46 at the end of the day.