The protracted legal battle is over. Ivax can now manufacture and market a generic form of Taxol, and BMS must come to terms with the erosion of sales of one of its key products - up to 30% of Taxol's sales in the first year.
The ruling couldn't have come at a worse moment for Bristol-Myers Squibb (BMS) - just days after the announcement that it was also under investigation over possible anti-competitive conduct. American Biosciences Inc. had previously issued a patent infringement lawsuit against BMS, which potentially would have enabled the Taxol patent to stay on the orange book list (FDA patent list) for an extra 30 months pending the outcome of the dispute. The original patent was to expire in the summer of 2000.
But the regulators, concerned that the stifling of generic competition would be harmful for patients, decided in Ivax's favor. Taxol's main use is in the treatment of breast and ovarian cancer; the generic form of the drug would contain the same active ingredients at the same levels but would sell at a lower price. Currently costing between $1,000 and $3,000 per course of treatment, competition would make it easier for those on low incomes to obtain treatment for their conditions.
Ivax's paclitaxel will massively reduce Taxol's sales ($1.48 billion in 1999). Datamonitor estimates that the generic drug will eat away up to 30% of Taxol's market share within the first year. In subsequent years the drug will face even stiffer competition, not only from generic rivals, but from the likes of Aventis' Taxotere, which has experienced strong growth in sales over the past five years and whose patent extends until 2010.
Taxol's vulnerability is bad news for BMS. After peaking in the final quarter of 1999, the company's share price has kept falling. A 30-month extension on rights to exclusively produce Taxol would have led to an injection of revenue and a renewing of investor faith. The introduction of direct competition from Ivax's paclitaxel will only add to its instability.