Fitch Ratings revises Merck & Co.’s outlook
Cytori has announced it has been informed that seven new investigator-initiated clinical studies in Japan using adipose-derived regenerative cells have been approved by local ethical committees. The approvals are at leading academic university hospitals and include a diverse group of therapeutic applications. All seven studies are investigator-initiated and to be performed under local and country
Full Post: Cytori announces seven new investigator-initiated clinical studies in Japan
Fitch Ratings has affirmed Merck & Co.’s (Merck) ratings, and revised the Rating Outlook to Negative from Stable.
The ratings affirmed are:
- Long-term Issuer Default Rating (IDR) at ‘AA-’;
- Senior unsecured debt rating at ‘AA-’;
- Bank loan rating at ‘AA-’;
- Short-term IDR at ‘F1+’.
The ratings apply to approximately $6.93 billion of outstanding debt. The Rating Outlook is Negative.
Merck is in the middle of a period of intellectual property losses during which four of its top-selling drugs will potentially face generic competition. Two major drug products, Zocor and Fosamax, have already lost market exclusivity over the past two years. The period of patent expiry extends until 2012, when the company faces the potential patent loss of its highest revenue generator, Singulair. Additionally, Merck’s research and development (R&D) program, which had been highly successful in prior years, has experienced recent delays in key projects, including Tredaptive in the U.S.
Fitch’s Outlook revision reflects an estimate of flat- to slightly declining revenues over the long term, as potential commercialization of the R&D pipeline will not fully offset declines due to the maturing drug product portfolio, with the worst effect on revenues in 2010, and lessened impacts in 2012 and 2013. Given the challenges to the company’s intellectual property position, Merck’s credit profile is dependent on operating cost efficiencies gained from ongoing restructuring activities as well as improving equity income from its joint ventures, most notably the Merck/Schering Plough joint venture.
Fitch recognizes that Merck has undertaken significant restructuring activities over the past few years, including major programs announced in 2005 and 2008, to control operating costs during the current wave of drug patent expirations. Cost cutting efforts have led to a moderation of manufacturing costs as well as a reduction of marketing expenses, yielding EBITDA margins for 2007 and the latest 12-month period ending Sept. 30, 2008, above that experienced prior to the patent loss of the company’s then top-selling product, Zocor, in June 2006. However, Fitch expects continued pressure through the intermediate term on equity income received from the company’s cholesterol joint venture with Schering-Plough Corp. due to significant sales declines of Vytorin and Zetia.
Liquidity is not a major concern, as Merck had full capacity of its $1.5 billion revolving credit agreement (due in April 2013) at the end of the third quarter, as well as strong free cash flow generation. The company had cash and short-term investments totaling $6.84 billion at the end of the third quarter, despite restricting $5.1 billion for the U.S. Vioxx product liability settlement during the quarter. Merck benefited from the partial redemption in March of its joint venture with AstraZeneca, which resulted in a cash inflow of approximately $2.6 billion after netting out the $1.38 billion loan due to AstraZeneca. There is no significant debt maturity until 2015 (approximately $1 billion); however, anticipated near-term borrowings from a letter of credit vehicle used to fully fund the Vioxx litigation settlement are expected to be paid through the intermediate term.
Merck still has significant litigation exposure from a wide range of previous and new legal cases, including those pertaining to Vioxx and now Zetia/Vytorin. The U.S. Vioxx product liability settlement and the closure of numerous investigations of past sales and marketing practices this year has removed considerable uncertainty; however, patent challenges to key pharmaceuticals remain and Fosamax product liability has arisen.
Mylan Inc. has announced that its subsidiary Dey L.P. has been issued several additional U.S. patents protecting the company’s Perforomist(R) Inhalation Solution, a chronic obstructive pulmonary disease (COPD) treatment. U.S. Patent No. 7,462,645 was issued Dec. 9, 2008, and is directed to treatment through the administration of a ready-to-use, storage stable composition of formoterol. This
Full Post: Dey L.P. issued new U.S. patents for Perforomist inhalation solution
Human Pheromone Sciences, Inc. has announced that it has filed a Comprehensive Patent Application with the International Bureau of the World Patent Office for the use of its innovative and previously undeveloped compound with its origin in sea coral, which has significant emotional impacts on both men and women, enhancing feelings of positive social relationships,
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Mylan Inc. has confirmed that the company and its subsidiary, Mylan Pharmaceuticals Inc., have been sued by Novartis in connection with Fluvastatin Capsules USP, 20 mg (base) and 40 mg (base), the generic version of Novartis’ Lescol(R) Capsules. Mylan believes it is the first company to file a substantially complete Abbreviated New Drug Application
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Teva Pharmaceutical Industries Ltd. announced today that the U.S. Food and Drug Administration has granted approval for the Company’s Abbreviated New Drug Application (ANDA) for Fentanyl Transdermal System, 25 mcg/hour, 50 mcg/hour, 75 mcg/hour and 100 mcg/hour, the AB-rated generic equivalent of Ortho McNeil’s chronic pain treatment Duragesic. Shipment of this product has commenced.
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Teva Pharmaceutical Industries Ltd. has announced that its subsidiary, Teva Pharmaceuticals USA, Inc., has signed an agreement with AstraZeneca to settle patent litigation involving Teva’s U.S. generic version of AstraZeneca’s Pulmicort (Budesonide) Respules including all claims for patent infringement and damages. Teva launched its generic budesonide respules in the U.S. on November 18, 2008. The
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