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Arthritis Drug Maker Losing Its Monopoly : Pharmaceuticals: As its patent runs out, Syntex faces another challenger. Analysts are predicting a 'ruthless market.'

September 30, 1993|From Bloomberg Business News

ELIZABETH, N.J. — Palo Alto-based Syntex Corp. on Wednesday faced another potential challenger to its monopoly on Naprosyn, the company's blockbuster arthritis drug.

Purepac Inc. of Elizabeth, N.J., said its Purepac Pharmaceutical Co. won tentative approval from the Food and Drug Administration to sell naproxen, a generic version of Naprosyn.

Naprosyn and another naproxen-based drug, Anaprox, generated $928 million of Syntex's $2.12 billion in worldwide sales for the year ended July 31.

Syntex's patent protection on the anti-inflammatory medications is scheduled to expire in December, threatening its U.S. naproxen sales of $681 million a year.

Purepac said it is one of five makers of generic drugs that have won FDA approval to sell naproxen. Syntex's Hamilton Pharma Inc. has been selling a generic version of Naprosyn since August.

Hemant Shah, an analyst with HKS & Co. in Warren, N.J., said at least four other generic drug makers can be expected to join the naproxen fray.

"This is going to be one of the most ruthless markets," Shah said.

The FDA's approval of Purepac's naproxen places additional heat on Syntex to develop replacements.

In New York Stock Exchange trading Wednesday, Syntex slipped 12.5 cents to $17.50 a share. The stock was at $54.25 in January, 1992, but has been falling amid doubts that new products will fill the void left by the naproxen patent expiration.

"When your quarterback ages and you don't get a replacement, it becomes very important" to develop new drugs, said David Saks, an analyst with Gruntal & Co. in New York.

Syntex has long been prepared for the patent expiration. In 1988, it and Procter & Gamble Co. formed a joint venture to develop an over-the-counter version of Naprosyn. That product is awaiting FDA approval. In addition, Syntex plans to sell raw naproxen to its competitors.

This week, Syntex named Robert Stevens Miller Jr., a restructuring expert, to its board. Miller, former chief financial officer of Chrysler Corp., helped rescue the auto maker from the brink of bankruptcy in the early 1980s.

Syntex is also cutting costs. The company began eliminating jobs in November and plans to cut its work force 20% by August, 1995.

Syntex plans to close factories in France, Britain and California as well as research laboratories in France and Canada. All told, the restructuring is intended to save $180 million a year, Syntex said.

HKS' Shah said Syntex's efforts could prove futile because naproxen is so important to the company.

"It doesn't matter what you do," he said. "You're going to lose your shirt and pants too."

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