Taro Pharmaceutical Industries (Nasdaq: TARO)’s generic version of Lotrisone, a drug for treating skin diseases and fungus, was launched only one month ago, but has already exceeded expectations for its market penetration. The data shows that Taro achieved a 46.4% share of the new prescriptions in the fourth week, while the ethical drug itself, Schering Plough’s Lotrisone, held 43.4% of the market. Third place was held by Fougera’s drug with a 10% market share.
”The weekly Rx data that we receive does not differentiate between cream (Taro & Fougera and potentially SGP) and lotion (exclusively Schering Plough),” explains Merrill Lynch investment house analyst Paul Woodhouse. “Therefore this suggest Taro has now captured at least a 46% share of the overall $200 million Lotrisone market and still over 80% of the generic market. At generic prices, this now points to a theoretical annualized sales run rate of over $60 million,” Woodhouse adds.
The sales forecast for the Lotrisone substitute has been revised twice. When the drug was launched on the market in June, Merrill Lynch predicted its approval could contribute $15 million to company revenue in 2001 and $25 million in 2002. Reality, it seems, has confounded the forecasts.
As reported in “Globes”, Taro has exploited its lead (Fougera’s generic drug was launched a week later), and within only 10 days managed to achieve its annual target, thanks to the severe shortage of Lotrisone creams in the market. While this shortage was due to Shering Plough’s strategy of educating the market to lotions, in which it had exclusivity, in the end Taro defeated Shering Plough.
Merrill Lynch hurried to revise its sales forecast for 2002 to $50 million. They are now again revising the forecast, estimating that Taro’s profits in 2002 are likely to reach over $33 million.
Published by Israel's Business Arena on July 10, 2001