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MERCK ENTERING GENERIC BUSINESS WITH WEST POINT PHARMA

Executive Summary

MERCK ENTERING GENERIC BUSINESS WITH WEST POINT PHARMA, a newly-created division announced by Merck on Sept. 3. West Point Pharma's first product, a generic version of Merck's nonsteroidal anti-inflammatory drug Dolobid (diflunisal), is expected to reach the market in October. The Dolobid patent expired in April, but the company has not yet faced generic competition. The Israeli pharmaceutical firm, Teva Pharmaceutical Industries (through its Lemmon subsidiary) has had an approved diflunisal application since July 31 ("The Pink Sheet" Aug. 3, In Brief). Lemmon is set to launch its diflunisal shortly. Merck intends to sign up a marketing partner for the generic. Merck has narrowed its choice of partners down to two contract selling companies with experience in marketing and selling generics. The Philadelphia-based ad agency Sulpizio Associates has been selected to advertise West Point's diflunisal to the trade. Heading up West Point Pharma as general manager is marketing exec Ed Jeglum. He has previous experience with the generic market as director of the marketing efforts for Merck's multi-source products. Most recently, he was product manager for the lipid- lowering agent Zocor. Merck's decision to establish a generic marketing subsidiary for its own products facing generic competition follows the pattern established last summer by ICI with atenolol. As such, it is not a ground-breaking event. However, because of Merck's long reputation as a brandname-only firm, the decision is a milestone for the industry. Over the years, Merck executives have avoided even the use of the generic names of their products in public. Merck has been sidling up to generic marketing prior to the establishment of West Point Pharma; through its DuPont Merck affiliate, it has had an broad generic line. The DuPont Multi- Source Products unit currently markets off-patent DuPont products. Another DuPont Merck product is facing imminent generic competition, the Parkinson's drug Sinemet (see following T&G). The company rationalizes its entrance into the generic business as part of its support for R&D activities. The decision "was based on the goals of generating revenues to support the company's research and development program and to satisfy the preference of some customers for generic products," the company explained. The move into generics comes well before Merck's strongest- selling products are due to come off patent, giving the company several years to weather the image-change prior to having to deal with a really significant product. The ophthalmic beta blocker Timoptic (timolol) is the only major Merck product that will come off patent in the next five years, in March 1997. The West Point Pharma diflunisal tablets will be engraved with a different identification code than Dolobid tabs and will bear the inscription "WPPh." The generic product will be made at the same West Point, Penn. facility where Dolobid is produced. Trade dress for the generic will be labeled "West Point Pharma, a division of Merck." In addition to the generic sales of diflunisal, Merck may also make it one of the switch candidates for its OTC marketing effort through J&J-Merck. Merck officials say that the company has never commented on Dolobid publicly as a potential switch candidate. Merck Chairman Roy Vagelos told analysts in 1988 that Dolobid was the type of product in Merck's line that could be a switch candidate. As part of the J&J-Merck venture, it would have to show potential in the consumer analgesia class that J&J knows well.
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