AZ drops 11% as FDA clears Teva's Pulmicort

The US Food and Drug Administration has granted Israeli generics giant Teva approval to market a generic version of AstraZeneca's blockbuster product Pulmicort Respules (budesonide inhalation suspension).

Shares in the Anglo-Swedish drug major fell 11% on November 19, after it warned that full-year profit would be at the lower end of previous guidance - $4.90 to $5.05 - due to the potential effect of generic competition. The London-based firm said that "lost sales, one-time charges associated with stock write-offs and provisions against inventory in the pipeline," could lead to an earnings drop of $0.16 per share. So far this year, the preventive and maintenance therapy for asthma generated $1.1 billion in revenue, almost 5% of the firm's $23.4 billion total turnover.

Later that day, AstraZeneca was granted a temporary restraining order by the US District Court for the District of New Jersey, halting sales of Teva's generic. The TRO remains in force until further order of the court, which will help ease concerns that full-year earnings will be lower than expected. A preliminary injunction hearing is scheduled to begin on November 25, with the full case due to start on January 12.