Merck: generic Singulair threat becomes reality

As anticipated, Merck is about to face a significant decrease in revenue as the first generic versions of its blockbuster Singulair reach the US market. Although Merck's strong pipeline is aimed at offsetting the impact of generic erosion, little can be done in the immediate future to stem this loss.

Merck's leukotriene antagonist is widely used to treat both allergic rhinitis and asthma. In asthma, where Singulair (montelukast) is commonly used as an add-on therapy, use increases significantly with disease severity. Datamonitor's 2012 survey of pulmonologists revealed that more than half (53%) of severe asthmatics in the US are treated with Singulair. In the EU, where generic erosion is expected to start after patent expiry in February 2013, use in severe asthma is high as well. Italy shows the highest use, with 74% of severe asthmatics treated with the brand.

While both asthma and allergic rhinitis are heavily penetrated markets, Singulair holds a unique position as a leukotriene antagonist and is available in numerous convenient oral formulations. The approved generics will target the breadth of Singulair's product offering, with generics companies such as Teva receiving the green light for tablets, chewable tablets, and oral granules.

In 2011, Merck reported Singulair's sales in the US to be $3.5bn with global sales of $5.0bn. However, with the FDA granting 10 different companies marketing approvals for their generic forms of Singulair, Datamonitor expects a rapid loss of sales for the brand, with 90% of US value erased within a year.

Singulair's genericization has been a long time coming, and Merck is aiming to offset the loss with a packed late-stage pipeline. Indeed, Datamonitor expects six marketing applications to be submitted over the next 18 months. While it would be difficult for any new product to emulate the success enjoyed by Singulair, the varied R&D activities of the company, spanning numerous disease areas, could together help to make up the revenue gap. Furthermore, this could help to insulate the company from such a dramatic dip in the future. Still, an initial rapid loss is unavoidable as patients and payers are expected to eagerly replace the brand with cheaper generics.