S&P: Pfizer, Merck likely unchanged

Standard & Poor's said in a report that in the latest twist in the interplay between Big Pharma and the generic drug industry, Pfizer Inc. has announced that it is producing a much lower costing generic version of its best-selling antidepressant Zoloft following its very recent patent expiration.

The agency said that this comes on the heels of Merck & Co. Inc.'s announcement that it was selling a heavily price-discounted generic version of its cholesterol lowering statin, Zocor, after its patent expiration.

According to the report, these moves raise concerns for the generic drug makers, as they introduce additional players into an already highly competitive environment and threaten the lucrative earnings opportunity afforded to the generic drug industry by the 180-day exclusivity provision.

While these latest developments warrant close attention, S&P said it does not believe that they will ultimately result in any negative rating actions, adding that future earnings expectations for generic drug makers will undoubtedly be affected by similar actions by Big Pharma.

"We have never raised a generic drug maker's rating solely on a 180-day opportunity, nor have we downgraded a rating due to the expiration of the exclusivity," noted S&P credit analyst Arthur Wong.

"Our focus is on the generic drug companies' ability to continually develop new products on a timely basis and to maintain market share on older base products."

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