Summary
Caraco Pharmaceutical Laboratories, Ltd., (Amex: CPD) is one among 13 companies approved by the FDA (on April 23) to market the generic version of the drug Ambien (zolpidem tartate) as a short-term treatment for insomnia.
The FDA’s recent request that manucturers of hypnotic drugs strengthen their label to warn against complex, potentially dangerous sleep-related behaviors, has led to speculation that certain hypnotic drugs may be less commonly prescribed.
Analysis
Ambien has been a blockbuster drug for Sanofi-Aventis, dominating the sleep/insomnia market in recent years with very strong marketshare, with some 2 billion in sales last year. The generic forms should penetrate the market as easily, diminishing return on the trade brand. I do not see insurance plans paying for the name brand or physicians commonly requesting it. Sales for Caraco and the other companies will be diluted in comparison to the overall market, due to the 13 companies given approval, unless some are better poistioned through their distribution channels to enter quickly into the market.
Even with the FDA’s recent warning on hypnotics, which will result in further investigation and study, zolpidem (Ambien) is considered an effective and generally safe drug (when used properly just for sleep) among clinicians. Ambien CR, with its bimodal release to help people stay asleep more effectively, in my view doesn’t confer so distinct an advantage clinically as the marketing would have one believe.
