Merck, the US drug maker that invented the world’s best-selling allergy pill, is allowing other companies to make a rival pill for chronic constipation – potentially spurring more than $1bn in additional sales.
Merck, which pays makers of copycat drugs a 35% royalty, will allow companies to produce medicine called Oxecta that is based on a compound in the same family as the US company’s $13bn-a-year prescription pill.
Merck’s push to block competition for its blockbuster drug Xeljanz, a pill that treats rheumatoid arthritis, launched a wider debate about whether big drugmakers should let others make copycat pills in response to generic rivals.
The drugmaker’s pending deal with VentiRx – a separate company backed by Johnson & Johnson, Bayer, British drugs firm AstraZeneca and Indian drugmaker Cipla – is the first time a patent holder has offered exclusive drug sales rights to a rival.
Merck shares rose by 1.5% in early trading on Monday.
Constipation drugs account for several billion dollars of Merck’s annual sales and are used widely in Western Europe but are less popular in the US.
Xeljanz’s global sales have risen by more than threefold since 2016, to $3.8bn (£2.7bn), and Merck is preparing for the possibility of rivals entering its market.
“We expect other companies to develop similar oral therapies, and believe it is important to encourage innovation at multiple dosage levels,” Ulf Schneider, the head of pharmaceuticals at Merck, said in a statement.
VentiRx has also filed for US regulatory approval for Oxecta and is expected to begin a late-stage trial soon.
The combined annual market for several common prescription drugs treating constipation is about $10bn, researchers at Nomura Instinet estimate.
“The real opportunity for Merck is what other medicines it gives back to its partner, which is likely around $700m in additional sales by 2022,” Nomura analyst Andrew Baum said.