More -- on Schering-Plough's Larger Drug Franchise "In-Substance" Patent Cliffs

As I noted toward the end of this post, even though many on Wall Street tout Schering-Plough's relative dearth of formal patent expiries (most after 2014; many in the 2017 to 2019 time-frame) -- there is another side to this story. That story involves the right, under the various Hatch-Waxman amendments, of generic manufacturers to launch generic versions of most of these drugs, "at risk" -- on the earlier to occur of (1) a favorable outcome in patent litigation, (2) 30 elapsed months from the filing of a patent lawsuit, coupled to FDA approval of an abbreviated new drug application, or (3) the formal expiration of the relevant as-granted patents.

A technical note, here -- only the Temodar matter has resulted in a trial, thus far -- the trial concluded on April 2, 2009. Thus, there has been no decision rendered, as to factor (1), above, on any of these, so I'll omit it from the table below, for now. [And in the "credit where credit is due" department: J&J does a terrific job of setting all of this out (at page 25), in handy charts, for J&J investors -- so I've mocked one up, for Schering-Plough investors, below.]

Chemical Name	Branded Name	Sales ($M/Yr)	First Suit Filed	30 Month Expiry/ First "At Risk" Date	Likely Competitor
Descloratadine	Clarinex®	$800 Million	September 2006	May 2009*	Orchid Pharma* (India)
Ezetimibe	Zetia®	$900 Million	March 2007	October 2009	Glenmark Pharma
Temozolomide	Temodar®	$950 Million	July 2007	January 2010	Barr Labs (Teva Pharma)
Eptifibatide	Integrilin®	$300 Million	February 2009	November 2011	Teva Pharma

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* All but one potential generic Descloratadine manufacturer has agreed to a standstill until January 2012, for generic launches. I believe the one remaining is Orchid.

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I'll be off the grid for most of the day, today, so as you contemplate the above -- over your morning coffee, tea or chai -- discuss among yourselves whether there is any sound theory of executive compensation to justify payouts for 2006 of $16 million; for 2007 of $15 million, and now -- for 2008-2009 -- post May 1, 2009, perhaps an additional $100 million. Over the last three years, that is $131 million, to a CEO who generated a five-year "total shareholder return" of less than three quarters of one percent.

. . . .Do remember to add a little more than $7 million -- for every single dollar in stock price increases, from the base of $22.91 -- by merger time. . . .