While most of the dry eye community is still buried up to its eyelashes in the DEWS II report (400 pages!), the world of economics and markets acknowledged a tectonic shift: Restasis is about to lose its patent protection. Yes, I know, we’ve already talked about this here, but this is the real deal. In addition to the possibility of a branded cyclosporine A (Sun’s filing for an NDA was accepted by the FDA), it is highly likely that Allergan will have at least two generic competitors to Restasis by 2019. Coupled with the arrival of Xiidra last July, it is possible that we will have gone from precisely one FDA-approved dry eye medicine to five in 18 months.
That, my friends, is what’s known as a game changer.
Allergan’s response has been swift and decisive. After the loss in federal court in Texas, Allergan took a $3.2 billion “impairment charge” (loss of “goodwill” or “brand value”) on the value of Restasis to the company. While I don’t pretend to be a financial analyst of any sort, this seems to send the message that Restasis as a brand has uncertain value at best.
In response to the anticipated attacks on the Restasis revenue, CEO Brent Saunders promised significant cost cuts at Allergan.
These arrived last week as Allergan announced plans to let 1,000 employees go and drop 400 unfilled positions from the rolls, moves that will save more than $400 million per year.
What, if anything, does this mean to you, the DED doc out there in the trenches taking care of patients? I’m going with, “It depends on who you are and where you practice.” If you are in an area where your Restasis sales team stacked up well relative to other teams in the country, you were only surprised by how happy your Allergan reps were on Friday. If you noticed at all. Most of us, though, experienced the loss; the entire sales team (including the regional manager) covering SkyVision was let go.
Listen, business is business, and if I’ve tried to tell you anything these last couple of years, it’s that the industry players in our field of dreams keep score in a wholly different way than we do. Heretofore, Allergan has built an ophthalmic franchise on its relationship with prescribing doctors via its extraordinary sales force. The relationship survived axing the ECBA program; time will tell what this change brings.
Disclosure: White reports he is a consultant to Allergan, Shire, Sun, Kala, Ocular Science, Rendia, TearLab, Eyevance and Omeros; is a speaker for Shire, Allergan, Omeros and Sun; and has an ownership interest in Ocular Science and Eyevance.