This Little-Known Stock Could Double Thanks to the "Patent Cliff"

Generic drug companies are standing on the cusp of a once-in-a-lifetime opportunity.

 

In the next five years, a total of $290 billion in prescription drug sales are expected to lose patent protection, making brand-name pharmaceutical companies vulnerable to generic competition. The effect this so-called "patent cliff" will have on the generics space cannot be overstated.

Take cholesterol blockbuster Lipitor for example, which peaked with annual sales of $13 billion in 2006. In spite of Pfizer Inc.'s (NYSE: PFE) greatest efforts to hold market share and protect its crown jewel, sales of Lipitor fell by 50% the first week it went off patent in late December 2011. But for Ranbaxy Laboratories, it was a watershed moment, reaping $500 million in sales for its generic version of Lipitor in just the first six months the drug had gone off patent protection.
The generic space is littered with success stories just like this.

Activis Inc. (NYSE: ACT), which has rolled out a series of copycat drugs in the past year that includes authorized versions of Lipitor and Johnson and Johnson's (NYSE: JNJ) attention deficit hyperactivity disorder drug Concerta, saw its share price jump 44% in 2012. (more)

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