Johnson & Johnson (JNJ) has warned certain sales representatives to be prepared for layoffs due to the possible launch of competing generic copies of its blockbuster drug for attention-deficit disorder, according to a person who was on a sales-force conference call last month.

The drug, Concerta, generated $1.3 billion in sales last year, or 2% of J&J's total revenue, but an April court ruling invalidated a key patent for the drug. J&J, of New Brunswick, N.J., says cheaper generic versions could be cleared by U.S. regulators at any time, which would significantly reduce sales of the original brand-name drug.

Generics manufacturers Impax Laboratories Inc. (IPXL) and Watson Pharmaceuticals Inc. (WPI) are hoping to receive U.S. Food and Drug Administration approval for proposed generic versions of Concerta soon. But although Watson hopes to be selling it by 2011, hurdles surrounding product labeling and final regulatory approval still remain.

Late last month, a J&J executive told Concerta sales representatives on a conference call that they should brush up their resumes and start exploring other job opportunities, because generic competition would likely cause J&J to reduce the Concerta sales force, according to a person on the call. Information about the call also was posted anonymously on message boards on CafePharma.com, a website aimed at drug sales reps.

J&J spokeswoman Kara Russell said, "We communicate with our employees regularly," but she couldn't reveal details or say when the company expects generic Concerta to become available. "Like everyone else, we are watching very closely to see when there may be a more definitive development on Concerta," Russell said.

FDA spokeswoman Sandy Walsh said she couldn't speculate on the potential for agency approval of generic versions of Concerta.

The launch of generic Concerta wouldn't necessarily surprise Wall Street, given the patent setback. Wells Fargo analyst Larry Biegelsen sees 2010 Concerta sales flat with 2009's $1.3 billion, then steadily declining in subsequent years.

Concerta, which treats attention deficit/hyperactivity disorder, went on sale in the U.S. in 2000, and its basic patent expired several years ago. Watson challenged the validity for another Concerta patent, sparking a patent-infringement suit by J&J, but a federal appeals court sided with Watson in April, invalidating that patent.

But the FDA still hasn't approved generic versions of Concerta. J&J in 2004 filed a petition asking the agency to use extra criteria when evaluating proposed copies of Concerta, which is an extended-release drug. J&J argued the FDA should require generics makers to demonstrate their generic versions are absorbed by the body gradually over the course of a day, in the same way that the branded drug is.

The FDA hasn't yet decided on J&J's request, Walsh said.

Watson has submitted to the FDA additional information to show that its proposed generic is bio-equivalent to the branded drug, spokeswoman Patty Eisenhaur said.

There is another potential wrench in plans for generic Concerta, however. J&J recently secured an additional period of exclusivity for Concerta, through November 2012, because information about the abuse potential of Concerta was added to its prescribing label.

Watson is considering trying to sidestep the extended exclusivity by omitting the abuse-potential information from the label for its proposed generic Concerta, which would allow Watson to launch its product before November 2012, assuming it's approved by the FDA. However, because it involves a safety matter, Watson Chief Executive Paul Bisaro recently told an investor conference the company will have to work with the FDA to convince it to allow Watson to carve out the abuse information.

Impax also would consider trying to carve out the abuse information from the label for its proposed generic product, said spokesman Mark Donohue.

The FDA will take a close look at Concerta's labeling to determine what the label for a generic copy may look like, said spokeswoman Walsh.

-By Peter Loftus, Dow Jones Newswires; +1-215-656-8289; peter.loftus@dowjones.com
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