LONDON U.S. regulators approved two generic versions of Reckitt Benckiser's heroin addiction drug and rejected its bid to block rival products on the grounds that stricter packaging rules were needed to protect children.
The British consumer health goods company's pharmaceuticals division makes most of its profit from Suboxone, a treatment containing buprenorphine that helps people addicted to opiates cope with ceasing to take them.
The company had been warning that generic competitors were likely to enter the market since its exclusivity status expired in 2009.
Hoping to shore up its position, Reckitt has been campaigning to persuade the U.S. Food and Drug Administration (FDA) to refuse applications from manufacturers unless they adopt stringent packaging standards.
But on Monday, Reckitt said it had been informed by the FDA that the regulator had approved two generic versions of Suboxone tablets in the United States.
Furthermore, the FDA said in its letter that it had received comments asserting that Reckitt's petition was an anti-competitive practice, and that it would refer the company to the Federal Trade Commission.
Last year, Reckitt voluntarily withdrew the sale of Suboxone tablets in the United States in favor of an individually sealed film version, which melts on the tongue, saying there was a higher risk of children mistakenly getting hold of tablets.
The FDA said there was not sufficient evidence to support the need for stricter packaging.
"While FDA welcomes and encourages sponsors to utilize unit-dose packing for their oral buprenorphine products, we do not believe the data at this time support refusing to approve applications that lack such packaging," it said.
A recent downward trend in accidental exposure of children to the drug could be attributed to many factors, including clearer labeling and a better understanding among patients and pharmacists of the dangers of an overdose, it said.
"The timing of Reckitt's September 2012 announcement that it would discontinue marketing of the tablet product because of pediatric exposure issues, given its close alignment with the period in which generic competition for this product was expected to begin, cannot be ignored," said the regulator.
The company said it was "disappointed" with the FDA's decision but would continue to work with the drugs regulator on safety enhancements.
"Reckitt Benckiser Pharmaceuticals remains confident in the value and benefits of Suboxone Film as the product is a significant advancement in product technology," it said in a statement on Monday.
The news wiped nearly 4 percent off the FTSE 100 company's shares, a reaction that Andrew Wood at Bernstein said was "overdone".
"In fact, we see this as a positive move in finally lifting off the cloud of uncertainty that has bedeviled RB's stock in recent years," he said.
Meanwhile, Deutsche Bank estimated that - assuming generics launch within a month and 90 percent of tab users switch within nine months - Reckitt's group profits would see a 2 percent hit in 2013.
"Had RB not repeatedly warned on the potential threat of a generic Suboxone tab entry, the valuation impact would have been far greater than it will probably end up being," the broker said, adding that it expected the firm's core household and over-the-counter business to do well in 2013.
The company, which makes products ranging from Strepsils lozenges to Cillit Bang cleaner, beat market forecasts on its 2012 performance earlier this month, leading the shares to a record high.
(Reporting by Rosalba O'Brien; Editing by Anthony Barker)