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June 19 (Reuters) - UBS downgraded two major U.S. pharmacy benefit managers, saying potential benefits from the launch of a generic version of Pfizer Inc’s (PFE.N) blockbuster cholesterol drug Lipitor were now delayed after the U.S. drugmaker settled patent disputes with India’s Ranbaxy Laboratories RANB.BO.
UBS cut its rating on Medco Health Solutions Inc MHS.N and Express Scripts Inc ESRX.O to “neutral” from “buy,” and said the companies will now realize benefits from the generic drug beginning late 2011 — the launch date as stipulated by the settlement, against the earlier expectation of a 2010 launch.
“While Lipitor was not factored into our model, we viewed a 2010 launch as a source of upside,” the brokerage said in a note to clients.
Pharmacy benefit managers obtain prescription drug benefits for employers and health insurance plans. They are usually helped by the introduction of cheaper generics as these have a higher profit margin than branded drugs.
UBS cut its price target on Medco’s stock to $53 from $61, and on Express Scripts’ stock to $73 from $81.
Medco shares closed at $45.75 on the New York Stock Exchange, while those of Express Scripts closed at $64.85 on Nasdaq, both on Wednesday. (Reporting by Varsha Tickoo in Bangalore; Editing by Pratish Narayanan, Jarshad Kakkrakandy)