Some of America's best-known prescription drugs are on the brink of a sales plunge - and drug makers are scrambling to survive it. About 40 drugs with $16 billion in sales last year - one-quarter of the industry's US revenues and an even higher percentage of total profits for some companies - are set to lose patent protection by the end of 2002. That will throw the gates open to savage competition from cheaper generic versions.

The reason: Drugs created during a pharmaceutical research boom in the 1970s and 1980s are approaching the end of their patents.

Never before have so many blockbuster drugs come off patent in such a short period of time. It will mean cheaper drug prices and a potential bonanza for generic-drug makers. But it also will roil the industry over the next five years, reshaping the landscape and altering the way drug companies conduct research and do business. How the big drug makers that are most at risk deal with this looming chalenge will determine which ones survive in a new round of takeovers.

"It's an unprecedented period. It isn't just a great opportunity for us, it will be a great opportunity for consumers as prices drop," says Bruce Downey, chief executive of Barr Laboratories Inc, Pomona, New York, which plans to churn out cheap copies of the anti-depressant Prozac, which sells for $2 a pill in the US, and other big sellers.

At the epicentre of the patent-expiration quake is giant Merck & Co, which will lose a lock on four drugs that provided more than half of its $6.18 billion US drug sales last year, including the heart drugs Vasotec and Mevacor. Schering-Plough stands to lose exclusivity on the allergy drug Claritin and others that contributed 57 per cent of its $2.61 billion prescription US drug sales last year. And Eli Lilly & Co faces patent expirations on drugs that generate more than half of its $4.02-billion US drug sales, including Prozac.

The upheaval has already begun. Patent protection expired last month for Glaxo's anti-ulcer drug Zantac, one of the world's largest-selling prescription drugs with annual sales of $1.6 billion in the US alone. (The drug is also available over the counter.) Last week, the first generic rival entered the market. Glaxo's herpes drug, Zovirax, lost its patent power earlier this year and now competes with generics that cost consumers about 80 per cent less. To avert calamity, major pharmaceutical companies are racing to find new drugs to replace the billions of dollars in sales they stand to lose. They are embracing risky new technologies more quickly and scouting the world for alliances and drug-licensing deals. Some are betting on legal muscle, lobbying for patent extensions and pursuing narrower, add-on patents for a drug's use or method of manufacture. And in a radical change, some companies are shedding their Hollywood-style focus on finding afew big hits - a long-time practice that left them vulnerable when patents expired - in favor of developing a broader range of drugs. Ultimately, that change could yield drugs aimed at smaller markets, and for rarer illness, which might have been shelved in the past.

Still, some observers doubt all of this effort will be enough. It can take 15 years to turn a newly created molecule into an approved product, with many more failures than successes along the way (only about one in 250 chemical compounds that go into laboratory and animal testing ultimately makes it to pharmacy shelves). Even though companies aim to cut that gestation time in half, it is doubtful they have enough new drugs in the works now to offset the revenue lost to generics.

Jurgen Drews, research head of Swiss giant Roche Holding Ltd, was one of the first to sound the alarm, warning two years ago that "the outlook for the industry is bleak." Today it hasn't much improved, he says, adding that the industry still isn't generating enough new drugs to outrun the patent expirations.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.