Competition from generic pharmaceutical companies can be a major problem for most companies, and Amarin Corporation plc (NASDAQ:AMRN) got a setback in that regard on Tuesday. The United States District Court of Nevada rendered the company’s patent firewall around its product Vascepa invalid and opened the company up to competition from generic manufacturers.
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Vascepa is approved by the United States Food and Drug Administration to treat cardiovascular diseases, and it goes without saying that it is a massive blow to the company. The Amarin stock tumbled by as much as 70% on Tuesday. After the fall, it’s worthwhile to factor whether the Amarin stock is a buy or not.
Wall Street analysts previously forcasted that the stock would eventually hit $5 billion in annual sales, but the latest ruling has come as a massive blow for Amarin. The company’s market cap has shrunk to $1.44 billion, and at this point, the stock is trading at twice its cash position. That makes the stock a bargain.
The coronavirus pandemic was expected to have an adverse effect on Amarin’s performance in the current quarter, but unless a generic version of Vascepa hits the market, the company is in the safe territory in the near term. Additionally, it is expected that Amarin is going to generate sales in the $450 million and $650 million range.
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While it cannot be denied that the latest ruling has hurt the company’s future prospects, it should be noted that the company is still protected outside the United States. There is no litigation against Amarin outside the U.S., and hence once Vascepa managed to get wider approval worldwide, the company’s prospects could improve considerably.
Analysts believe that the stock is currently undervalued following the verdict, and there is an expectation that it could rebound in the near term. As a matter of fact, $AMRN has rebounded by as much as 10% following the selloff after the news.