The generic version of Teva blockbuster multiple sclerosis drug Copaxone.
The surprise approval came a day after the health regulator said it would introduce a slew of measures to speed to market generic versions of complex drugs in an effort to address the rising cost of pharmaceuticals.
U.S. listed shares of Israel-based Teva teva sank 15.2% in response while Mylan was the top gainer on the S&P 500 before the opening bell.
The FDA approved both doses—20 mg and 40 mg—of Mylan’s version of Teva’s Copaxone, which generated global sales of $1.02 billion in the second quarter of this year. Mylan myl had missed out on approvals twice this year, and before Tuesday investors assumed there would be further delay.
“Approval represents a meaningful positive for the story and will substantially derisk/support upside to (Mylan’s) 2017 and 2018 earnings per share,” J.P. Morgan analysts said in a note.
For Teva, however, it meant generic competition 9 to 12 months ahead of previous Wall Street expectations.
“The news adds to an already challenging near-term setup for the story, with the company’s U.S. generic business under pressure, high levels of leverage, and limited clarity on drivers of a broader recovery in results,” JPM added.
Last month, Teva said it was looking to team up with other drugmakers to fund some of its development pipeline as it struggles with debts and expiring patents.
Mylan said it expected to start shipping the generic drug very soon and that the FDA approval letter said the company might be eligible for 180 days exclusivity on the drug. Mylan spokeswoman Julie Knell declined to comment beyond the release at this time.