Dive Brief:

• The Food and Drug Administration has rejected the first attempt by generic drugmaker Mylan to win approval for a copy of GlaxoSmithKline's top-selling asthma drug Advair, handing the British pharma a temporary respite from a major hit to revenues.
• Mylan on Wednesday said it received a complete response letter, confirming suspicions of a delay after no word on a decision was forthcoming on Tuesday, the drug's target review date. The FDA is set to decide on approval of another potential generic copy to Advair, from Hikma Pharmaceuticals and Vectura by May 10.
• Glaxo has forecast U.S. Advair sales to decline by as much as 45% if a generic copy launches by mid-year. If no generic launches this year, core earnings per share for 2017 are expected to grow between 5% and 7%, while a mid-year launch would lead to flat or declining core EPS.

Dive Insight:

Mylan said it would review the response from the FDA and will provide an update on future plans for its application "as soon as practicable."

The generics maker has invested heavily in its efforts to bring a copy of Advair (fluticasone/salmeterol) to market. Mylan CEO Heather Bresch has said the company has spent $700 million to bring the drug to market — a sizable investment that the company hopes is a barrier to entry for potential competitors.

Mylan had been confident in winning approval on its first pass at regulatory review, citing discussion with the FDA throughout development. But the copycat drug would be the first complex inhaled combination generic approved by the regulator — raising the difficulty of winning a quick and easy approval.

Approval would have given Mylan a top-shelf generic product to market alongside a potential launch of a copy of Teva's multiple sclerosis top-seller Copaxone (glatiramer acetate). A district court ruling in January which invalidated patents held by Teva on a 40 mg dose of Copaxone opened the door for a potential launch, although the timing of such a move is still unclear.

Advair, which is also approved for COPD, has been GlaxoSmithKline's top-selling drug for years, historically accounting for nearly 20% of overall product sales.

But competition has begun to eat away at Advair's market share, putting pressure on the rest of Glaxo's portfolio and on developing new hits. Last year, sales of the respiratory behemoth totaled £3.5 billion ($4.74 billion), with £1.83 billion in the U.S. — reflecting a steady decline since a peak in 2013.

Teva actually won approval in January for its AirDuo Respiclick, a inhaler-drug combo which uses the same active pharmaceutical ingredients as Advair. But the product is only approved for treatment of asthma in patients older than 12, and is not directly substitutable with Glaxo's drug.

Although the FDA's rejection of Mylan's generic will buy Glaxo some more time, the pharma has long planned for competition to its flagship brand.

"Advair has been a very generous support during that period of the last two or three years in terms of helping us fund the growth of the replacement products," Glaxo CEO Andrew Witty said on a fourth quarter earnings call in February. "But as we move forward the new products are going to be the ones that are going to be kicking in the cash flow and the profitability."

For now, the bulk of new product sales will come from Glaxo's HIV products Tivicay (dolutegravir) and Triumeq (abacavir/dolutegravir/lamivudine), which together earned £2.69 billion last year. But Glaxo has high hopes for successor respiratory drugs to Advair, such as Breo Ellipta (fluticasone/vilanterol), Nucala (mepolizumab) and a "closed triple" for COPD currently under regulatory review.

While Mylan will have to go back to the drawing board and resubmit, the writing is on the wall for GSK. Even if a generic Advair copy fails to make it to market this year, time is running out on the blockbuster.

Loss of such a lucrative revenue stream will pose an immediate challenge for incoming CEO Emma Walmsley, who is scheduled to take over for Witty at the end of this month. The British drugmaker has staked out strong positions in respiratory, HIV and vaccines. But after eschewing further development in oncology, Walmsley will have to deliver a smooth transition to a post-Advair world.