The floodgates opened to Pfizer’s (PFE) once exclusively prized drug Lipitor, and the race to scoop up the generic market for the widely-used cholesterol treatment has begun.

Pfizer was hit by a double whammy earlier when Ranbaxy Laboratories got clearance by U.S. regulators to sell the drug and WellPoint (WLP), the largest insurer by enrollment, said it would support use of the generic version, called Atorvastatin Calcium, by assigning it a lower co-pay.

Now, it has gotten hit a third time, with Teva Pharmaceuticals (TEVA) announcing late Thursday afternoon that the Food and Drug Administration has granted it tentative approval for the company’s copycat Lipitor.

Lipitor, a drug taken by some 8.7 million Americans, is the biggest-selling prescription drug of all time, raking in about $10.7 billion last year.  

Teva plans to start selling its brand of the product after Ranbaxy’s 180-day exclusivity period ends in May 2012. Until then, Teva will receive royalties from Ranbaxy’s sales of Atorvastatin Calcium Tablets, which was a part of an earlier deal struck between the Indian company and the FDA following a dispute over whether Ranbaxy could produce the generic drug despite questions over its manufacturing facilities.

The generic drug follows a trend in the healthcare industry where big pharmaceutical companies are racing to adopt cheaper generics to one-up their competition. Insurers have also been quick to hop on the bandwagon as they have to pay less out of pocket for prescriptions.

Customers, too, benefit from generics since the makeup mimics that of the original drug. The prescription has the same effect but is much less pricey and often covered more fully by insurance, which leads to lower co-payments.

However, Pfizer has not gone down without a fight. The company has fought feverishly in lawsuits against the patent expiration and has even embarked on a campaign to keep the brand-name drug’s sales surging even after the generic introduction.

The company has been striking ambitious deals with pharmacy-benefit managers that have them continuing to dispense Lipitor for a time at generic prices. It is also discussing setting up a direct-mail service.  

Still, Pfizer's shares were poised to close in the red on Thursday, while Teva's were bumped into the green. 

Follow Jennifer Booton on Twitter at @Jbooton