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Lipitor patents under attack

Indian firm Ranbaxy Laboratories is still waiting to hear whether taking on the might of Pfizer in US and UK courts will pay off

Indian firm Ranbaxy Laboratories is still waiting to hear whether taking on the might of Pfizer in US and UK courts over the rights to produce a generic version of the US giant's $12bn-a-year blockbuster Lipitor will pay off.

Rulings in the cases in Delaware federal court and the British Patents Court, under the jurisdiction of Judge Joseph Farnan and Justice Nicholas Pumfrey respectively, are expected at any time. Pfizer insists that its patents on the world's top-selling medicine are valid until 2011, while Ranbaxy is confident it has presented a convincing enough argument to invalidate them.

The case could have serious repercussions for the cholesterol-lowering market. If Ranbaxy's challenge is successful, it could triple its profits to about £554m ($1bn) a year while those of Pfizer would be dented by about $6bn.

Meanwhile, the National Health Service (NHS) would save millions of pounds every year while Lipitor's brand name rivals such as Crestor (AstraZeneca) and Vytorin (Schering Plough) would suffer declining sales.

Analysts said the decision hangs in the balance. While Barbara Ryan at Deutsche Bank believed Pfizer had an 80 per cent chance of defeating Ranbaxy, investment bank Citigroup said Pfizer's chances of prevailing ìare as likely as a lossî.

Maintaining a 'Sell' rating on Ranbaxy, Citigroup analysts wrote in a research note: ìResidual value in the stock seems to be increasingly pricing in a win for Ranbaxy in the Lipitor challenge.î

However, all were agreed on the grave impact a negative ruling for Pfizer, which is already facing a $15bn fall in sales from the potential loss of other drug patents, would have on the world's largest pharma company.

ìThe loss of Lipitor's US patent protection would badly hurt Pfizer's stock and bring the company's earnings down about 30 per cent in 2007,î said Oppenheimer & Co analyst, Scott Henry.

If Ranbaxy loses the case, one other potential challenger to Lipitor patents could be non-profit organisation, the Public Patent Foundation. The charity has already successfully overturned one Lipitor patent by making a case to the US Patent and Trademark Office.

Earlier this year, the Austrian Patent Office ruled in favour of Ranbaxy and invalidated a Pfizer patent covering Lipitor's active ingredient, atorvastatin calcium. Pfizer still holds a composition-of-matter patent on Lipitor in Europe, which Ranbaxy has also challenged in Austria.

The Indian company is awaiting the outcome of the second trial before it knows whether it can sell the drug in Austria.

30th September 2008

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