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Teva facing $2bn liability for at-risk generic Protonix launch

Potential litigation costs from Pfizer are triple the generics firm's original estimates

Teva has revealed that the potential liability for coming to market too early with its generic version of Pfizer's gastrointestinal drug Protonix could be more than $2bn, around three times its original estimates.

The Israeli pharma company said last year it had set aside $670m in a fund to meet possible charges from litigation in the case, which relates to its launch in the US of a Protonix (pantoprazole) generic in 2007, before the expiry of a patent on the drug in January 2011.

In its latest annual report, however, Teva notes that it may cost an additional $1.4bn to resolve the litigation, taking the total liability up to around $2.1bn.

The case sums up the difficulties faced by generic drugmakers as they try to balance the commercial benefits of early market access for a new generic with the risks of substantial damages if subsequent litigation doesn't go their way. 

Pfizer has successfully defended its patent in a series of court cases, despite challenges from Teva and Indian generics firm Sun Pharmaceutical since 2004 on the validity of its intellectual property for Protonix. 

In April 2010 a federal court ordered Teva and Sun to remove their generics from the market, and last year Pfizer revealed it was seeking around $1bn in damages from Sun for its part in the affair. 

At the time analysts suggested that an out-of-court settlement would probably ensue, with both generic drugmakers expected to pay around $400m-$600m.

Teva's concession that payments could massively exceed the high end of that scale comes ahead of a trial - due to start in July - in which Pfizer will issue a claim for damages from lost sales of its brand during the period between the launch of the generic and the loss of US patent protection, according to a Wall Street Journal report.

Teva is still fighting the decision on the patent's validity however, as well as the level of damages sought by Pfizer, notes the WSJ.

Pfizer maintains that sales of Protonix peaked at $1.9bn in 2007, but plummeted nearly 60 per cent the following year to $1.1bn - with US sales down 80 per cent - and continued to fall in subsequent years.

15th February 2013

From: Sales

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