Fresh off one blockbuster patent defense, Eli Lilly and Co. mounted another last month when it filed suit to protect its billiondollar cancer drug Gemzar.
The Indianapolis drugmaker sued Teva Pharmaceutical Industries Ltd. and a subsidiary, Sicor Pharmaceuticals Inc., to prevent them from selling generic versions of Gemzar, which treats several forms of cancer and comprises 9 percent of Lilly's worldwide sales.
Lilly learned in January that California-based Sicor had filed so-called "abbreviated new drug applications" with the U.S. Food and Drug Administration to market doses of gemcitabine, the compound that makes up Gemzar, before Lilly patents expire in 2010 and 2013.
At stake in the case are future U.S. sales of a drug that has become standard therapy for advanced pancreatic cancer and some forms of lung and breast cancer.
"It's an important drug for Lilly's cancer franchise," said Shaojing Tong, an analyst who covers Lilly for New York-based Mehta Partners.
Lilly brings some momentum to its latest patent case. Last April, U.S. District Court Judge Richard L. Young ruled that the company's patent covering its star seller, Zyprexa, was valid and enforceable.
That denied three challenging companies-including Israel-based Teva-the chance to sell generic versions of the anti-psychotic before its patent expires in 2011. An appeal is scheduled for oral argument next month before the U.S. Court of Appeals in Washington, D.C.
Analyst Zach Wagner believes Lilly has little to worry about with the Zyprexa appeal or the Gemzar challenge. Wagner, who covers Lilly for St. Louis-based Edward Jones, said patent challenges have become common for any successful pharmaceutical product. "Challenges are common, but successful ones are pretty rare," he said.
Standard & Poor's analyst Herman Saftlas agreed. He said it takes a while for Wall Street to become concerned over patent litigation. "Until there's an official trial date, I don't think anyone starts to worry about these things," he said.
Even so, Lilly's patent-defense record sports a big blemish. The company lost patent protection in 2000 for its then-best seller, Prozac, during an appeal.
Lilly introduced Gemzar to the U.S. market in 1996 as a treatment for advanced pancreatic cancer. It has since received approval for treatment, in combination with other drugs, of non-small-cell lung cancer and advanced breast cancer.
Gemzar ranked fifth among Lilly drugs with $586 million in domestic sales in 2005. The drug rang up $1.3 billion worldwide last year, second in Lilly's product portfolio only to Zyprexa, which topped $4.2 billion.
While Zyprexa's sales slipped last year, Gemzar's climbed, increasing 10 percent. Wagner said the cancer drug eventually might surpass $2 billion in annual sales. Tong forecasts sales growth of 10 percent to 15 percent a year until patents expire.
Wagner called oncology a "huge market" that's growing rapidly.
Lilly's lawsuit, filed in U.S. District Court in Indianapolis, accuses the Sicor and Teva applications of violating a patent covering gemcitabine that expires in 2010 and a patent covering the use of the compound in treating cancers that expires three years after that.
Lilly also named Teva Pharmaceuticals USA Inc. and Sicor Inc. as defendants in the case. Teva spokesman Kevin Mannix did not return calls seeking comment.
The generic companies deny patent infringement, Lilly spokeswoman Terra Fox said. Essentially, they claim-by citing scientific articles and patents-that gemcitabine and its use for treating cancer are obvious and therefore cannot be protected by a patent.
Lilly officials are confident they'll prevail. The new case bears at least one crucial difference from Prozac, Fox noted: Gemzar patents cover treatment of a specific disease. A narrow patent like that, she said, is easier to defend than one covering how a drug works in a body regardless of the specific disease.
If Sicor and Teva ward off Lilly's lawsuit, they can gain six months of marketing exclusivity for their lower-cost generic equivalents, a prize that makes the cost of litigation worthwhile, analyst Saftlas said.
"There is no question that a generic company has very little risk in initiating a patent challenge," he said. "The cost is relatively low and the reward is significant if they win, but usually it's a long shot."
Aside from Gemzar, Lilly also has gone to court to protect its patent for the blockbuster osteoporosis drug Evista, which pulled in $653 million in U.S. sales last year. That lawsuit, filed against New Jersey-based Barr Laboratories Inc. in 2002, is pending.
Wagner said drugmakers like Lilly file these suits with a built-in advantage. Courts generally put the onus on generic companies to prove a patent invalid, and that gives the makers of brand-name drugs a strong starting position, he said.
"It would be a setback if they lost it, and it is a risk, but we don't expect them to lose it," Wagner said.
Regardless of outcome, the case won't be resolved quickly. Patent lawsuits take anywhere from one to three years to resolve, said Jim Coles, co-chairman of the intellectual property group at Indianapolis law firm Bose McKinney & Evans LLP.
Coles, who isn't involved in the case, expects a tough fight. Drug companies can spend more than $1 billion to research and develop a new drug, he said, and any company that invests that much "is going to do whatever they can to maximize their exclusivity for as long as they can, to be able to recover that investment.
"Patents are really the only way that enable you to maintain an exclusive position," he said.