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Lilly's win in Evista patent case crucial, analyst says

September 24, 2009
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A decision by a federal judge in Indianapolis to turn back a patent challenge to Eli Lilly and Co.’s Evista marks a major victory for the company, says an analyst who closely follows the pharmaceutical industry.

In Wednesday’s decision, U.S. District Court Judge Sarah Evans Barker ruled that Lilly’s method-of-use patents for Evista are valid through 2014, rejecting all the claims of Israel-based generic drug firm Teva Pharmaceuticals Industries Ltd.

Evista, an osteoporosis drug, generated global sales of $1 billion last year, including $700 million in the United States, and is considered a blockbuster drug.
 
“Lilly’s taken a couple of hits lately, so it would have been bad [to lose the case],” said Les Funtleyder, a health care stock analyst at New York-based Miller Tabak & Co.

Earlier this month, the company said it plans eliminate 5,500 jobs by the end of 2011 as it tries to cut $1 billion in expenses before it loses the revenue from its bestselling drug, Zyprexa.

Indianapolis-based Lilly faces the patent expiration of Zyprexa in November 2011, after which it will lose most of the drug’s $4.7 billion in annual sales to cheaper generic versions. In addition, patents will expire by 2014 on four other major Lilly drugs, including Evista.

Challenges to Lilly’s patents aren’t unusual, but disputes brought by Teva warrant serious consideration, Funtleyder said.

“I don’t think a lot of people thought there was a high probability that [Lilly] would lose, because these cases usually go in favor of the innovator,” he said. “But Teva is one of the smarter generics.”

Teva has sought to market a cheaper generic version of Evista, also known as raloxifene.

The decision wasn’t a total victory for Lilly. Barker said its patents on Evista’s particle size are invalid. Lilly said it is considering whether to appeal that part of the ruling.

The expiration date for the particle-size patents, which involve the size of the molecule used in Evista, had been 2017. If Lilly appeals the judge’s ruling, and it is successful, it could market Evista for an additional three years without a threat from generics.

“Patents provide us a limited amount of time to recoup our investments,” Lilly spokesman Mark Taylor said following the decision. “This is how we reinvest that money back into the research and development of the next generation of pharmaceuticals.”

The stock market had little reaction to the court decision. Lilly shares were down 6 cents late this morning, trading at $32.38 each.

 

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