Lilly loses appeal over patent for cancer drug Gemzar

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Eli Lilly and Co., already facing competition for its antipsychotic and antidepressant drugs, lost a court bid over patent
protection on its cancer medicine Gemzar, which could open the door to generic products.

A U.S. appeals court Wednesday said a lower court was correct to invalidate a patent on the medicine that expires in 2013.
The patent is almost the same as one on Gemzar that expires in November, the Court of Appeals for the Federal Circuit said in a ruling
posted on its website.

Gemzar, used for lung, breast, pancreatic and ovarian cancers, generated $747.4 million in U.S. sales last year. Globally,
Gemzar sales were $1.36 billion for Indianapolis-based Lilly, down 21 percent from the previous year, the company said in
its fourth-quarter earnings report.

“If Lilly suddenly loses more or less a billion-and-a-half-dollar drug, that’s a significant problem since they’re
also losing Zyprexa next year,” Les Funtleyder, an analyst with New York-based Miller Tabak & Co., said. “It
could have a significant impact to earnings.”

The decision is a victory for India’s Sun Pharmaceutical Industries Ltd., which had challenged the patent, and generic-
drug companies including Teva Pharmaceutical Industries Ltd. and Novartis AG’s Sandoz that also are seeking to sell
lower-cost versions of the medicine.

“It opens up the generic market some two years early on an incredibly important drug,” said lawyer James Hurst
of Winston & Strawn in Chicago, who represented Mumbai-based Sun.

When a drug loses patent protection, typically its sales can fall as much as 80 percent in the next two to three years, Funtleyder
said. Gemzar, which is given by injection, may see revenue deteriorate more slowly because the drug is harder to make, he
said. Funtleyder has a “neutral” rating on Lilly shares and doesn’t own them.

U.S. District Judge George Caram Steeh in Detroit invalidated the patent a year ago. Lilly continued to sue generic companies,
including Sandoz and Hospira Inc., anticipating a victory at the appeals court. In March, a federal judge in Indianapolis
upheld the patent that expires in 2010.

The appeals court said the 2013 patent covered an invention that was already protected through 2010. Hurst used the same
double-patenting argument to invalidate Lilly’s claim on the antidepressant Prozac in 2000.

Mark Taylor, a spokesman for Lilly, said the company was preparing a statement. Denise Bradley, a spokeswoman for Petah Tikva,
Israel-based Teva, said the company had no comment.

“We’re encouraged by this development and remain committed to bringing high-quality, low-price products to market
as soon as possible,” said Daniel Rosenberg, a spokesman for Lake Forest, Ill.-based Hospira. A spokeswoman for Novartis
didn’t immediately return a message seeking comment.

Lilly is seeking to increase the speed of drug development as it faces patent expirations on two top-selling medicines, the
antipsychotic Zyprexa next year and antidepressant Cymbalta in 2013.

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