July 11 (Bloomberg) -- Daiichi Sankyo Co., Japan's second- biggest drugmaker, lost an appeals court ruling and could face generic competition in the U.S. to its Floxin Otic, a medicine for treating ear infections, including swimmer's ear.

An appeals court in Washington today sided with Canada's Apotex Inc. and invalidated a Daiichi patent on ofloxacin otic, the chemical name for the drug, reversing a lower-court ruling. Tokyo-based Daiichi was relying on the patent to prevent competition to the ear drops until it expires in March 2012.

Apotex, based in Weston, Ontario, received U.S. Food and Drug Administration approval to sell a generic version of Floxin Otic in 2005 before it was blocked by the lower court. Daiichi's ear drops generated $90 million in U.S. sales in 2005, according to Apotex.

Today's decision by the U.S. Court of Appeals for the Federal Circuit ``means that Apotex should regain its final approval from the FDA,'' said Robert Breisblatt, a lawyer for the company. Since Apotex was the first to challenge the Daiichi patent, it will have the only generic version on the market for six months, he said.

``We disagree with this decision and intend to file a motion for reconsideration,'' Arthur Mann, Daiichi's executive director of intellectual property, said in an e-mailed statement.

The case is Daiichi Sankyo v. Apotex, 06-1564, U.S. Court of Appeals for the Federal Circuit (Washington). The lower-court case is Daiichi Pharmaceutical Co. v. Apotex Inc., 03cv937, U.S. District Court for the District of New Jersey (Newark).

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net; Jeff St.Onge in Washington at jstonge@bloomberg.net.

Last Updated: July 11, 2007 17:04 EDT