Eli Lilly's Strattera Faces Generic Competition After U.S. Court's Ruling
Eli Lilly & Co.'s Strattera
JB Reed/Bloomberg
Strattera, made by Eli Lilly & Co., faces generic competition.
Strattera, made by Eli Lilly & Co., faces generic competition. Photographer: JB Reed/Bloomberg
Eli Lilly & Co.’s Strattera faces generic competition after the drugmaker lost a U.S. court case over the attention-deficit treatment, its second patent ruling setback in a month.
U.S. District Judge Dennis M. Cavanaugh in Newark, New Jersey, invalidated a patent on the medicine that would have prevented sales of copies until May 2017. The ruling yesterday favors generic-drug companies including Teva Pharmaceutical Industries Ltd. and Novartis AG’s Sandoz unit.
Lilly said it expects “near-term entry” of generic versions and reduced its sales forecast. The Indianapolis-based company is seeking to preserve patent protection on its drugs because Zyprexa and Cymbalta, accounting for more than a third of its revenue, already face generic competition by 2013.
The loss in the Strattera case “reinforces our view that Lilly needs to move more aggressively on partnering and acquisition activity due to its challenged long-term outlook,” Seamus Fernandez, an analyst with Leerink Swann & Co., said today in a research report.
Revenue growth this year will be in “the low- to mid- single digits” in terms of percentage, instead of “mid-single digits,” the company said yesterday in a statement.
Lilly fell 90 cents, or 2.5 percent, to $35.70 at 4 p.m. in New York Stock Exchange composite trading.
Strattera, known by its active ingredient atomoxetine, generated U.S. sales of $445.6 million last year as a treatment for attention deficit hyperactivity disorder, the company said in a fourth-quarter earnings statement. The company reported $21.8 billion in total annual revenue.
‘Disagree Profoundly’
Cavanaugh said Lilly failed to describe in its patent application how anyone could use the invention to treat hyperactivity.
“We disagree profoundly with the district court’s ruling and will appeal this decision,” Robert A. Armitage, Lilly’s general counsel, said in a statement.
At least seven of the 10 generic-drug makers involved in the case have tentative U.S. Food and Drug Administration approval to sell versions of the medicine, Fernandez said. He estimated that an immediate launch could put $100 million worth of Lilly revenue at risk this year.
“The ruling could lead to FDA approving atomoxetine versions, and generic companies launching at risk,” Robert Hazlett, an analyst with BMO Capital Markets Corp., said in a note. He said the generic-drug companies may decide to wait “until the upcoming appeals process plays out, which should occur within 12 months.”
Second Loss
The ruling is Lilly’s second court loss over a patent in the past month. On July 28, a U.S. appeals court upheld a ruling that a patent on the cancer medicine Gemzar was invalid, which may allow generic competition two years earlier than Lilly had projected. Gemzar had $747.4 million in U.S. sales last year.
Lilly is seeking to increase the speed of drug development as it faces patent expirations on its two top-selling medicines, Zyprexa next year and antidepressant Cymbalta in 2013. Zyprexa sales last year were $4.9 billion, or 23 percent of total revenue, and Cymbalta was $3 billion, or 14 percent of 2009 sales, according to data compiled by Bloomberg.
The other generic-drug makers who had challenged the Strattera patent were Mylan Inc., based in Canonsburg, Pennsylvania; Belgium’s Synthon BV; Iceland’s Actavis Group hf; Canada’s Apotex Inc.; and Indian generic-drug makers Aurobindo Pharma Ltd., Glenmark Pharmaceuticals Ltd., Sun Pharmaceutical Industries Ltd. and Cadila Healthcare Ltd.’s Zydus.
The case is Eli Lilly & Co. v. Actavis Elizabeth LLC, U.S. District Court for the District of New Jersey (Newark).
To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net
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