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Shire Faces Patent Suit Revival Over Lialda Colitis Drug

Shire Plc (SHP)’s patent-infringement lawsuit against Cadila Healthcare Ltd. and Zydus Pharmaceuticals Inc. over the colitis drug Lialda was reopened, according to court filings.

A federal judge in Wilmington, Delaware, yesterday ordered the suit over Cadilas and Zydus’s bid to create a generic version of Lialda to be revived a year after the case was administratively closed, according to a court-docket notation.

Shire’s American depositary receipts, each representing three ordinary shares, fell 2.3 percent to $167.14 at 1:31 p.m. in New York trading after U.S. District Judge Kent Jordan ruling was made public. They earlier dropped as much as 3.3 percent. Shire fell 2.5 percent to 3,329 pence in London.

Lialda sales grew 32 percent to $528.9 million last year, making it the Dublin-based company’s third-best-selling drug, Shire said on Feb. 13. The company has sued other generic drugmakers, such as Actavis Inc. (ACT), to bar competing versions of Lialda.

Shire officials said today the judge’s decision to reopen the case at Cadila and Zydus’s request was procedural and doesn’t affect Shire’s substantive claims over Lialda’s patent rights.

“The reopening of the litigation does not indicate anything about the approvability of” Cadila and Zydus’s request to have a generic version of Lialda cleared, Jessica Mann, a Shire spokeswoman, said in an e-mailed statement.

Shire’s Lawsuit

Shire sued Cadila, based in Ahmedabad, India, and its Zydus unit in 2010 over the companies’ bid to have the U.S. Food and Drug Administration approve a lower-cost version of Lialda, court filings show. It sought to block approval until Shire’s patent expires.

Under federal drug law, lawsuits are commonly filed to clarify patent rights at the same time the FDA is considering the generic-drug maker’s application.

Shire’s case against the generic drugmakers had been set for trial until the judge found in May 2012 that “unresolved issues” prevented the case from moving forward, according to court filings.

The judge closed the case on an administrative basis last year. He now serves as a judge on the federal appeals court based in Philadelphia.

‘Extraordinary Relief’

Lawyers for Cadila and Zydus argued the case should be revived because of the public’s interest in gaining access to lower-cost drugs and Shire was seeking “extraordinary relief” by asking to keep the case on hold indefinitely, according to court filings.

Last year, Shire won a court ruling that will help it prevent Actavis from selling generic versions of Lialda in the U.S. until 2020.

A patent on the medicine would be infringed by the Actavis version, U.S. District Judge Donald Middlebrooks in Florida ruled in May. The judge rejected Actavis’s claims that Shire’s patent was invalid.

The case is Shire Pharmaceutical Development Inc. v. Cadila Healthcare Ltd. (CDH), 10-cv-00581, U.S. District Court, District of Delaware (Wilmington).

To contact the reporters on this story: Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net; Andrea Gerlin in London at agerlin@bloomberg.net.

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; Phil Serafino at pserafino@bloomberg.net.

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