July 28 (Bloomberg) -- Eli Lilly & Co., already facing competition next year for its top-selling drug, lost a bid to block generic sales of the cancer medicine Gemzar after November, opening the door to rivals two years earlier than the company anticipated.
A U.S. appeals court today upheld a lower court that had invalidated a patent on a method of using the medicine that expires in May 2013. The patent is similar to one on Gemzar that expires in November, the Court of Appeals for the Federal Circuit said in a ruling on its website. Lilly said it disagrees with the decision and is considering further review.
Gemzar, used for lung, breast, pancreatic and ovarian cancers, generated $1.36 billion in global sales last year including $747.4 million in the U.S., the Indianapolis-based company said in its fourth-quarter earnings report. At the current U.S. sales pace, the court decision could put more than $1 billion of Gemzar revenue in jeopardy in the next two years.
“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 today in a telephone interview. Zyprexa, Lilly’s top-selling schizophrenia drug with $4.92 billion in 2009 sales, loses patent protection next year.
Lilly said that, since it will maintain market exclusivity until at least Nov. 15, it wouldn’t modify its financial projection for this year. Lilly raised its full-year earnings forecast last week, projecting profit, adjusted for some items, of $4.50 to $4.65 a share. The drugmaker had previously forecast as much as $4.55.
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 this year.
A three-judge panel of 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.
Lilly said it may ask for a rehearing before all active judges of the Federal Circuit, which specializes in patent law. It also can ask the Supreme Court to look at the case.
“Protection of intellectual property rights is extremely important to the biopharmaceutical industry and the patients we serve, as these rights help support the development of the next generation of innovative medicines to treat unmet medical needs,” Lilly Chief Executive Officer John Lechleiter said in a statement.
A spokeswoman for Novartis didn’t return a message seeking comment. Denise Bradley, a spokeswoman for Petah Tikva, Israel-based Teva, said the company had no comment.
Soon As Possible
“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, Illinois-based Hospira.
Lilly is seeking to increase the speed of drug development as it faces patent expirations on two top-selling medicines, Zyprexa next year and antidepressant Cymbalta in 2013.
Lilly fell 43 cents to $35.67 at 4 p.m. in New York Stock Exchange composite trading, and the shares are little changed for this year.
The case is Sun Pharmaceutical Industries Ltd. v. Eli Lilly & Co., 10-1105, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Sun Pharmaceutical v. Eli Lilly, 07-15087, U.S. District Court, Eastern District of Michigan (Detroit).