Law firms must love generic drugmakers, considering all the business they throw at them. Lately, Barr Pharmaceuticals (NYSE: BRL) has been a particularly big help to the profession.
Last week, privately held German firm Boehringer Ingelheim sued Barr over its generic version of Boehringer's Aggrenox, which is used to reduce the risk of strokes in patients. Boehringer claims that its patent is still in effect, and it's trying to stop Barr from proceeding with commercialization.
Barr filed an abbreviated New Drug Application (aNDA) in January, which the FDA accepted for review in May. The company believes that it's the first to file an aNDA for Aggrenox, which would give it an exclusivity period of six months if it's approved -- and the patent is disputed.
On Monday, Barr announced that it was being sued again, this time by Sepracor (Nasdaq: SEPR), for infringing on Sepracor's patent on its asthma drug Xopenex. In March, Barr filed an aNDA for marketing approval, and it was accepted last May.
Infringing on patents and getting sued for it is just part of the generics business. There's actually not much other choice for generic drugmakers: Under the Hatch-Waxman Act, that process is how the patent dispute is initiated. Barr is certainly getting good at this; earlier this year, it initiated its attempt to break Sanofi-Aventis' (NYSE: SNY) patent on Ambien CR.
Aggrenox had sales of about $258 million in the United States in the past year, and Xopenex's sales topped $600 million. Barr had $839 million in generic sales last year, so the additional sales from generic versions of Aggrenox or Xopenex could increase the bottom line substantially.
Investors appear to be getting used to Barr's method of operation; the news of the lawsuits didn't hurt the stock price. In these cases, I think it's right for investors to not factor in the future sales when the company files the aNDA, but to wait until the court has its say. As long as the lawyers don't cost more than what the company can gain during its exclusivity period, being the first to file the aNDA -- and having to deal with the lawsuits that are sure to follow -- is a good move for Barr.
Barr Pharmaceuticals is a recommendation of
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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool's disclosure policy doesn't infringe on any patents.
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