Pfizer Protects Profitable Patent

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Pharmaceutical patent disputes aren't always thrilling to follow, but their outcomes can have profound, unexpected effects on drugmakers' operations. Today, Pfizer (NYSE: PFE) got good news regarding its own legal battle: Its U.S. patent woes regarding top drug Lipitor are probably over.

The company announced today that the U.S. Patent and Trademark Office had confirmed the validity of the key patent on its $12.7 billion-a-year cholesterol drug. Generic-drug maker Ranbaxy Laboratories had filed a re-examination request last year. Now that Pfizer's won multiple U.S. court battles against Ranbaxy's bid to market generic Lipitor before the drug's patent expires in March 2010, the direct generic threat to Lipitor in the U.S. seems decisively defeated.

Although Ranbaxy seems to have failed in the United States, it's successfully overturned Lipitor patents in some other global jurisdictions, including Norway last year. Ranbaxy and other generic manufacturers also have defeated Pfizer in the Canadian Federal Courts, where they now await the results of Pfizer's appeal.

Eventually, some generic Lipitor will leak into markets where Pfizer still has exclusivity. But generic versions of Merck's (NYSE: MRK) rival cholesterol drug Zocor, which debuted in 2006, may pose a greater challenge. Facing added competition from much cheaper generic versions of a similar statin drug, in what Pfizer calls a "price-sensitive" environment, Lipitor U.S. sales fell 18% year over year in the first quarter. With Ranbaxy foiled, this generic threat to Lipitor deserves investors' closest attention.