Abbott Makes All the Right Moves

Hot off its cholesterol win over Merck (NYSE:MRK), Abbott Labs (NYSE:ABT) is playing it safe with another cholesterol drug, TriCor.

In a Securities and Exchange document filed yesterday, the company said it has settled a patent dispute with generic-drug maker Teva Pharmaceuticals (NASDAQ:TEVA). Abbott claims that patents on the drug don't expire until 2023, but it'll let Teva launch a generic version of TriCor as early as March 28, 2011. Under certain defined -- but unspecified -- circumstances, Teva might not be able to launch until July 1, 2012.

While there's no way to be certain, those unspecified circumstances may have to do with the ratio of prescriptions of TriCor to its follow-up drug, Trilipix. Abbott needs to convert patients to the new drug before conceding the old one to the generic-drug barracudas. If Abbott was smart, it negotiated an extension in case it couldn't convert enough patients by the March 2011 date.

The other advantage to settling is that Abbott will know exactly when the generic drug will launch. Teva has a habit of making preemptive strikes -- launching before a court has its final say. Those launches have sent brand-drug makers such as Wyeth and AstraZeneca (NYSE:AZN) scrambling to get a court to stop it. Another strategy is to launch its own authorized generic, as Wyeth -- now part of Pfizer (NYSE:PFE) -- did with Protonix.

Abbott still has pending litigation with Biovail (NYSE:BVF), Lupin, and Impax Laboratories (NASDAQ:IPXL), and I'd expect the company to settle with those generic-drug makers as well. After conceding with Teva, there's not much point in going to court with its cohorts.

Pharmaceutcial companies have to know when to pick their battles. They have to know when to run a head-to-head trial and know when to settle lawsuits. Kenny Rogers would be proud of Abbott.

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