Even royalties in the mid-single-digit range would be a substantial contribution to Biogen's bottom line, given that Betaseron and Rebif are both blockbusters, but I wouldn't go penciling in the income quite yet. Biogen just received the patent last September, long after the drugs were on the market, which makes you wonder if the patent can hold up to the obviousness test.
At the very least, this is going to drag on for a long time. Biogen tried asking nicely for a royalty, but the other drugmakers refused. Bayer even struck first, filing a lawsuit one day earlier and asking the court to either invalidate Biogen's patent or rule that Betaseron doesn't infringe on the patent. Because Extavia is the same molecule as Betaseron, Novartis can presumably piggyback on the outcome of that decision.
The big winner here could be Teva Pharmaceuticals
I'm not a patent lawyer, nor do I play one on the Internet, but my guess is that Biogen figures this is a long shot worth taking. Even if there's only a 10% chance of getting a court to require its competitors to pay royalties, the potential payoff makes the cost of the lawsuit worth the risk. Swinging for the fences is a good idea sometimes; just realize there's a good chance Biogen will strike out.
Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Pfizer is a Inside Value recommendation. Novartis is a Global Gains pick. The Fool has a disclosure policy.