Source: Teva Pharmaceutical Industries Ltd.

For the second time, a federal court ruling has invalidated key patents protecting Teva Pharmaceutical Industries Ltd. (NYSE:TEVA) multiple sclerosis drug Copaxone. This clears the way for the launch of the biosimilar Glatopa from Novartis (NYSE:NVS) and Momenta Pharmaceuticals (NASDAQ:MNTA).

Will Glatopa's entry result in Teva Pharmaceutical's profit engine sputtering out? Let's see.

Turning pages
The court's decision has been a long time coming, and Teva Pharmaceutical's legal posturing has arguably proven to be a brilliant strategy for keeping Glatopa at bay.

Last year, the District Court of Appeals rejected patents protecting Copaxone until September 2015; however,Teva convinced the Supreme Court to take up its case, effectively blocking any potential launch of Glatopa, which hadn't yet won FDA approval.

In January, after determining the appeals court had not considered the case properly, the Supreme Court kicked the patent case back down to the lower court. This further delayed Glatopa's launch even though the drug received FDA approval in April.

Now that the appeals court has reaffirmed its decision invalidating the patent, Novartis and Momenta can begin selling Glatopa without fear of having to pay damages to Teva Pharmaceutical.

A big threat? Maybe not
There's no denying Copaxone is an extremely important drug to Teva Pharmaceutical. Copaxone is the market share-leading multiple sclerosis therapy and it represents 20% of Teva's total sales. For that reason, investors are right to worry that Glatopa, which is similar to, but not an exact copy of, Copaxone, could significantly reduce Copaxone's $4 billion in annual revenue.

However, Teva has not been sitting idly by waiting for Glatopa to arrive. Instead, the company used the time bought by its legal strategy to develop, launch, and market a next-generation formulation of Copaxone that works longer, so requires fewer monthly doses. That dosing advantage has traditional Copaxone users switching over in droves to the long-lasting version.

Although Teva Pharmaceutical has yet to break out exact sales numbers for its new form of the drug, it has said 67% of its traditional Copaxone patients have already switched over.

Long-lasting Copaxone's dosing advantage is displacing traditional Copaxone in new patients, too. As a result, patient switching and new scripts have resulted in long-lasting Copaxone capturing 20% of the multiple sclerosis market.

Looking ahead
Teva Pharmaceutical's success in switching patients to its new formulation suggests its dosing advantage is a key differentiator; however, it remains to be seen whether that advantage can trump Glatopa's lower price.

If Novartis prices Glatopa low enough, healthcare payers might give it a more favorable reimbursement tier than Copaxone. If so, then patients might be unwilling to accept a higher co-pay to buy the long-lasting formulation of Copaxone, which costs north of $60,000 annually.

For that reason, Teva investors will need to closely watch upcoming quarterly results from the company -- particularly given that a significant drop in sales could pressure Teva Pharmaceutical to spend more money on acquisitions and new products than on shareholder-friendly buybacks and dividend payments.