Defending against and filing lawsuits is a fact of life for every generic drugmaker. The most common course of action is to fight a drug's patent legality before launching a generic version. Risk-taking generic drug companies, though, sometimes launch their products "at risk" while fighting the legality of a pharmaceutical company's patents. Launching a generic drug at risk could mean paying substantial damages if the generic company loses the patent trial, but for drugs with large enough markets, this is sometimes a risk worth taking.
Generic drug producer Teva
As part of the agreement, Teva will pay Pfizer up to $70 million and will get an option to market another one of Pfizer's cancer drugs in 2007. That drug, named Ellence, has produced sales of $68 million in the first half of this year for Pfizer. The option to market Ellence isn't such a great coup for Teva, though, considering that Mayne Pharma (soon to be acquired by Hospira
Teva got more good news on the generic front last week when it received approval to market a generic version of GlaxoSmithKline's
If generic drug companies aren't constantly battling the big pharmas, they'll wilt away as their margins erode, since bringing generic drugs to market before the competition is the lifeblood of these companies. Being the largest generics producer, Teva is in a good position to continually pour resources into the legal challenges required in this high-stakes game.
Pfizer is an Inside Value pick. To see which other stocks have caught the attention of Philip Durell and his team of value-minded Fools, take a 30-day free trial of the newsletter. GlaxoSmithKline is an Income Investor selection.