You don't have to look any further than fellow pharma giant Bristol-Myers Squibb (NYSE:BMY) to see the effect the entrance of a generic competitor can have on sales, even if it's only on the market for a few weeks. It was no wonder, then, that some investors in shares of drug developer Pfizer (NYSE:PFE) were worried last Friday after the company reported mixed results in defending its patents on the cholesterol-lowering drug Lipitor.

Pfizer has been defending its patents on its top-selling drug Lipitor against generic drugmaker Ranbaxy Pharmaceuticals throughout the world. On Friday, Canadian courts ruled for Pfizer on the validity of some Lipitor's patents lasting until May of this year, but against Pfizer on the validity of patents that would continue its exclusivity until July 2010.

Although, theoretically, drugs from Canada aren't allowed into the U.S., the reality is that Canadian drugs are sold in the United States all the time, and there will surely be some trickledown from a potential entrant of a generic version of Lipitor up there, so a generic entrant in Canada will, in fact, have some impact on U.S. sales. With Pfizer appealing the decision, though, there's no near-term impact as a result of this ruling anyway, and it should be noted that the ruling only has an impact officially on Canadian sales and not U.S. sales.

Lipitor was by far the top-selling drug in the world last year, with $12.9 billion in sales. The U.S. patents on the drug don't start expiring until March 2010, but indirectly Lipitor has been already facing generic competition since last year, with two of the other cholesterol-lowering statins, Merck's (NYSE:MRK) Zocor and Bristol-Myers' Pravachol, having generic copies on the market. That hasn't slowed down Lipitor yet, as sales still managed to grow 6%.

Ranbaxy had similar mixed results in a patent trial in Australia in which it was able to get one of the patents invalidated, but another one continuing Pfizer's exclusivity until 2012 was ruled valid.

There's big money to be made in bringing generic drugs to market, and because of this, it's worthwhile for generic drug makers to fight some of the shakier patents that pharmaceutical firms like to attach to their drugs. While I can't judge whether Pfizer will win the appeal on the Canadian Lipitor patent, it's a trial worth paying attention to for its shareholders, as Canada does represent one of the larger pharmaceutical markets in the world.

Pfizer is an Inside Value recommendation.

Fool contributor Brian Lawler does not own shares of any company mentioned in this article.