In the high-stakes world of generic drugs, millions of dollars are made or lost in the courtroom fighting over the validity of branded drug's patents. Generic-drug maker Mylan Laboratories
Mylan lost the court battle relating to the legality of its patents for the hypertension (high blood pressure) treatment Norvasc. This ruling affirming Pfizer's patents on Norvasc gives it another six months of marketing exclusivity on Norvasc until its patents expire in September of this year.
Mylan had been fighting Pfizer in court for years to try to get the Norvasc patents overturned so that it could launch a generic version of the $4.9 billion drug. Norvasc is Pfizer's second-highest-grossing drug and accounted for more than 10% of its revenues last year.
In 2005, the 30-month stay of action that the FDA provides whenever a branded-drug company contests the introduction of a generic drug expired, and Mylan's generic version of Norvasc was approved for marketing in October of that year.
Mylan could have launched its generic version of Norvasc "at risk" once it received FDA approval for its generic version back in 2005 had it really thought its case strong enough, but it would have been liable for millions of dollars in compensatory and punitive damages if the Pfizer court victory had been upheld upon appeal. Mylan plans on appealing this ruling, but with the Norvasc patents expiring so soon, I don't see what the point is. Mylan also mentioned in a press release today that this court loss wouldn't affect its estimates for earnings per share of $1.50 to $1.55 for the year.
All is indeed not lost for Mylan, considering that it will still get a 180-day exclusivity period to market a generic version of Norvasc when the patents expire in September. So the real effects are that this only delays Mylan's entry of a generic version. This is a minor negative for Mylan, but for Pfizer, those extra six months of marketing exclusivity mean billions of dollars.
Pfizer is an Inside Value recommendation. Check out our newsletter service dedicated to finding the market's best bargains -- it's free for the first 30 days.
Fool contributor Brian Lawler does not own shares of any company mentioned in this article.
