Pfizer, Ranbaxy Reach Settlement on Lipitor Patents

Lipitor, Caduet Settlement

U.S. pharma major Pfizer has settled with Ranbaxy Laboratories (India) on most of the patent disputes over Lipitor and Caduet (Norvasc/Lipitor) worldwide. The settlement is exclusive to Ranbaxy and its affiliates in several countries, mainly the United States, enabling Ranbaxy to sell generic versions on varying dates in Canada, Belgium, Netherlands, Germany, Sweden, Italy and Australia. It also involves dismissal of the dispute in Brunei, Malaysia, Peru and Vietnam. According to the two firms, the deal covers the patent dates in the United States for: the main basic compound of Lipitor, which expires in 2010; the enantiomer patent, which expires in 2011; the Caduet combination, which expires in 2018; and the process and crystalline form patents of Lipitor, which expire in 2016 and 2017, respectively. Ranbaxy will hold on to 180-day marketing exclusivity in the United States. However, the deal does not cover ongoing patent infringement lawsuits in Finland, Denmark, Spain, Romania and Portugal.

Interestingly, the deal also covers patent disputes relating to Accupril in the United States and Viagra (sildenafil citrate) in Ecuador, indicating that the two firms have negotiated on a slightly wider platform than Lipitor.

The patent challenge involving the two firms dates back to 2003, when Ranbaxy made its first legal challenge to invalidate patents relating to Lipitor. The Indian firm struck its first blow when it successfully brought down the patent period by 18 months, overturning the enantiomer patent on Lipitor. However, Pfizer has blocked these attempts from turning into an upside for Ranbaxy by appealing to all court decisions on Lipitor. Lipitor is cholesterol-lowering cardiovascular drug, having garnered close to US$13 billion in global sales for Pfizer in 2007.

Outlook and Implications

The settlement brings to an end one of the most aggressively fought patent litigations recently. Lipitor patent litigations are ongoing in more than 20 countries, and the deal between the two firms appears to cover the bulk of them. The rationale and timing of such a deal, in particular for Ranbaxy, will be heavily debated. For Pfizer, the deal offers tremendous upsides in the short-to-medium term, with the firm successfully staving off one of the biggest threats to its top-line growth. Lipitor currently accounts for 28.4% of Pfizer's overall sales and any indication of guaranteed sales unto its patent expiry in 2011 will boost investor sentiment. The U.S. drug major has been under massive pressure to outline a future growth path without the contributions of Lipitor, and has sought to explore inorganic growth in specific therapeutic segments, as well as foray into the oncology space to spur future sales. Hence, this development will contribute to not only bringing down some litigation costs but will also offer a fresh focus for Pfizer beyond 2011.

The scenario is slightly different for the Indian generics firm as the deal comes after the promoters sold off their stake in Ranbaxy to Japanese firm Daiichi-Sankyo. Although there is no indication of the Japanese firm's influence in the talks, the timing of the deal suggests a possible change in tactics, which could be traced back to Daiichi-Sankyo. This is a rare insight into Ranbaxy, indicating that the firm may be looking at less risky overtures on patents challenges in the future. In operational terms, the deal will immediately reduce most of Ranbaxy's litigation expenses, which have affected its operational profit in the past two years. The company will, however, lose out on potential sales if successful in invalidating Lipitor's basic patent. However, this seems unlikely as the company's request on examining Lipitor's main patent was recently not upheld by the U.S. Patents and Trademarks Office (USPTO). Although it could be argued that Ranbaxy has lost out on potential Lipitor sales until 2010, the upsides towards reducing litigation costs will mitigate the perceived lost sales, providing some certainty over the launch of a generic version from Ranbaxy.

Related Articles

• United States: 1 April 2008: Spanish Court of Appeal Upholds Pfizer's Lipitor Patent
• United States: 27 March 2008: Pfizer Moves to Block Ranbaxy's Lipitor Challenge in U.S.
• United States: 6 March 2008: Pfizer Attempts to Paint Positive Picture of Future Without Lipitor

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