The US District Court of New Jersey ruled today that Nycomed’s patent on Protonix, no. 4,758,579, is not invalid, although Teva is still trying to argue that the patent, while valid, should never have been granted due to obviousness-type double patenting. Teva launched a generic version of Protonix (pantoprazole) in the US in December 2007 after the District Court refused an injunction to Altana (which developed Protonix but subsequently divested its pharma business to Nycomed) and Wyeth (which sells Protonix in the US and is now part of Pfizer). Sun followed Teva a month later.
The legal process on Protonix began in 2004 and is by no means yet complete, as there will certainly be appeals, but if Teva and Sun lose in the end, they could be liable for up to triple damages on Pfizer’s lost profits, which is going to be a substantial amount of money. Using IMS data, the implied loss of sales to Pfizer in the period since generic launch is about $3.7bn. Of that, quite a lot was lost to its own generic arm, Greenstone, but 40% went to Teva and just under 9% to Sun. For Teva, this represents close to $1.5bn in sales to Pfizer, which, even taking Wyeth’s operating margin of 30% (as opposed to the gross margin of the product, which is presumably more than 90%), implies $450m of lost profit to Prizer. Even for Sun, tripe damages could run to more than $300m, which would be a painful prospect for a company that is already having to spend heavily on plant improvements in the US and is embroiled in a long-running battle to take over Taro in Israel.
Teva is highly cash-generative so it could afford to pay a $1.35bn fine if it had to, but this case is a stark reminder of the potential downside of at-risk launches and is likely to accelerate the existing industry trend to settle with originators rather than take court cases to their natural end.