Pharmaceutical Sector Sets Sights on Patent Litigation

Claiming ownership over a brand or item is often essential to the success of a company. According to Chris Barry, an advisory partner for PricewaterhouseCoopers' Forensic Service practice, more businesses are waking up to the benefits of patent ownership.

"Companies are continuing to realise the value from patents - whether protecting their product commercialisation initiatives, or through their enforcement and other monetisation efforts of patents -they see the upside of using patents for competitive advantage," he explained.

A patent allows firms the opportunity to ensure they are the sole benefactors of their own research and products. However, it almost goes without saying that some problems can arise when the documents - which tend be enforced for around 20 years - expire.

There are often a number of companies waiting in the wings to bring generic versions of products onto the market, in a bid to both widen the sector and capitalise on the first drug's success.

Mr Barry warned that firms could be in a better position by avoiding such legal problems.
"Patent litigation is very expensive and intellectual property damage awards can be costly," he said. One way that pharma companies currently look to avoid litigation is by reaching settlements with other firms. Such practices have already hit the headlines in 2010.

[inlinead]

Earlier this year, the European Commission revealed it has requested information from some companies over their patent settlement agreements, particularly cases when firms have paid a rival to delay the market entry of a generic product. There are concerns that such cases may be reducing the range of medicines available at low prices to consumers across Europe. European competition commissioner Neelie Kroes said: "We need to monitor this type of agreement in order to better understand why, by whom and under which conditions they are concluded. The monitoring will also provide us with the possibility to act should this become necessary."

Despite the official interest in settlements, companies in the pharmaceutical industry are still working to avoid any conflicts which could result in patent litigation. One of the most notable agreements since the turn of the year was between AstraZeneca and the Israeli drugs manufacturer Teva. The settlement means that Teva will hold off on launching its generic copy of heartburn drug Nexium until May 2014, when the first patent on the product will expire. AstraZeneca is likely to reap some financial benefits from the deal, as according to the Independent, US sales of the drug hit $2.1 billion (£1.3 billion) over the first three quarters of 2009.

Savvas Neophytou, analyst at Panmure Gordon, said AstraZeneca's announcement was "welcome and reduces risk to earnings in 2011 because Teva could have been prepared to launch generic Nexium at risk after a lower court case which was scheduled to start in January".

Teva's abbreviated new drug application to market a version of brain tumour drug Temodar was recently the subject of a decision by the US District Court for the District of Delaware. The court said a patent over the drug from Schering-Plough is not enforceable, so the generic drug is now awaiting final approval from the US Food and Drug Administration.

If all of the agreements and investigations mentioned above highlight anything, it is that patent litigation can be a fraught and complicated area for pharmaceutical companies to navigate. Therefore, they should look to ensure they have quality strategies in place that will mean their patents are protected and any threats can be litigated effectively.