Global Insight Perspective | |
Significance | U.S. pharma giant Eli Lilly reported yesterday that the Court of Appeals for the Federal Circuit has upheld an earlier lower court decision on the validity and enforceability of its Zyprexa patents. |
Implications | This means that Lilly’s patent protection for Zyprexa should remain bullet-proof until 2011. It is therefore a major blow to those generic companies wishing to gain a slice of Zyprexa’s U.S. revenues. |
Outlook | The court’s ruling is a significant success for Lilly that removes a notable cloud over the company’s top-selling product. Lilly will now have to continue its efforts to stabilise sales of this product, which has been under considerable pressure recently. However, with a number of Lilly’s newer products showing robust growth, the company seems set to enjoy solid revenues into the medium term. |
Lilly yesterday delivered a significant slice of good news to investors on its top-selling anti-psychotic Zyprexa. It comes at the end of a month when the drug has been in the news for all the wrong reasons, after a vitriolic war of words between the company and leading U.S. newspaper the New York Times. Lilly reports that the Court of Appeals for the Federal Circuit in Washington D.C. has upheld an earlier decision from the U.S. District Court (Eli Lilly and Company vs. Zenith Goldline Pharmaceuticals et al.) which affirmed the company’s Zyprexa patents, which expire in 2011. In the earlier ruling, the U.S. District Court for the Southern District of Indiana ruled in Lilly’s favour on all of the generic companies’ patent challenges, including obviousness, double patenting, inequitable conduct, anticipation and public use.
Outlook and Implications
This decision is a significant blow to the hopes of generics companies targeting Zyprexa. The Ivax unit of Israel’s Teva and Dr Reddy’s had challenged the earlier District Court decision, claiming that the court was mistaken in deciding that Zyprexa should enjoy patent protection until 2011. They had also suggested that Lilly had “failed to disclose information” to the patent office, reports Bloomberg; an issue that would have made Lilly’s patent protection vulnerable. The Court of Appeals yesterday ruled in Lilly’s favour on both of these key issues.
This decision is a resounding success for Lilly. In a short statement, Lilly’s chairman and chief executive officer, Sidney Taurel, said that the “appeals court ruling not only affirms the validity of our patent, but upholds patent law that helps enable the significant investments required to develop the next generation of revolutionary medicines”. Bearing this in mind, the decision has extremely important implications for Eli Lilly’s future. The company is hugely dependent on Zyprexa to shore up its bottom line, with the drug generating sales of US$4.2 billion in 2005, or 28.7% of its total revenues. Significantly, growth is now being driven by a number of Lilly’s newer products, most notably the anti-depressant Cymbalta (duloxetine HCl), severe osteoporosis treatment Forteo (teriparatide injection) and cancer drug Alimta (pemetrexed). Lilly can therefore now look forward to solid revenues well into the medium-term.
These generic challenges perhaps posed the gravest threat to Lilly’s Zyprexa revenues, as a generic entrant to the U.S. market would have probably quickly eroded sales of this drug. However, this is not the only cloud over Zyprexa. The 2005 sales figures quoted above represented a 4.9% year-on-year drop from the 2004 figures, as concerns about metabolic side effects associated with the treatment impacted sales. Over recent quarters the company appeared to have stemmed some of these leaking revenues, by ramping up its support for the drug and introducing a number of price increases.
However, the drug has come under fresh attack over recent weeks, particularly from the New York Times. In two separate articles, the paper ran stories which suggested that Lilly promoted Zyprexa’s use “off-label” and that the Indianapolis-based drug-maker had kept important information on the metabolic side effects of Zyprexa from doctors. These high profile charges are likely to have some negative impact on sales of Zyprexa over the coming quarter, and come uncomfortably ahead of Lilly having to defend its marketing of Zyprexa in lawsuits brought by the attorney generals of Mississippi, Louisiana, West Virginia and Alaska, reports Bloomberg. Nevertheless the company has come out fighting to try and stem any significant damage that these articles might have caused. Although it is becoming increasingly unlikely that Lilly will see a return to growth in its Zyprexa franchise, it should be able to maintain much of the stabilisation that it has thus far achieved, particularly as there don’t appear to be any significant new findings.
Related Articles
- United States: 22 December 2006: New York Times and Lilly Renew War of Words over Zyprexa
- United States: 18 December 2006:Lilly Hits Out against NYT’s Zyprexa Claims