Sanofi wards off Lilly's Lantus challenger with infringement lawsuit

Lantus--Courtesy of Sanofi

Sanofi's ($SNY) got the top-selling diabetes drug in the world right now, and it intends to keep it that way. The French drugmaker is suing Eli Lilly ($LLY) over infringement claims on four of the patents for its Lantus insulin product, which is set to lose protection next February.

As Reuters reports, with the lawsuit filed Thursday, Sanofi puts into play an automatic 30-month stay of approval by the FDA, which will keep Lilly's biosimilar copy off the U.S. market until mid-2016--more than a year after its previously anticipated launch date. A Sanofi win in court could mean an additional multi-year protection extension on the $7 billion-a-year giant, the news service said.

Though the biosimilars market holds billions of dollars in potential revenue, it has been slower to flesh out than some expected. Part of that lag can be chalked up to huge costs and difficult development, which have caused players like Teva ($TEVA) to reevaluate their strategies. But old-fashioned patent litigation has also stalled the process of bringing biosimilars to market, with some drugmakers doing all they can to maintain exclusivity on some of their most complex--and most expensive--products.

Sanofi, for one, needs Lantus' colossal revenue haul as it looks to bounce back from losses on other off-patent drugs, like blockbuster blood thinner Plavix, and a costly Brazil generics snafu. Lantus generates nearly 20% of Sanofi's total revenue and over a third of its operating profit, Reuters notes, and analysts estimate that its U.S. sales rose by 22% to €3.8 billion ($5.15 billion) in 2013.

Warding off Lilly's challenger will also give Sanofi more time to switch patients over to a new, long-acting Lantus successor known as U300, for which the the company expects FDA approval in 2015. The French pharma has already caught one break, with the FDA last year rejecting Tresiba, a Novo Nordisk ($NVO) drug seen as a potential Lantus rival. "Time is important in any switching strategy, so any delay would be supportive to the franchise's long-term growth," Jefferies analysts wrote (as quoted by Reuters).

For Lilly, though, the holdup is not so welcome. The Indianapolis-based drugmaker is feeling the effects of generic competition to its top-selling Cymbalta, which went off-patent late last year. And CEO John Lechleiter has recently touted the Lilly's diabetes prospects, even as he warns investors of a tough year ahead for both the company's top and bottom lines.

"We're on the cusp of launching products in cancer and diabetes, two therapeutic areas where we're well established and where we have built out the infrastructure we need," he told Reuters in a recent interview. "And we believe that's going to be the beginning of our return to growth."

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