AZ's Pulmicort patent loss could cost $100M-plus

It's another setback for AstraZeneca ($AZN). A U.S. court ruled against the drugmaker in a long-running patent fight over its asthma drug Pulmicort Respules. That means copycat drugmakers can launch their versions, competing with Teva Pharmaceutical's ($TEVA) authorized generic. Pulmicort's patents don't expire till 2018.

Courtesy of Kaiser Permanente

The decision will obviously undercut AstraZeneca's branded sales. It will also take a bite out of its royalties on Teva's version. Under its agreement with the generics maker, AstraZeneca's royalties on the product drop when other generics hit the market, Leerink Swann pointed out in an investor note.

And with Actavis ($ACT), Sandoz and Apotex versions for sale, generic prices are likely to drop significantly. Actavis, for one, says it plans to launch its version immediately. So there will probably be less Teva revenue to share.

The company's Pulmicort franchise, which also includes Pulmicort Turbuhaler, brought in $233 million in the U.S. last year and $866 million worldwide, AstraZeneca's annual report states. About $136 million of that is specifically Pulmicort Respules sales in the U.S. The company's royalties from Teva amounted to $260 million, giving AstraZeneca almost $400 million in Pulmicort Respules revenue. (Actavis' press release pegs U.S. branded and generic sales of Pulmicort at $1.2 billion.)

Naturally, AstraZeneca is weighing an appeal. "AstraZeneca strongly disagrees with the court's decision," EVP Paul Hudson said in a statement. "AstraZeneca has full confidence in the strength of its intellectual property rights protecting Pulmicort Respules."

The company says it doesn't expect the court's decision to change its 2013 revenue guidance. It will, however, hit the company's Core Other Income number; last year, that line item amounted to $1.027 billion, and it had expected $600 million for 2013. Now, it's predicted to be "significantly below" that.

- see the release from AstraZeneca
- get more from Actavis
- read Leerink Swann's note (PDF)

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