U.K. court cuts Alimta exclusivity short, threatening Lilly's European sales

Eli Lilly ($LLY) might have succeeded in protecting Alimta from generics in the U.S., but in the U.K.? Not so much. Lilly lost a patent fight with Actavis ($ACT) in English High Court, in a ruling that paves the way for copycat competition not only in that country, but several others in Europe.

With the lung cancer drug one of its remaining big earnings, Lilly naturally intends to appeal the decision. But for now, it's victory for Actavis, which wants to sell alternative salt forms of Alimta next year.

That's when Lilly's compound patent on the drug expires. But Lilly has successfully argued in the U.S. that other patents protect Alimta through 2022. That court decision, handed down by a U.S. District Judge last month, backed Lilly's contention that a patent on Alimta's administration with B vitamins should bar generics till it expires.

The English court obviously did not agree. It ruled that Actavis would not infringe on Lilly's additional patents, which expire there in 2021. So, Actavis should be free to launch its rival version when the 2015 patent runs out. The court also issued non-infringement declarations that apply in France, Italy and Spain.

The U.K. ruling could have even broader effects, said ISI Group analyst Mark Schoenebaum. The expectation was that Lilly would have Alimta protection across Europe through 2021, but the odds are now against it. If Lilly loses its U.K. appeal--and Alimta rivals roll out across Europe--the company's earnings could take a 5% hit from 2016 to 2019. Cost cutting would likely make up some of that difference, he said, because Lilly has committed to meeting certain margin targets.

Lilly says it will fight on, however. "Although Alimta's compound patents remain in force and are expected to provide exclusivity in major European countries through 2015, we continue to believe that Alimta's vitamin dosage regimen patents would be infringed by the entry of generic pemetrexed in Europe prior to June, 2021," Lilly's general counsel Michael Harrington said in a statement.

- read the Reuters news

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