German court rebuffs GSK on Advair patent

A German patent court in Munich has determined that a key patent on GlaxoSmithKline's (NYSE: GSK) lung drug Advair (aka Viani) is not valid, dealing a blow to the top-selling lung drug in Europe's biggest market.

GSK confirmed that the Federal Patents Court ruled in favor of the claimants Mylan, Hexal, Neolab and IVAX International in deciding that under German law GSK's German combination patent for Viani was not valid. GSK owns a number of other patents in Germany relevant to Viani that expire in 2011 and 2012. The company plans to appeal the decision to a higher court.

While the news is good for the generic companies, it is also good for British inhaled drug specialist Vectura, which is developing a product called VR315 with Sandoz in Europe that analysts believe to be a generic version of Advair, as Reuters points out. Advair's worldwide sales last year were 5 billion pounds ($7.2 billion), with Germany accounting for 177 million pounds of this total. Shares in GSK fell 0.8 percent, while Vectura jumped 6.2 percent, Reuters reports.

Paul Diggle, an industry analyst at Ambrian Partners, says he expects generic companies to launch copies of Advair in Germany later this year, despite the technical challenges involved in making the inhaled medicine. But because GSK has patents covering its Diskus inhalation device that are valid until 2011, generic companies will have to use a different inhaler device. "It's not going to be a classic generic collapse," Diggle says, as quoted by Reuters, but rather a "fairly slow collapsing pack of cards."

- check out GSK's statement
- read the Reuters coverage