After nearly a year of fighting to protect the patent on its blockbuster leukemia drug Gleevec, Novartis ($NVS) has made peace with Indian drugmaker Sun Pharma, reaching a settlement that will keep Sun's generic version off the U.S. market until February 2016, Reuters reports. Novartis' U.S. patent expires in July 2015.
The battle erupted last June, when Sun sued Novartis in the District Court of New Jersey for the right to market generic Gleevec before the patent ran out. Sun made its move just three months after India's Supreme Court refused to issue a patent on the drug, which is known as Glivec there.
Generic competition has been a major drag on Novartis' top line. In the most recent quarter, the company's revenues were flat at $14 billion, missing analysts' expectations by $200 million. Novartis reported that generic rivals, primarily to its bone drug Zometa/Aclasta, slashed net sales by 6%. Gleevec sales also slowed, the company said. Profits jumped by 23%--but that gain came only because Novartis sold its blood diagnostics unit to the Spanish company Grifols.
Novartis is now facing declining sales of its hypertension drug Diovan, which has generic rivals in the U.S. The company will lose patent protection on its hypertension drug Exforge in Europe in 2017, and some of its patents on cancer drug Sandostatin LAR will also expire, according to the Wall Street Journal. Those two drugs were among Novartis' top 10 sellers in 2012, the WSJ points out, and Gleevec was its top performer in 2013, generating $4.7 billion in sales.
Sanford C. Bernstein analyst Tim Anderson told the WSJ he expected the delay in Gleevec generics to boost Novartis' 2015 earnings per share by about 6%, but that there would be no positive effect beyond 2016.
Novartis is doing everything it can to cushion the coming loss of Gleevec exclusivity, embarking on a series of deals designed to boost its oncology pipeline, while reducing its focus on less profitable endeavors. It agreed to buy GlaxoSmithKline's ($GSK) cancer franchise for up to $16 billion and sell its vaccines business to GSK for $7 billion. The two companies teamed up on a consumer-health business, which GSK will run. Novartis is also selling its animal health unit to Eli Lilly ($LLY) for $5.4 billion.
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