UPDATE 2-Novartis buys generic lung drug firm Oriel

* Novartis generics unit buys Oriel for undisclosed sum

* Targets respiratory drugs losing patent protection

* Oriel inhaler may be alternative to Vectura device

* Novartis shares ease 0.4 pct

(Adds analyst comment, background on Vectura)

By Sven Egenter

ZURICH, April 19 (Reuters) - Swiss drugmaker Novartis AG (NOVN.VX) has bought privately held U.S. company Oriel Therapeutics to boost its generics portfolio in the multibillion-dollar market for respiratory drugs.

The move suggests the Swiss drugmaker may see an simpler route to market with Oriel's electronic inhaler device than with another device from Britain's Vectura Group Plc (VEC.L), which Novartis has been working on, analysts said.

According to industry estimates approximately 50 percent of the current $32 billion global market segment for asthma and chronic obstructive pulmonary disease (COPD) medicines is expected to lose patent protection by the end of 2016, Novartis' generics unit Sandoz said in a statement on Monday.

The segment is projected to grow significantly faster than the pharmaceutical market, driven by factors including a significant level of under-diagnosis.

Sandoz has made generic respiratory drugs a key area for investment, partly via its alliance with Vectura. But last month it handed back to Vectura U.S. rights for a drug widely believed to be a generic version of GlaxoSmithKline Plc's (GSK.L) Advair.

"Clearly, this news (Oriel acquisition) may suggest that Sandoz-U.S. sees an easier path for this product to get regulatory approval as a generic device than it did for Vectura's device," said Sam Fazeli, an analyst at Piper Jaffray in London.

Sandoz is still working with Vectura on its product in Europe.

Sandoz has signed a definitive agreement to buy Oriel Therapeutics, which focuses on developing respiratory products as generic alternatives to patented drugs for asthma and other respiratory diseases. Financial details were not disclosed.

"Oriel is a strong strategic fit with Sandoz and the acquisition is expected to support our strategy of increasing the number of differentiated, higher-value products in our development pipeline," said Jeff George, Division Head Sandoz, in a statement.

"One of our strategic objectives is to offer fully substitutable generic versions of key branded medicines, including respiratory medicines," he said.

The acquisition provides Sandoz with three promising development projects targeting leading medicines in this field.

Details of Oriel's development programmes, including anticipated timing of future regulatory submissions, are not being given for competitive reasons, the Swiss group said.

Novartis shares eased 0.4 percent to 56.35 Swiss francs by 0818 GMT, in line with the Stoxx 600 healthcare sector index .SXDP, while Vectura fell 1.1 percent. (Additional reporting by Ben Hirschler in London; Editing by Jon Loades-Carter and Michael Shields)