* Sanofi alleges Lilly infringed four patents
* Lawsuit delays U.S. launch of biosimilar to mid-2016
* Move gives Sanofi more time to switch patients to U300
By Bill Berkrot and Natalie Huet
NEW YORK/PARIS, Jan 31 French drugmaker Sanofi
sued Eli Lilly and Co for alleged patent
infringements concerning its top-selling Lantus diabetes
treatment, delaying the U.S. company's plans to produce its own
version of the drug.
Lantus is the world's most prescribed insulin product, with
annual worldwide sales of about $7 billion. It is set to lose
patent protection in the United States, the world's largest
pharmaceutical market, in February 2015.
Sanofi's lawsuit, filed on Thursday, triggers an automatic
30-month stay of approval by the U.S. Food and Drug
Administration, keeping Lilly's biosimilar drug off the U.S.
market until mid-2016, more than a year later than its
previously expected launch date.
Sanofi's shares were higher in earlier trading, but ended
down 0.8 percent at 72.80 euros. Shares in Denmark's Novo
Nordisk, whose own rival to Lantus, called Levemir,
accounts for 15 percent of its sales, rose 3.64 percent to 219
"Any delay provides Sanofi and Novo increased pricing power
in the $6 billion U.S. basal insulin market," Citigroup analysts
Deutsche Bank analysts said the move also raised the
possibility of a further, multiyear extension of exclusivity for
Lantus if, in the end, the court found that Sanofi's patents had
indeed been infringed.
The lawsuit, filed in the U.S. District Court for the
District of Delaware, comes a month after Eli Lilly applied to
the FDA for permission to sell a biosimilar version of Lantus,
known chemically as insulin glargine.
Indianapolis-based Lilly, in its FDA submission, challenged
the validity of several patents on Lantus. But it also said it
would not launch its product before Sanofi's patent on the
active ingredient in Lantus expires in February 2015.
But Sanofi hit back in its lawsuit on Thursday, alleging
that Lilly had infringed on four of its patents. Lilly responded
to the lawsuit on Friday, denying any patent infringement.
"Lilly respects the intellectual property of others and does
not believe the application for approval of its new insulin
glargine product infringes any valid claim of the asserted
patents," Lilly's general patent counsel Doug Norman said in a
Eli Lilly shares were up 21 cents, or 0.4 percent, at $53.48
in midday trading on the New York Stock Exchange.
Lantus accounts for close to a fifth of Sanofi's total sales
and over a third of its operating profit. Analysts estimate U.S.
sales of the drug grew by 22 percent in 2013 to 3.8 billion
euros ($5.15 billion).
Sanofi, which publishes full-year results next Thursday, is
striving to return to growth after a difficult 2013 that
featured problems in Brazil and several product setbacks.
Chief Executive Chris Viehbacher told Reuters last month he
was confident its diabetes business could grow beyond 2015.
Sanford Bernstein analyst Tim Anderson said in a research
note that the 30-month delay would raise Sanofi's earnings per
share from 2015 through 2020 by about 6 percent and reduce
Lilly's EPS for the period by about 2 percent.
ISI Group analyst Mark Schoenebaum forecast annual sales of
about $1 billion by 2020 for a Lantus biosimilar, half of which
would go to Lilly's partner Boehringer Ingelheim.
"In the worst case scenario, Sanofi blocks Lilly completely
and the FDA never approves the drug, effectively removing all
sales," he wrote in a note.
The delayed launch of Lilly's biosimilar drug will also give
Sanofi more time, before cheap competition for Lantus hits the
market, to switch patients to a new long-acting follow-up
product known as U300, which could get FDA approval in 2015.
"Time is important in any switching strategy, so any delay
would be supportive to the franchise's long-term growth,"
Jefferies analysts wrote.