NEW YORK (Reuters) - A U.S. judge on Tuesday ruled that the patent on the multibillion-dollar blood clot-preventing drug Plavix is valid, handing a major victory to Bristol-Myers Squibb Co. (BMY.N) and Sanofi-Aventis (SASY.PA).
The long-awaited ruling, which blocks sales of generic Plavix, provides much needed certainty for the two makers of one of the world’s largest-selling medicines, and immediately revived debate on Wall Street about a Bristol-Myers takeover.
“The decision will help solidify Bristol-Myers’ earnings and dividend, and perhaps open the door for another drugmaker — most logically Sanofi — to come in at this point and purchase Bristol,” said Jason Fox, an analyst at H&R Block Financial Advisors.
U.S. District Judge Sidney Stein in Manhattan found that Apotex Inc., a privately held Canadian generic drugmaker, failed to prove that the patent “is invalid or unenforceable on any of the grounds asserted.”
Bristol and Sanofi “are entitled to permanent injunctive relief and, as shall be determined by the court in a future proceeding, damages,” the judge said in the written decision.
Stein also rejected Apotex’s claims that Sanofi made false statements and omissions in an attempt to mislead patent examiners in getting the patent approved. Apotex “failed to prove by clear and convincing evidence that Sanofi engaged in inequitable conduct,” the judge wrote.
Apotex said it would immediately appeal the decision.
“Most people had assumed that they (Bristol and Sanofi) would win, but it’s nice to have the overhang removed,” said Les Funtleyder, a health-care analyst at Miller Tabak.
But analyst Michael Levesque of Moody’s Investors Service said he considered it only a temporary victory for Bristol and Sanofi because there is a slight chance Apotex could win on appeal.
“The decision at least eliminates a short-term risk,” said Levesque, who noted that federal appellate courts can take a year or longer to render decisions.
Bristol-Myers shares rose $1.44, or 4.75 percent, to $31.75 — their highest price in five years — in afternoon New York Stock Exchange trading. Sanofi shares closed up only 0.1 percent in Paris, after having risen 2.2 percent earlier in the day.
The ruling follows a roller coaster ride for both Bristol-Myers and Sanofi investors, who watched as a settlement designed to keep generic Plavix off the market fell apart.
The deal’s collapse allowed Apotex last August to briefly flood the market with its generic.
The cost of the generic, at roughly $128 a month, is only about 15 percent less than Plavix. But Bristol estimates the copycat has caused about a $2 billion decline in sales of its branded product.
Apotex has been challenging the patent since 2002, arguing that it is not truly innovative but is based on another patent that expired in 2003.
New York-based Bristol and Paris-based Sanofi said U.S. patent protection on Plavix runs until November 2011. Plavix had annual U.S. sales approaching $4 billion before the Apotex generic was launched, and global sales of $6 billion.
Supplies of generic Plavix still on the market are expected to dry up in coming weeks. That will allow the two drugmakers to resume their exclusive sale of the drug, once the world’s second-biggest medicine.
With the decision now behind them, shareholders and Wall Street analysts are mulling the long-term future of Bristol-Myers.
The company has just emerged from a two-year federal probation related to a $2-billion accounting scandal. Its earnings growth has faltered due to generic competition for a number of medicines, although recently launched medicines and a respected pipeline of experimental drugs are expected to help revive the drugmaker.
“With today’s favorable decision, Bristol can continue its recovery,” said Arthur Wong, an analyst at Standard & Poor’s.
Pharmaceutical analysts and investors have long pegged Sanofi as the most logical suitor because of its ties with Bristol on Plavix.
Reports surfaced earlier this year about a deal between the two companies. And Sanofi is likely hungrier to buy another drugmaker given last week’s rejection by a U.S. health panel of an experimental obesity drug from Sanofi called Zimulti, once deemed a possible $2.5 billion-a-year blockbuster, Fox noted.
“That setback could push Sanofi’s hand to do something on the mergers and acquisition front, in order to get new products and bigger geographic reach,” Fox said.
But others questioned the merits of a deal.
“I’m not so sure that Bristol wants to be acquired ... Given that they’ve signed (product) deals with AstraZeneca (AZN.L) and Pfizer (PFE.N), it kind of suggests that maybe they don’t want to be,” Funtleyder said.
Additional reporting by Martha Graybow, Lewis Krauskopf, Ed Tobin and Bill Berkrot