Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) could be required to pay hundreds of millions of dollars in compensation to Wyeth (NYSE: WYE) and Pfizer Inc. (NYSE: PFE; LSE: PFZ) after the jury in the US District Court for the District of New Jersey ruled that the US patent of Protonix held by Swiss Nycomed Gmbh’s is valid.
Nycomed licensed Protonix to Wyeth. Wyeth was bought by Pfizer at the end of 2009. Nycomed and Wyeth filed the patent infringement case against Teva in May 2004.
Protonix is a treatment for Gastro Esophageal Reflex Disease (GERD). Teva made an at-risk launch of generic Protonix in December 2007. US sales of Protonix, a blockbuster drug, fell 58% in the year following the launch of the generic version, and Wyeth's revenue took a severe hit, since Protonix is an important source of income.
India's Sun Pharmaceutical Industries Ltd. (BSE: 524715) also launched a generic version of Protonix.
While the jury ruled that the patent was valid, there were other defense claims by Teva, which were not ruled on. If a judge sides with Teva on these issues, it would also invalidate the patent.
Harel Finance analyst Steven Tepper said, "Teva took a risk on Protonix, and may have to pay $1-3 billion to Wyeth/Pfizer. The US jury found that Teva infringed on the Protonix patent, and the judge's decision will be in a few weeks. Teva claims that this is not the final word, and that the judge has to decide whether the patent is valid and there is no duplication of patents. We believe that the damage to Teva will reach $1 billion, with a small chance of reaching $3 billion, if the court rules that Pfizer is entitled to three-fold compensation."
UBS analyst Mark Goodman estimates the maximum possible damage to Teva at $450 million. He said, "We don’t rule out a legal settlement. We'll wait for things to clear, since we don’t yet know if Teva has completely lost."
Goodman gives Teva a "Buy" recommendation with a target price of $74.
Teva's share closed at $61.54 on Nasdaq on Friday. The share price fell 1.9% in early trading on the TASE today to NIS 227.60.
Published by Globes [online], Israel business news - www.globes-online.com - on April 25, 2010
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