AstraZeneca and Teva settle generic Pulmicort squabble

In mid-November, Teva pursued an “at-risk” launch of its generic version of Pulmicort Respules, an inhaler used to treat asthma in children, after receiving approval from the FDA—despite a continuing patent-infringement case with AstraZeneca. AstraZeneca stuck to its patent and intellectual property guns and filed a temporary restraining order on Teva as well as preparing for its own generic release to steal Teva’s thunder. By late November, however, the two companies settled and each got some of what it wanted.

Jeffrey Bouley
LONDON—In mid-November, Teva pursued an "at-risk" launch of its generic version of Pulmicort Respules, an inhaler used to treat asthma in children, after receiving approval from the U.S. Food and Drug Administration (FDA)—despite a continuing patent-infringement case with AstraZeneca. AstraZeneca stuck to its patent and intellectual property guns and filed a temporary restraining order on Teva as well as preparing for its own generic release to steal Teva's thunder.

By late November, however, the two companies settled and each got some of what it wanted.

For AstraZeneca, the settlement deal means that Teva will pay AstraZeneca undisclosed damages for launching generic Pulmicort, as well as royalties on sales once its starts again selling its low-cost version of the product on Dec. 15, 2009. According to a release from AstraZeneca, "The agreement also releases Teva from all past U.S. sales of its generic budesonide inhalation suspension and provides that any product already shipped by Teva will remain in the market to be further distributed and dispensed."

The settlement is also a third feather in the cap for AstraZeneca's efforts to fend off copycat drugs, having already headed off attempts to copy two of its top-selling products, heartburn drug Nexium and antipsychotic Seroquel, earlier this year.

Moreover, after seeing its shares fall 4.6 percent in mid-November on news of Teva's generic release and mixed results on trials of its lung cancer treatment Zactima, the settlement announcement boosted the companies shares 1.7 percent on the lower London markets—and AstraZeneca further reported it continues to expect core earnings per share in the range of $4.90 to $5.05 for the full year 2008.

"This agreement provides increased certainty and stability in our business and a clearer backdrop for our investment decisions while re-affirming the strength of our intellectual property," said David Brennan, CEO of AstraZeneca, in a prepared statement.

Savvas Neophytou, an analyst with Panmure Gordon, who issued a "buy" recommendation on AstraZeneca's stock, noted that the agreement is important in delaying generic competition for Pulmicort Repsules—the patent for which expires in 2018, with pediatric exclusivity extending to 2019. But more broadly, he says, it removes uncertainty about where AstraZeneca stands, saying, "For the time being it's a sensible solution."

The deal also helps AstraZeneca's efforts to drive Pulmicort toward blockbuster status before facing substantial competition from MAP Pharma's Unite Dose Budesonide, expected to launch in 2012. As Datamonitor has forecast, even with with residual Teva product in the supply chain, Pulmicort revenues will reach $935 million across its seven major markets by 2011. Such sales penetration and momentum will be critical to fend off Unite Dose Budesonide, which could displace 30 percent of Pulmicort Respules, according to predictions by Datamonitor.

While Teva had to concede that the patents asserted by AstraZeneca in the patent litigation are valid and enforceable, and admit that its generic version of Pulmicort Respules infringes AstraZeneca's patents, the deal keeps it from potentially paying triple damages for the at-risk launch if it had lost the patent infringement cases.

The deal also removes what would have been a competitor for the generic Pulmicort. Immediately following the at-risk launch by Teva, AstraZeneca had entered into a supply and distribution agreement with Par Pharmaceutical to begin shipments of AstraZeneca's own generic version. As part of the settlement with Teva, that Par deal is now off, as is the plan for AstraZeneca to release it generic version. While Datamonitor has noted that this means AstraZeneca may have less control over its positioning of the product against early generic counterparts, for Teva is means a more streamlined process to becoming the first company out of the starting gate with a generic version. DDN

Jeffrey Bouley

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