Bayer is celebrating the news that a US court has ruled in its favour in a patent dispute concerning the German firm’s big-selling antibiotic Avelox.

A Court for the District of Delaware issued a ruling backing Bayer’s lawsuit against a bid by Dr Reddy’s Laboratories which challenged the validity and enforceability of two US patents covering Avelox (moxifloxacin), the company’s fluoroquinolone antibiotic for the treatment of respiratory tract and other infections. The ruling means that the Indian drugmaker cannot launch its generic version of the drug in the USA (where Bayer’s drug is sold by partner Schering-Plough) until at least 2014.

Teva Pharmaceuticals has also challenged the validity of the same Bayer patents at issue in the Dr Reddy’s suit, which cover active ingredient, composition and methods of treatment, in a case pending in the same Delaware court. That trial is currently scheduled to commence on February 25 next year and Bayer said it intends to defend its patents vigorously on Avelox which had first-half 2007 sales of 218 million euros.

Meantime, analysts at JP Morgan have reiterated their ‘overweight’ rating on Bayer and raised their 12-month target price from 70 euros to 73 euros._ In a research note, they also claim that there is a 60% probability of the company’s investigational first-in-class oral blood thinner Xarelto (rivaroxaban) achieving peak sales of 5 billion euros and that Bayer’s share price is expected to stay strong thanks to the improved outlook for its consumer health division, oral contraceptives and the haemophilia agent Kogenate (recombinant antihaemophilic factor).

Betapharm declines hurt Dr Reddy’s earnings

The Avelox decision came just as Dr Reddy’s posted a 4.5% decline in net profits to 2.672 billion rupees, around $67.5 million, for the fiscal second quarter ended September 30, though the like, year-earlier figures were boosted by one-time gains. Revenues fell 37% to 12.67 billion rupees, due principally to a disappointing showing from Germany's Betapharm, which Dr Reddy's acquired last year. Its sales fell nearly 27% to 1.9 billion rupees, which the company said was due to supply constraints and rupee appreciation.

Revenue from its generic drugs in North America decreased to 2 billion rupees from 9 billion rupees, but last year's figure included the aforementioned one-time gains of 7.8 billion rupees, which are linked to six-month marketing exclusivity it enjoyed for its copycat versions of Merck & Co’s cholesterol drug Zocor (simvastatin) and its enlarged prostate treatment Proscar (finasteride).