Eli Lilly could be facing generic competition far sooner than expected for Strattera, after a US court ruled that a key patent on the attention deficit hyperactivity disorder treatment is invalid.

A court for the District of New Jersey has ruled against the company in its litigation with generic drugmaker Actavis over the validity of Lilly's '590, or method-of-use, patent on Strattera (atomoxetine). It had been set to expire in May 2017 and Lilly now says that as a result of the court decision it anticipates “the near-term entry of generic atomoxetine in the US market”.

Robert Armitage, general counsel for Lilly, said that “we disagree profoundly with the District Court's ruling and will appeal this decision”. He claimed that the judge “did not apply what we believe has been long-settled law on the legal issue of enablement. We will take every reasonable step to protect our intellectual property rights”.

Strattera is a pretty big earner for Lilly and second-quarter sales climbed 6% to $142.8 million, The firm noted that the decision will not effect its current 2010 earnings per share guidance, lifted last month to $4.20-$4.30 from $4.00-$4.25, but turnover will be affected.

The company now expects revenue growth in the low-to-mid single digits, a reduction from its prior forecast of mid-single digits. Chief executive John Lechleiter said that “assuming a launch of a generic version of Strattera in the USA, the loss of revenue will undoubtedly add to the challenges we will face during upcoming patent expirations on other key products”.

He added that Lilly is taking “the actions necessary to meet these challenges, including lowering our cost structure by at least $1 billion by the end of 2011 and reducing our full-time workforce”. As a result, he added that “we still expect to generate sufficient cash flow in the coming years to fund R&D, make necessary capital investments and to pursue anticipated business development opportunities”.

Dr Lechleiter concluded by saying that “we do not intend to deviate from our plan to maintain our dividend at least at its current level”, which will at least please investors.