AstraZeneca has suffered a setback following a decision by a US court that a patent on the firm's Pulmicort Repsules asthma drug is invalid.
A court in New Jersey also ruled that Actavis' generics of Pulmicort Respules (budesonide) do not infringe AstraZeneca's second patent and the company intends to launch immediately its 0.25mg and 0.5mg versions of the product. Actavis' Abbreviated New Drug Application for its versions of the two aforementioned doses received final approval in the USA in August 2012.
Paul Hudson, executive vice president for AstraZeneca in North America, said the firm "strongly disagrees with the court’s decision,” adding that it has "full confidence in the strength of its intellectual property rights protecting Pulmicort Respules". He noted that AstraZeneca is "considering next steps, including an appeal".
In November 2008, an agreement was reached with Teva Pharmaceutical Industries which saw the Israeli firm start to sell its generic version of Pulmicort Respules at the end of 2009 under an exclusive licence granted by the Anglo-Swedish drugmaker. AstraZeneca gets royalties.
Now that Actavis' generic will enter the market, AstraZeneca says this will materially impact royalties received from Teva, which represented an annualised value of approximately $260 million in 2012. The US court's decision will not change AstraZeneca’s revenue guidance for 2013 of a mid- to high-single digit decline on a constant currency basis.
Commenting on the ruling, Panmure Gordon analyst Savvas Neophytou said "we thought AstraZeneca had managed to keep the 'wolf from the door' following its 2008 settlement with Teva on Pulmicort Respules which we had assumed would have protected the franchise to 2019". He added that the court decision that invalidates the company's patent protection "should impact the circa $400 million franchise".
Mr Neophytou said that with generic launches now probable, the broker has downgraded core earnings per share forecasts for AstraZeneca to $5.49 (from $5.62) and $5.61 (from $5.69) in 2013 and 2014, respectively. Actavis claimed that total branded and generic sales of Pulmicort Repsules were around $1.20 billion in the USA in the 12 months to January 2013.