Double loss gives Glaxo a headache

Glaxo Wellcome suffered a double blow yesterday after losing a key patent battle in the US and seeing a drug it largely developed launched by a rival.

The news that Novopharm, a Canadian drugs group, has won permission from a US court to market a rival to Zantac, the UK group's best-selling anti- ulcer drug, coincided with an announcement from rival Zeneca that it was launching Zomig, a migraine treatment which Glaxo was forced by US regulators to sell in September. But the damage had been anticipated by dealers and Glaxo's shares dipped only 4p to pounds 10.86 yesterday.

A Federal appeal court ruled on Friday that Novopharm's application to market a non-patented form of Zantac did not infringe Glaxo's so-called form 2 version of the drug, over which it will continue to hold a US patent until 2002. The unsuccessful appeal, which followed a decision against Glaxo in a US district court in North Carolina almost a year ago, means that much cheaper generic forms of Zantac will go on sale when the US form 1 patent runs out in July. Novopharm said it was also ready to launch a generic form of Zovirax, Glaxo's big-selling shingles and genital herpes drug.

The British company is unlikely to appeal further in the Novopharm case and was yesterday playing down the effects of the ruling. A spokesman said: "We have been saying for some time we have been anticipating generic competition."

At the time the company announced its annual results last month, Sir Richard Sykes, chief executive, warned that US sales of Zantac could slump by as much as 80 per cent in the 12 months after the patent expired in July. But he went out of his way to allay City fears about the prospects for the group, saying he expected earnings to be "at least maintained" over the next two years.

Analysts largely agreed that the ruling had done little to change market expectations. Fraser Hall at Barclays de Zoete Wedd said forecasters had been expecting multiple generic competition from July and the only question was whether Glaxo could limit its competitors to, say, two or three, rather than the six to eight expected. He said the group was likely to continue its legal battle against other potential generic producers.

The court setback for Glaxo should bring a multi-million pound windfall for Holliday Chemical, a Huddersfield-based company, whose main Spanish subsidiary makes the chemicals used in the manufacture of ranitidine, the generic name for Zantac. Holliday, which supplies both Novopharm and other generic drug manufacturers, saw its shares rise 13p to 152p yesterday after its chairman, Michael Peagram, said the launch of generic competition could be worth "several million pounds extra profit in the current year." The Zovirax move is seen as less significant. Whereas more than half last year's total Zantac sales of pounds 1.95bn were in the US, less than two- fifths of Zovirax sales were there, making the effects of generic competition on the drug there less severe.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'