AstraZeneca wins Seroquel case

Anglo-Swedish pharmaceutical group AstraZeneca received a boost yesterday when a US court upheld its patent over $4bn a year schizophrenia and bipolar blockbuster Seroquel.

The New Jersey District Court awarded AstraZeneca summary judgement in the face of claims by Israeli generics drug group Teva Pharmaceuticals, and Sandoz, the generics arm of Novartis, that AstraZeneca's conduct in asserting its patent had been inequitable. Teva and Sandoz conceded infringing the patent itself, but were hoping to move the proceedings to a full trial that had been scheduled to start on 11 August. The news was a fillip for the share price, which closed up 4.8 per cent at 2233p yesterday.

Peter Cartwright, an analyst at Evolution Securities said that the spike was down to the removal of doubt about Seroquel. "There had been a number of brokers expressing the company's target price on a risk adjusted basis," he said. "With the news from the court yesterday, that risk has been removed and those that had sold on doubts over the process going to a full trial were coming back in." Mr Cartwright has a price target for the shares of around 2400p.

Teva has said that it intends to appeal the decision but that process will take at least six months. It was unclear yesterday if Sandoz also plans to challenge the ruling.

"We are pleased with the court's decision to uphold our valid intellectual property," said AstraZeneca chief executive David Brennan. "Seroquel remains an important part of our company's portfolio benefiting patients and physicians throughout the world."

Market experts said that the decision would come as a relief for the group, especially as a full trial could have lasted well into next year. The judgement confirms AstraZeneca's exclusive right to produce the drug until the patent expires in the US, the treatment's biggest market, in 2011. The group is also applying for a six month patent extension for use in paediatric patients. Seroquel recorded first quarter sales of $1.05bn this year, up from $923m in the same period 12 months ago.

However, Jeremy Batstone-Carr at Charles Stanley pointed out that the company had few blockbuster drugs in the pipeline. "It is only a stay of execution," he said. "The group publishes results on 31 July and inevitably we will see that operationally they are struggling."

Big pharmaceutical companies are facing increasing pressure from generic firms. Another AstraZeneca treatment, Crestor, an anti-cholesterol drug, face challenges in the next 18 months, which the company says it will vigorously defend.

In April, the group settled out of court a long running dispute with Indian generics drug maker Ranbaxy over its biggest medicine, Nexium, an ulcer treatment that generates sales of $5.22bn a year. Under the terms of the settlement Ranbaxy will be able to produce the drug from May 2014, which is when the first patents held by AstraZeneca expire. A spokesman for AstraZeneca confirmed at the time that no damages had been paid by Ranbaxy, but that the Indian firm did accept AstraZeneca's patents.

However, there are still outstanding challenges over Nexium. Both Teva and another Indian group, Dr Reddy's have lodged proposals to manufacture their own versions of the drug.