GSK lawsuit claims rivals are using stolen secrets

A tale of a stolen phial of bacteria, a disloyal drugs company employee and a 14-year hunt for evidence of industrial skulduggery looks set to be told in a US courtroom, after GlaxoSmithKline launched a multimillion-dollar lawsuit against rivals that it claims are using its trade secrets.

GSK is alleging that four drugmakers are using secrets stolen and sold by a former employee in 1988 as they develop copycat versions of its top-selling antibiotic, Augmentin. GSK claims it has developed a fool-proof test that shows its "S clavuligerus" culture is being used by companies to produce generic Augmentin, a treatment for chest and ear infections.

But the rivals insist GSK has launched a spurious legal action to try to scare them from the market and protect Augmentin's £1.4bn of annual sales.

In legal and regulatory filings in the United States, GSK says that Biochemie and Geneva, two subsidiaries of the Swiss pharmaceuticals giant Novartis, and two other generics manufacturers should be barred from selling their products in the US, the world's most lucrative pharmaceuticals market.

The filings claim: "It is now clear that Biochemie acquired its production strain of S clavuligerus culture from a third party and knew or should have known that the culture it acquired had been stolen."

The filings are the latest twist in GSK's long legal fight to keep copycat Augmentin from the US market. It comes at a sensitive time in the US, where political demands are growing for big pharma groups to face price competition earlier. The company has already attracted fierce criticism for its failed attempt to extend patent protection on the drug, which would keep out rivals and keep prices high.

Earlier this year, a Virginia judge invalidated five patents on the way Augmentin is produced, which GSK had hoped would extend its period of exclusivity as far as 2018. It is appealing the decision and Jean-Pierre Garnier, GSK's chief executive, has promised to extract damages for lost profits if it wins its case, but analysts feel it has little chance of success. Industry sources suggested yesterday that GSK was using the stolen secrets allegations to discourage the other two companies, Teva of Israel and India's Ranbaxy, from risking the launch of their drugs.

Novartis has already launched generic Augmentin in the US, a move which has contributed to the 20 per cent fall in GSK's shares over the last three months. Novartis said yesterday it was confident it will see off the appeal and the new legal challenge. A spokesman said: "We are confident that the lawsuit will show we have acted legally and ethically in the correct manner."

One UK analyst said: "It is probably a bit of a wild card, but from GSK's point of view, the more legal layers they can throw at everybody the better."