Prozac ruling hits drug firms' shares

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The Independent Online

Shares in drugs groups AstraZeneca and SmithKline Beecham came under pressure yesterday after a surprise patent ruling on Prozac, owned by US rival Eli Lilly, generated fears for the pair's leading drugs.

Shares in drugs groups AstraZeneca and SmithKline Beecham came under pressure yesterday after a surprise patent ruling on Prozac, owned by US rival Eli Lilly, generated fears for the pair's leading drugs.

The ruling, in a US court on Wednesday, brought forward the expiry date of Eli Lilly's patent on Prozac, the world-famous anti-depressant, from 2003 to 2001 by overturning a so-called secondary patent on the drug. Eli Lilly shares fell 31 per cent to $75 on the judgment, and showed little sign of recovery yesterday.

Analysts said it would now be harder for companies to extend primary patents on the compound of their drugs by filing secondary patents aspects such as its mechanism of action.

AstraZeneca shares yesterday fell as much as 126p, or 4 per cent, to 2825p, amid fears for sales of Losec, the anti-ulcerant which is the world's best selling drug. They closed at 2,900p. Losec's patent expires in October in the US, with AstraZeneca is expected to file secondary patent applications to extend Losec's life.

Some analysts said the worst case scenario for Losec, in which AstraZeneca suddenly loses sales in the third quarter of 2001, now looked more likely. AstraZeneca this month launches Nexium, a more advanced anti-ulcerant designed to replace lost Losec sales.

A spokesman for AstraZeneca said: "We remain confident of our Losec strategy. The outcome of Eli Lilly's court cases does not have any bearing on the outcome of court cases in Losec."

Shares in SmithKline Beecham fell 32p, or 4 per cent, to 833p amid fears Paxil, an anti-depressant, would lose sales to the cheap generic versions of Prozac expected to flood the market next year. The shares recovered to close 6p lower at 859p.

The company said that while Paxil worked on the same principal as Prozac, it would not be substituted with generic Prozac - a process called therapeutic substitution - because it was a different formulation.

Paxil is patent protected until 2006, but is already the subject of litigation from companies hoping to sell generic formulations of the drug.

The City was more sceptical. "As healthcare providers become more cost conscious, therapeutic substitution is more likely to happen," said Matthew Northover, drugs analyst at ABN Amro.

Lehman Brothers said sales of Paxil in the US could fall by 15 per cent in 2001, rising to 35 per cent by 2003 in the worst case scenario.

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