AstraZeneca (AZN) recently announced that three patents protecting its cholesterol management drug, Crestor (rosuvastatin) were rendered invalid by the Federal Court of Australia. The three patents including a formulation patent were set to expire by 2020-21. The patents were challenged by companies like Apotex, Ascent Pharma and Actavis (ACT).
AstraZeneca expects that the Australian Federal Court’s verdict will not impact its 2013 guidance of mid-to-high, single-digit revenue decline. In 2012, Crestor generated sales of approximately $350 million in Australia.
The company also noted that the decision by the Australian Federal Court does not affect the validity of patents in the rest of the world. We remind investors that in Dec 2012, the Court of Appeals for the Federal Circuit had maintained an earlier ruling that the US substance patent (RE37, 314) related to Crestor is valid. The ‘314 patent is set to expire in 2016. However, Crestor is already facing generic erosion in Canada.
Generic competition has adversely impacted AstraZeneca’s revenues over the past few quarters. This has put significant pressure on the company. Additionally, there is increasing uncertainty regarding Crestor due to the entry of generic versions of Pfizer’s (PFE) Lipitor in Nov 2011. The company’s much hyped antiplatelet drug, Brilinta’s performance has remained lukewarm. AstraZeneca is looking to combat the generic threat through deals and acquisitions and cost cutting measures.
AstraZeneca, a large cap pharma stock, carries a Zacks Rank #3 (Hold). Eli Lilly and Company (LLY) currently looks more attractive in the large cap pharma space, with a Zacks Rank #2 (Buy).
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