In the legal mesh of pharma patent litigations in the largest drug market?the US?Lupin Pharma, Sun Pharma, Ranbaxy Labs Ltd and Dr Reddy?s Ltd top the list of domestic pharma companies which have best battled the court cases in the last decade. Lupin takes the top honours with a success rate of 75% while Sun Pharma (67%), Ranbaxy (63%) and Dr Reddy?s (61%) are not far behind. The success rates include the cases won by the company and those that were favourably resolved out of court.
Lupin has won 33% of the patent cases where the court has given a final decision, losing out in 67% of the cases. How it has been able to turn fortunes into the company?s favour is mostly by striking out of court settlements in 63% of the Para IV cases it became a party in. A Para IV filing is made when the generic drugmaker or applicant filing Abbreviated New Drug Application believes its product or the use of its product does not infringe on the innovator?s patents or believes such patents are not valid or enforceable.
Litigation becomes inevitable if a company wants to make a Para IV filing by targeting an existing patent holder (on the basis of loopholes in the patents filed in the Orange Book, which may allow the company to launch a generic in the new drug dosage form or a different drug delivery form). Litigations can cost $15-20 million for a single Para IV filing. If successful, the generic drug company gets an exclusive marketing right for 180 days to sell the drug. Para IV filings involve considerable risk and need not necessarily translate into additional revenue for the generic companies.
Sun Pharma has managed to win 25% of the cases where courts have settled the matter losing the rest while the company has scored brownies in 56% of the para IV cases by settling them out of court, saving further expenses related to litigation and killing uncertainty related to future of the product. Ranbaxy and Dr Reddy?s have the same track record in terms of concluded court cases, with both winning in 22% of cases, losing the balance. Where Ranbaxy has outperformed Dr Reddy?s is the number of cases it has favourably resolved out of court. Ranbaxy has managed to settle 53% of cases out of court, while Dr Reddy?s follows closely behind by settling 50% of such cases.
The overall average success rate for generic industry stands at 48% based on court decision, according to the calculations of Adam Greene, analyst, RBC Capital Markets Estimates, which has analysed a database of over 370 resolved cases in US over the last decade. ?The outcome is fairly even, with generics winning 82 of the rulings,? Greene said in the report. By that yardstick, the four Indian companies have passed the patent litigation test with flying colours.
?The Indian pharma companies have developed the necessary capacity and strength to successfully navigate the litigation challenges related to patented products in the highly regulated US market. It not only ensures increased penetration of generics in the US market but also gives the Indian firms an opportunity to align interests with the US government?s desire to reduce healthcare costs,? said Hitesh Gajaria, executive director, KPMG India. The number of cases resolved out of court between innovators and generic companies have been increasing every year and reached an all-time high in 2009 to 54, up from 45 in the prior year.