The Beijing Municipal People's High Court last week upheld a verdict by a lower-level Beijing court not to grant the company so-called administrative protection for the anti-depressant drug, said president Richard Smith of Eli Lilly Asia Inc's Greater China operations.

"We are no closer to the goal than we were six months ago," Smith said by telephone.

The state pharmaceutical administration of China turned down the company's request in 1995 to offer Prozac administrative protection. In December last year, a Beijing court rejected an appeal against that decision.

Administrative protection is offered to products that could not have obtained protection in China under an old patent law that was revised in 1993.

The old law protected only a specific process of manufacture, and was easily circumvented by Chinesecompanies making slight changes to the process.

Eli Lilly was considering taking the case to the Supreme Court, Smith said.

The final outcome could have broad implications for foreign investors in China, he said.

"I think it clearly bears directly on the willingness and the commitment of the Chinese authorities to uphold intellectual property rights," Smith said.

The High Court maintained that Eli Lilly did not have product exclusivity in Holland where the drug was registered, Smith said.

Smith argued his company had exclusive rights to the product.

"The Chinese authorities in this case are really interpreting the patent laws and the laws surrounding exclusivity in Holland in a very different way to the way the Dutch authorities have interpreted their laws," Smith said.

Officials at the state pharmaceutical administration and High Court were not immediately available for comment.

Smith said Chinese companies made and marketed Prozac but he declined to give details about losses this had causedto the company.

Last month Smith estimated that China's drug market generated a turnover of $6 billion in 1998 and was growing at an annual rate of 10 to 15 per cent.

Smith has said Eli Lilly, which has been doing business in China since 1918, would continue to invest in China regardless of the final verdict.

The company owns a majority stake in a $28 million joint venture plant in Suzhou, capital of stern Jiangsu province, to produce drugs including Prozac. The project went into test operations last year.