The tug-of-war over Nexium starts once again. This time, AstraZeneca has filed two separate cases against Sun Pharma to block a Para IV filing on Nexium, its best-selling drug. Para IV filings have become an intrinsic part of the patent litigation strategy of generic companies. A January report by RBC Capital Markets, Analysing Litigation Success Rates, shows that patent challenges continue to rise, with a record 65 new first-to-file lawsuits in 2009, up from 51 the previous year and more than double the number just three years ago. The report analyses over 370 court rulings since the beginning of the decade to establish litigation success rates by company, court and judge.

The analysts concluded that while patent challenges by generics are extremely common, winning is not. Over the last decade, the generic drug industry had an overall success rate of 48% for cases that went to trial. However, the success rate increases to 76% when settlements are included, meaning over half of all cases are settled or dropped.

The report also highlights trends. Three districts were responsible for nearly 70% of court decisions?New Jersey (35%), Delaware (21%) and the Southern District of New York (12%). The bad news for generics is that the combined historical success rate in these three districts is just 36%, which most likely explains the 52% settlement rate there. The most pro-generic courts include the Central District of California, the Eastern District of New York, Minnesota and the Eastern District of Missouri, which have never ruled against a generic. However, just over half of the cases in these three courts get settled or dismissed.

Industry observers have already begun to guess the outcome of AstraZeneca?s move against Sun Pharma. Consider that AstraZeneca has filed from Detroit, Michigan, and Trenton, New Jersey, one of the three districts with a low success rate. This may tip the balance in favour of an out-of-court settlement.

Then again, the legal scorecard summary of the report throws up an interesting fact. Sun Pharma?s US subsidiary Caraco is the only Indian company to have not one but two at-risk launches (in January 2008 Caraco settled on Protonix and in March 2008 the company settled on Ethyol). In fact, the report points to an emerging trend: settlements soon after launch, like Sun Pharma?s second at-risk settlement on Ethyol.

All eyes are on the two companies. Who will blink first?

viveka.r@expressindia.com