Pfizer's Lipitor patent upheld

In a hearing on 12 October, a British court backed a key patent on Pfizer's cholesterol drug Lipitor, preventing India's Ranbaxy Laboratories from launching an early biogeneric version. The basic patent on the US$11bn-a-year (£6bn) medicine, expiring in November 2011, was ruled to be valid, whereas a more specific patent, terminating in July 2010, was not. Pfizer has called the verdict 'an important victory', but is planning to appeal against the decision on the second patent. Ranbaxy is also expected to appeal.

Scott Henry, an analyst at US-based national investment 'boutique' Oppenheimer & Co, said that Pfizer has only 'dodged a modest bullet', with UK sales of Lipitor accounting for no more than 'two to five cents' per share of the company's annual earnings, or around 7% of global Lipitor sales.

'What was mostly at stake was sentiment. If Pfizer had lost, people might have interpreted that as a precursor to a likely loss of its ongoing US Lipitor fight against Ranbaxy,' he added. 'I still believe Pfizer will win the US case, but you can never make any assumptions in a patent dispute.'

The commonly held view is that British courts are tougher on patent-holders than US courts, and many analysts were expecting Pfizer to win in the US even if it failed in Britain. However, if Pfizer loses in the US it could lead to generic competition there by 2007, thus posing a massive threat to future earnings.

Pfizer has other causes for concern: its shares are trading at near eight-year lows, there are fears over exclusivity losses on Norvasc and Zoloft by 2007, and worries that its painkiller Celebrex may increase the risk of heart attacks, following the withdrawal of Merck's Vioxx.