- The Washington Times - Friday, August 19, 2005

PINEVILLE, La. (Reuters) — Investors expect a federal court within weeks or months to decide whether a copycat form of Pfizer Inc.’s $10 billion-a-year Lipitor cholesterol drug can come to market, threatening the pharmaceutical giant’s economic health.

Lipitor, the world’s best-selling medicine, accounts for about 20 percent of Pfizer’s sales. Introduced eight years ago, the drug continues to increase in sales. It is Pfizer’s strongest bulwark as the company fights off revenue and earnings declines caused by a raft of problems.

The hardships include evaporating sales for Pfizer treatments for epilepsy, fungal infections and high blood pressure after patent expirations paved the way for cheaper copycats.

Patents will expire soon on other important Pfizer medicines, more than any other major pharmaceutical company.

Sales of Pfizer’s Celebrex arthritis drug, meanwhile, have been cut almost in half because of heart-safety concerns. Blockbuster revenue from Pfizer’s newer arthritis drug, Bextra, vanished when it was withdrawn in April after being linked to a deadly skin condition and its own heart risks.



Those setbacks would pale in comparison with the loss of Lipitor, the crown jewel in Pfizer’s $114 billion acquisition of Warner-Lambert Co. five years ago.

The threat comes from Indian drug manufacturer Ranbaxy Laboratories Ltd., which has challenged the validity of Lipitor patents in U.S. District Court in Delaware and in a British court.

Rulings from the U.S. and British judges are expected at any time, but most of the focus has been on the far more lucrative U.S. market and the trial in December in Delaware, at which Pfizer insisted its patents bar generics until 2011.

A loss of the Lipitor patent would mean patients with high cholesterol would be able to buy less expensive, generic versions.

Pfizer shares are trading about 40 percent lower than they were when the company acquired Warner-Lambert, because of uncertainty over whether the U.S. court will back Lipitor.

Although most industry analysts say Pfizer will prevail in the Lipitor battle, no one is dismissing the Ranbaxy threat.

“The loss of Lipitor’s U.S. patent protection would badly hurt Pfizer’s stock and bring the company’s earnings down about 30 percent in 2007,” said Oppenheimer & Co. analyst Scott Henry.

Mr. Henry noted that branded medicines can lose more than 75 percent of their sales once cheaper generics reach drugstores, as Eli Lilly and Co. learned in 2001 when its anti-depressant, Prozac, lost patent protection.

Deutsche Bank analyst Barbara Ryan says Pfizer has an 80 percent chance of defeating Ranbaxy.

If Pfizer is victorious, she says, its shares could jump to $33; if Pfizer loses, shares could sink to $21.

At Pfizer’s current share price of about $26, near the middle of that range, she said, investors are betting Pfizer has a 50 percent chance of victory.

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