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Wyeth has sought claims worth USD960mn from Sun Pharma in its
ongoing patent dispute over an at‐risk Protonix generic launch. Wyeth has
also made a similar claim against Teva for a total consideration of over
USD2.1bn. Both Teva and Sun Pharma believe that their respective case is
strong enough to be defended in a federal court. We believe that Sun
Pharma will defend its case vigorously yet if it loses the patent invalidity
case in a higher court, it will have to pay damages to Wyeth to the extent
of USD250mn‐300mn (INR12‐15 per share), as Sun launched the product
after Teva and the introduction of authorized generic (AG) at a price
which was higher than the launched generics.
Teva had launched at‐risk Protonix generic in Dec’07 following which Wyeth had
introduced the AG version of the same. Wyeth lost nearly USD3.2bn sales in 27 months
of the generic entry while at 40% profit, it lost USD1.3 bn of profit. Hence, Wyeth is
claiming triple suit damage to the extent of USD3bn (3x of loss of profit).
Sun Pharma had launched this product in Jan’08 after the launch of Teva and Wyeth AG
and at a higher price than Teva and AG. We believe that Sun Pharma had revenue of
USD250mn‐260mn during the 27 month period as both Teva and Sun Pharma withdrew
this product from the market (April’10) once they lost the case in a district court.
Edelweiss view: Damage claim limited; maintain ‘BUY’
We believe that the damage claim should be far lower since Sun’s generic launch was
after the entry of Teva and Wyeth generics, and at a higher price than the launched
generics. Moreover, generics entry has helped reduce US health expenditure
substantially while the nation’s overall pro‐generic approach should also help limit
damage claims. We estimate a damage claim of USD250mn‐300mn for Sun in the worst
case scenario of an unfavorable outcome. Sun Pharma has a cash of USD1bn as on 31st
December’2011. We remain positive on the base business and maintain ‘BUY’.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Wyeth has sought claims worth USD960mn from Sun Pharma in its
ongoing patent dispute over an at‐risk Protonix generic launch. Wyeth has
also made a similar claim against Teva for a total consideration of over
USD2.1bn. Both Teva and Sun Pharma believe that their respective case is
strong enough to be defended in a federal court. We believe that Sun
Pharma will defend its case vigorously yet if it loses the patent invalidity
case in a higher court, it will have to pay damages to Wyeth to the extent
of USD250mn‐300mn (INR12‐15 per share), as Sun launched the product
after Teva and the introduction of authorized generic (AG) at a price
which was higher than the launched generics.
Teva had launched at‐risk Protonix generic in Dec’07 following which Wyeth had
introduced the AG version of the same. Wyeth lost nearly USD3.2bn sales in 27 months
of the generic entry while at 40% profit, it lost USD1.3 bn of profit. Hence, Wyeth is
claiming triple suit damage to the extent of USD3bn (3x of loss of profit).
Sun Pharma had launched this product in Jan’08 after the launch of Teva and Wyeth AG
and at a higher price than Teva and AG. We believe that Sun Pharma had revenue of
USD250mn‐260mn during the 27 month period as both Teva and Sun Pharma withdrew
this product from the market (April’10) once they lost the case in a district court.
Edelweiss view: Damage claim limited; maintain ‘BUY’
We believe that the damage claim should be far lower since Sun’s generic launch was
after the entry of Teva and Wyeth generics, and at a higher price than the launched
generics. Moreover, generics entry has helped reduce US health expenditure
substantially while the nation’s overall pro‐generic approach should also help limit
damage claims. We estimate a damage claim of USD250mn‐300mn for Sun in the worst
case scenario of an unfavorable outcome. Sun Pharma has a cash of USD1bn as on 31st
December’2011. We remain positive on the base business and maintain ‘BUY’.
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