Mumbai, April 22: Glenmark Pharmaceuticals will have to pay damages of up to $25 million to Abbott Laboratories after it lost a patent infringement case pertaining to the latter’s anti-hypertension drug Tarka.
On Monday, a US appeals Court upheld the order of a district court that Glenmark had infringed on the patent for the drug.
“Glenmark loses its appeal to invalidate Abbot Laboratories’ Tarka (trandolapril/verapamil hydrochloride) patent when the Court of Appeals for the Federal Circuit, US affirmed the district court’s decision regarding Glenmark’s marketing of a generic equivalent of Tarka. Glenmark is disappointed and is considering its options,” the Mumbai-based company said in a communication to the stock exchanges.
The Glenmark stock tumbled on the markets and closed 0.33 per cent lower at Rs 574.50 on the Bombay Stock Exchange.
Glenmark had launched the generic version of Tarka at risk in June 2010. An at-risk launch occurs when a generic pharmaceutical company launches a drug (after securing FDA approval), even if there is an ongoing patent infringement litigation.
However, after a few months, a federal jury in New Jersey had rejected Glenmark’s challenge to the validity of the patent that expires in February 2015. It also ordered Glenmark to pay damages of $16 million to compensate for the loss of profits for Abbott.
While the latter demanded higher compensation, Glenmark had argued that the patent covered an invention that was protected by an expired patent. After the order, the company had stopped sales of the drug.
The final liability on Glenmark was estimated at $25 million.
Anshuman Gupta and Perin Ali at Edelweiss Securities said in a note that the development was sentimentally negative for the stock. However, they added that the future performance of Glenmark would depend on debt reduction and positive news from its research pipeline.
“We had already built in this (impact of any adverse ruling) as part of our valuations by assigning a negative net present value (NPV) of Rs 5.50 per share. The fresh ruling rules out possibility of significant debt reduction in 2014-15 and is sentimentally negative for the stock. We expect healthy growth in business to continue for India and semi-regulated markets, while the US promises better growth from 2015-16,” they added.
Glenmark Pharmaceuticals recently received $5 million as a milestone payment from Sanofi for a new drug to treat chronic auto-immune disorders, taking total payments received so far to $55 million. The milestone payments are part of a deal worth $613 million, which the company signed with Sanofi about three years ago.