Indian firm's Irish bid to launch generic drug may have global implications, writes Ciarán Brennan.

A case being heard in a Dublin courtroom this week casts a light on the ongoing battles between major global pharmaceutical companies and generic drug makers that could have major implications for the pharma industry around the world.

Ranbaxy Laboratories, an Indian pharmaceutical manufacturer and distributor, which specialises in making generic drugs, last week launched High Court proceedings in Ireland seeking a declaration under the Patents Act that its proposed manufacture and sale of its anti-cholesterol drug Atorvastatin calcium in Ireland would not infringe a patent held by rival pharmaceutical company Warner-Lambert, which is owned by one of the world's largest pharmaceutical firms, Pfizer. The defendant argued there would be a breach of its patent.

Behind the science of atoms and molecular structures presented by expert witnesses in the Commercial Court this week, what is really at stake are billions that stand to be won or lost when patents run out.

Pfizer's blockbuster cholesterol medicine Lipitor is the world's top-selling drug, with annual sales of $13 billion (€10 billion). Its patent is set to expire in 2011, but Ranbaxy is trying to launch a generic version earlier by taking cases which will prove that its method of production will not infringe the patent - as is being argued here - or by unearthing flaws in the patents as it is attempting in other jurisdictions.

"If you can get to the market earlier, you stand to take the sales that otherwise would have gone just to the originator of the idea," said a spokesman for Ranbaxy.

"If you can demonstrate that either the patent is in doubt or null, or that you don't infringe the patent, you get the opportunity to get into the market yourself in competition with the existing product."

The Irish case is just one of 17 lawsuits the Indian firm is taking or has taken around the world to force the issue. Nine of these lawsuits are in Europe.

The Irish case and the others ongoing around the world have taken on a new significance for Pfizer in light of the drug giant's decision in December to cut off all clinical trials and development of its new cholesterol treatment drug Torcetrapib.

That drug had been expected to be a big earner for Pfizer, offsetting revenue erosion due to patents expiring on some of the company's key drugs.

Any loss for Pfizer would be a major gain for generic drugs-makers such as Ranbaxy, which has grown to become one of the world's top 100 pharmaceutical companies. It is also one of the world's top 10 in the generic pharmaceutical sector. Revenue for 2006 rose 14.7 per cent to 61.64 billion rupees (€1.07 billion).

The importance of these court cases to Ranbaxy can be gauged from the fact that it is reported to spend 2 per cent of revenue on court cases, including patent challenges. However, those court cases and lawsuits are being met by aggressive patent defence from major pharmaceutical companies.

A Pfizer spokeswoman said it has vigorously protected its intellectual property rights wherever they are challenged.

"That's what we have done to date and we have been very successful in the courts," she said.

Any unfavourable outcome from the various cases may have implications on a local level. Pfizer employs 2,000 people in Ireland, many of them involved in the manufacture of Lipitor at its Little Island and Loughbeg plants in Cork. An earlier than expected loss of patent protection on the drug could hit the business. Sales from drugs whose patents expire usually fall very dramatically because they are undercut by the generic drugs.

"From an Irish perspective, it wouldn't be good because the majority of our industry manufactures on-patent research-based products," said Matt Moran, director of Ibec's Pharmachem Ireland.

He said it was a common strategy among generic firms. "You get a lot of attempts by generic companies to produce ahead of patent. They are basically pushing the system as hard as they can."

Analysts have played down the threat posed by Ranbaxy. "Ranbaxy has lost every court case so far, so I wouldn't be too concerned for Pfizer," said Barbara Ryan, an analyst with Deutsche Bank Securities.

But Pfizer shares have suffered on concerns about the generic threat to Lipitor and other key drugs, and with the company conducting a review of its entire international operations, including those in Ireland, the court cases being heard in Dublin and elsewhere may yet take on a greater significance.