Bristol, Sanofi Plavix Victory Revives Takeover Speculation
A U.S. judge ruled that the patent on the multibillion-dollar blood clot-preventing drug Plavix is valid, handing a major victory to Bristol-Myers Squibb and Sanofi-Aventis.
The long-awaited ruling provides much needed certainty for one of the world's largest selling products, and immediately revived debate on Wall Street about a Bristol-Myers takeover.
"The decision will help solidify Bristol-Myers' earnings and dividend, and perhaps open the door for another drugmaker -- most logically Sanofi -- to come in at this point and purchase Bristol," Jason Fox, an analyst at H&R Block Financial Advisors.
U.S. District Judge Sidney Stein in Manhattan found that Apotex, a privately held Canadian generic drugmaker, failed to prove that the patent "is invalid or unenforceable on any of the grounds asserted."
Bristol and Sanofi "are entitled to permanent injunctive relief and, as shall be determined by the court in a future proceeding, damages," the judge said in the written decision.
Stein also rejected Apotex's claims that Sanofi made false statements and omissions in an attempt to mislead patent examiners in getting the patent approved. Apotex "failed to prove by clear and convincing evidence that Sanofi engaged in inequitable conduct," the judge wrote.
Apotex said it would immediately appeal the decision.
"Most people had assumed that they would win, but it's nice to have the overhang removed," said Les Funtleyder, a health-care analyst at Miller Tabak.
Bristol-Myers shares rose $1.42, or 4.68 percent, to $31.73 -- its highest price in five years -- in morning New York Stock Exchange trading. Sanofi shares were up 2.2 percent in Paris.
The ruling follows a rollercoaster ride for both Bristol-Myers and Sanofi investors, who watched as a settlement designed to keep generic Plavix off the market fell apart.
The deal's collapse allowed Apotex last August to briefly flood the market with several months' supply of cheap copies of the medicine. Apotex has been challenging the patent since 2002, arguing that it is not truly innovative but is based on another patent that expired in 2003.
New York-based Bristol and Paris-based Sanofi said U.S. patent protection on Plavix runs until November 2011. Plavix had annual U.S. sales approaching $4 billion before the Apotex generic was launched, and global sales of $6 billion.
Huge supplies of generic Plavix still on the market are expected to dry up in the coming weeks. That will allow the two drugmakers to resume their exclusive sale of the drug, once the second-biggest selling drug in the world.
With the decision now behind them, shareholders and Wall Street analysts are mulling the long-term future of Bristol-Myers.
The company has just emerged from a two-year federal probation related to a $2 billion accounting scandal. Its earnings growth has faltered due to generic competition for a number of medicines, although recently launched medicines and a respected pipeline of experimental drugs are expected to help revive the drugmaker.
"With today's favorable decision, Bristol can continue its recovery," said Arthur Wong, an analyst at Standard & Poor's.
Pharmaceutical analysts and investors have long pegged Sanofi as the most logical suitor because of its ties with Bristol on Plavix.
Reports surfaced earlier this year about a deal between the two companies. And Sanofi is likely hungrier to buy another drugmaker given last week's rejection by a U.S. health panel of an experimental Sanofi obesity drug called Zimulti and once deemed a possible $2.5 billion-a-year blockbuster, Fox noted.
"That setback could push Sanofi's hand to do something on the mergers and acquisition front, in order to get new products and bigger geographic reach," Fox said.
But others questioned the merits of a deal.
"I'm not so sure that Bristol wants to be acquired ... Given that they've signed (product) deals with AstraZeneca and Pfizer , it kind of suggests that maybe they don't want to be," Funtleyder said.