SKYEPHARMA-GSK MARKET BLOCKBUSTER PAXIL CR

30 Dec 2002 12:44 GMT



Glaxo reassures on profits after Paxil ruling

By Victoria Cutler
LONDON (Reuters) - Pharmaceutical giant GlaxoSmithKline has fuelled hopes it can head off potential rivals to one of its top-selling drugs and reassured investors by repeating its earnings guidance.

Europe's biggest drug maker said a U.S. judge had ruled in its favour on one patent related to its anti-depressant drug Paxil, but had also decided, in the summary judgment ruling, in favour of private Canadian firm Apotex on another.

The firm said the judge for the Eastern District of Pennsylvania had split the decision on the remaining two disputed patents, holding some claims in the patents invalid and denying Apotex's motions on others.

The company, which, like its rivals, is constantly struggling against cheap generic versions of its blockbuster drugs, said it would seek an appeal against the ruling that one patent was invalid. The dispute over the remaining three patents will go forward to a court case.

"GSK continues to believe there are significant hurdles that prevent launch of a generic Paxil product. Accordingly, GSK's published earnings guidance for 2002 and 2003 remains as previously stated," the firm said in a statement.

GSK GSK.L says it expects to deliver growth in earnings per share of at least 10 percent in 2002 and the high single digits in 2003, assuming it successfully defends its Paxil patents in the United States.

The drug, which belongs to the same class of antidepressants as Prozac, sold by Eli Lilly LLY.N , has been a huge commercial success for GSK, generating global sales of 1.86 billion pounds last year. The biggest single market for the product is the United States.

An analyst at one investment bank, who declined to be named, said the news was mildly positive for GSK because had the judge upheld all four of Apotex's motions, the Canadian firm would have gone ahead with the launch of a generic version of Paxil.

"If they had lost all four patents, Apotex would probably have just launched their product... This was potentially very negative and that's been removed now for another six months," he said.

Goldman Sachs analyst Vikram Sahu said in a research note the news was neutral to positive for GSK as it eliminated the potential worst-case scenario of total invalidity of the patent.

GlaxoSmithKline shares rose 1.7 percent to 1,139 pence by 1230 GMT in a stronger overall market.

PATENT EXPIRY

Drugmakers across the world are facing threats to heavyweight medicines as their patents expire.

Normally viewed as defensive plays in times of economic uncertainty, these firms have had a tough year as key medicines have come off patent. Moreover, regulators have taken a tough line on new products, European markets have cooled and governments have stepped up the pressure to cut prices.

GSK is also pursuing another case against Apotex in Chicago over its patent covering the hemihydrate form of Paxil, which expires in 2006.

Analysts at brokerage ETrade Securities said in a note they believed the hemihydrate patent would hold until its expiry and that true generic substitutes for Paxil would not arrive until 2007.