In a setback for Dr. Reddys Laboratories Ltd., a U.S. federal judge blocked the Indian firm from selling a generic version of Indivior Plc's opioid treatment Suboxone film while a patent-infringement lawsuit is pending.
The U.S. District Court of New Jersey granted a preliminary injunction against Dr. Reddy’s, preventing it from selling or exporting the drug to the U.S. pending the outcome of the litigation, Indivior said in a press release. The court has also ordered the parties to submit a final proposed injunction order on July 16.
As a result of today’s court ruling, Dr. Reddy’s is prevented from re-launching its generic product until the patent litigation related to the ‘305 patent (U.S. Patent No. 9,931,305) is concluded or until DRL prevails on an appeal of this injunction. While we do not know the timing for these events, we will continue to defend our intellectual property vigorously.Shaun Thaxter, CEO, Indivior
Shares of the Hyderabad-based Dr. Reddy’s had rallied last month in anticipation of the launch.
The worst-case scenario played out for Dr. Reddy’s, and this once again highlights the challenges with giving full multiples to large product earnings, Anshuman Gupta, a pharma analyst at Investec wrote in a note to clients. The delay in monetisation would lower economic value significantly as more competitors including Alvogen Pharma US Inc., Mylan NV, Par Pharmaceutical Cos Inc., and Teva Pharmaceutical Industries Ltd. could enter, he added.
A big part of earnings estimates (especially 2018-19) were based on Suboxone film -- this will lead to an earnings cut.Anshuman Gupta, Pharma Analyst, Investec
Praful Bohra, a pharma analyst at Equirus, concurred. The brokerage had assumed that Dr. Reddy’s would get 15 percent revenue from generic Suboxone in the financial year-ending March 2020.
Dr. Reddy’s pushed more than a month's supplies of generic Suboxone for its two days of at-risk launch before the temporary restraining order was granted, according to Bohra’s estimate. The Indian pharmaceutical firm proceeded with an ‘at risk’ launch of the drug after getting the U.S. Food and Drug Administration’s approval in June.
An ‘at risk’ launch happens when a company sells a drug despite knowing that the patent of the innovator is valid and risks a potential penalty in case it loses the case.
Indivior said that it “does not know the exact quantity of product sold by Dr. Reddy’s prior to the issuance of the temporary restraining order” on June 15, but added that based on the "recent abrupt loss of market share" for its Suboxone film, it anticipates a net revenue impact of at least $25 million in the current financial year. Suboxone's market share dropped 2.5 percent to 52 percent after the launch by Dr. Reddy's.
If Dr. Reddy’s ends up losing this lawsuit, it could have to pay damages of up to three times the sales it garnered selling the drug in the two-day window.
The U.S. District Judge Kevin McNulty has ordered Indivior to post a bond to provide security to Dr. Reddy’s should the court conclude that the patent is invalid or not infringed. The court will determine the bond amount at a later date, said Indivior.
If the federal court rules in favor of Indivior, Dr. Reddy’s launch will get delayed until patent expiry, NBIE said in a note to clients. “We currently assume a fourth quarter launch for Dr. Reddy’s and a four-player market (60 percent price erosion),” it added.
Opioid Crisis
Opioid abuse affects about 2 million adults in the U.S., and the National Institute on Drug Abuse estimates 115 people die every day because of an opioid overdose.
The market for drugs that treat opioid abuse totaled almost $2.8 billion during the past 12 months, according to Symphony Health data reported by Bloomberg Intelligence.
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