Post by stcks on Mar 23, 2016 20:14:58 GMT
Gilead, Biogen Troubles Remind Investors Why Strong Drug Patents Are Vital
Ask most people to identify the lifeblood of the biotech industry, and they'd probably point to scientists conducting carefully calibrated experiments in a laboratory. That's only partially true. If your goal is for the biotech industry to be successful and profitable, those scientists need a phalanx of lawyers writing, filing and defending patent applications. Scientists might invent drugs, but lawyers filing patents to protect those drugs from competition turn those drugs into billion-dollar revenue generators. A flurry of patent infringement lawsuits and decisions in recent days, affecting some of the biotech sector's largest companies, underscores this point. On Tuesday, a federal jury upheld the validity of two patents owned by Merck (MRK) in a lawsuit against Gilead Sciences (GILD) over highly profitable hepatitis C drugs. Next, the jury will decide damages. Gilead could ultimately be forced to pay billions of dollars to Merck in damages and royalties on future sales, although an appeal is inevitable. Also Tuesday, hedge fund investor Kyle Bass scored a victory against Biogen (BIIB) when the U.S. Patent and Trademark Office granted Bass' request to conduct a trial to review the validity of a patent protecting the company's most important multiple sclerosis pill Tecfidera. It could be a year before the trial outcome is known, but Tecfidera sales were $2.9 billion in the U.S. last year ($3.6 billion worldwide), so a Biogen loss could cut significantly into the drug's growth. Last week, Amgen (AMGN) scored a legal victory over Regeneron Pharmaceuticals (REGN) in a lawsuit over patents protecting Repatha, the company's newly launched cholesterol-lowering drug. The jury decision in Amgen's favor puts Regeneron's competing product Praluent at risk of being pulled off the market. At a minimum, Regeneron will be forced to pay sales royalties to Amgen.
Ask most people to identify the lifeblood of the biotech industry, and they'd probably point to scientists conducting carefully calibrated experiments in a laboratory. That's only partially true. If your goal is for the biotech industry to be successful and profitable, those scientists need a phalanx of lawyers writing, filing and defending patent applications. Scientists might invent drugs, but lawyers filing patents to protect those drugs from competition turn those drugs into billion-dollar revenue generators. A flurry of patent infringement lawsuits and decisions in recent days, affecting some of the biotech sector's largest companies, underscores this point. On Tuesday, a federal jury upheld the validity of two patents owned by Merck (MRK) in a lawsuit against Gilead Sciences (GILD) over highly profitable hepatitis C drugs. Next, the jury will decide damages. Gilead could ultimately be forced to pay billions of dollars to Merck in damages and royalties on future sales, although an appeal is inevitable. Also Tuesday, hedge fund investor Kyle Bass scored a victory against Biogen (BIIB) when the U.S. Patent and Trademark Office granted Bass' request to conduct a trial to review the validity of a patent protecting the company's most important multiple sclerosis pill Tecfidera. It could be a year before the trial outcome is known, but Tecfidera sales were $2.9 billion in the U.S. last year ($3.6 billion worldwide), so a Biogen loss could cut significantly into the drug's growth. Last week, Amgen (AMGN) scored a legal victory over Regeneron Pharmaceuticals (REGN) in a lawsuit over patents protecting Repatha, the company's newly launched cholesterol-lowering drug. The jury decision in Amgen's favor puts Regeneron's competing product Praluent at risk of being pulled off the market. At a minimum, Regeneron will be forced to pay sales royalties to Amgen.
