PhillyDeals: AstraZeneca wins fight on Crestor patent

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AstraZeneca P.L.C.'s cholesterol drug Crestor. A federal judge turned aside attempts by several firms to break the moneymaking medicine's patent.

A federal judge in Delaware turned down attempts by Israeli-owned Teva Pharmaceuticals USA, of North Wales, and seven other makers of generic drugs to break Anglo-Swedish drugmaker AstraZeneca P.L.C.'s patent on the anticholesterol drug Crestor.

AstraZeneca said the ruling by federal Judge Joseph J. Farnan Jr. would stop the U.S. Food and Drug Administration from approving knockoffs of Crestor before the patent expires in 2016. The company employs about 4,000 at its U.S. headquarters in Fairfax, Del.

This is bad news for makers of cheap drugs and bargain-hunting, fat-afflicted consumers, but good news for AstraZeneca as it struggles to keep sales high before its most popular drugs face price competition.

Crestor accounts for $4.5 billion of AstraZeneca's $33 billion in world sales last year, and $2.1 billion of its $15 billion U.S. business, spokeswoman Katie Lubenow told me.

AstraZeneca shares jumped 10 percent on the London market Wednesday after Farnan ruled that "chaos, confusion and inexperience," rather than "deliberate" cheating, explains technical problems with the Crestor patent agreement that AstraZeneca made with Crestor developer Shionogi Seiyaku Kabushiki Kaisha of Japan.

The stock gave back some of its gains in later New York Stock Exchange trading as investors who had shorted it, on hopes AstraZeneca would lose the case, dumped shares to limit their losses.

Teva spokeswoman Denise Bradley said her company wouldn't comment on whether it will appeal.

"Generic challengers are likely to appeal [but] the probability of reversing this ruling appears very low," Alexandra Hauber, an analyst with JPMorgan Securities Ltd., told clients in a report.

AstraZeneca faces "an almost inevitable decline" in sales in the competitive drug business, Hauber added. Still, Farnan's ruling will pump "significant" cash into the company over the next few years, making it possible for AstraZeneca to prop up its stock price by spending billions of dollars a year to buy some of its own shares and take them off the market.

AstraZeneca employment in the region has fallen by more than 1,000 since 2008 as it consolidated research to concentrate on its most promising business lines.

Payback

Radnor-based Lincoln National Corp. says it has bought back all $950 million worth of preferred stock that the U.S. Treasury purchased to help Lincoln under the Bush administration's Troubled Asset Relief Program (TARP), which President Obama prefers to call the Capital Purchase Program (CPP).

The money "was an important bridge program to help stabilize the U.S. financial markets," Lincoln chief executive officer Dennis R. Glass said in a statement. "We always viewed CPP as a temporary cushion," said Glass, to be repaid, with interest, "as soon as market conditions warranted." Lincoln announced the payoff a day after Congress agreed to formally stop new TARP investments.

TARP special inspector Neil Barofsky last winter questioned why Lincoln and its larger rival, Hartford Financial, received TARP funds along with troubled banks and automakers. According to Barofsky, Congress had intended TARP to support loans to consumers and small businesses and to bail out the job-intensive auto industry, but Hartford and Lincoln used the money to beef up their sales forces. He didn't blame them for taking the money, but questioned why the government let them have it.

Lincoln and Hartford faced big losses when the stock market collapsed in late 2008, forcing them to raise cash to cover investors they had promised to protect from loss.

Lincoln's dependence on investment market conditions makes it a good candidate for sale to a more diverse insurer - maybe to Sun Life Financial, the rival company headed by former Lincoln boss Jon Boscia, Suneet Klamath, a research analyst with Sanford C. Bernstein, wrote in a report last month.

That raises the possibility that the Eagles' Lincoln Financial Field, where Lincoln National owns naming rights, could be renamed Sun Life Field - except that Boscia's company already sponsors the rival Miami Dolphins' stadium under that name.

Lincoln spokeswoman Ayele Ajavon said her company didn't comment on deal speculation.


Contact Joseph N. DiStefano at 215-854-5194 or JoeD@phillynews.com.