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Let me start off by saying that I am not an avid sports fan, so if I bungle this metaphor in the pursuit of a clever literary comparison: forgive me.
In baseball, a pitcher puts spin on the ball to confuse the batter, so that when the ball's coming at him he can't anticipate which way it's going to move.
Now, if you happen to have been paying attention to the ongoing patent wars between Canadian generic drugmaker Apotex Corp. and French multinational Sanofi-aventis, you'll know that Apotex founder and chairman Barry Sherman's bold move to launch a knock-off version of his opponent's best-selling blood-thinner went beyond spin.
Sanofi-aventis apparently didn't even see Apotex's pitch at all.
On Aug. 8, the billionaire drugmaker announced that Weston, Ont.-based Apotex had begun selling the first copycat version of Plavix in the United States. Within days, Apotex had reportedly shipped "hundreds of millions of dollars" worth of the pill to pharmacies in the States. This, after four years of wrangling with Sanofi and its U.S. marketing partner, Bristol-Myers Squibb Co. (BMS), over the rights to sell a generic version.
Sherman's decision to launch the drug "at risk" (or pending the outcome of a patent ligitation trial) was daring. But he also knew that he had lots to gain from getting a jump-start (and 180 days of market exclusivity) before other generic competitors could enter the market with their own versions.
The party lasted just over three weeks. On Aug. 31, a U.S. District Court judge slapped a preliminary injunction on Apotex, preventing it from selling any more generic Plavix; requests by Sanofi and BMS to recall any product that Apotex had already shipped were denied by the court. Apotex says it is appealing the decision and has filed an emergency motion with the Court of Appeals for the Federal Circuit to stay the injunction.
So while it wasn't exactly the "largest and most successful launch in the history of the generic industry" — as Sherman stated in a press release on the day of the launch — it wasn't exactly small potatoes either. In fact, according to industry estimates, Apotex successfully grabbed more than 75% of the drug's market within mere days.
What makes this story even more interesting is the how and why of a proposed three-way settlement between Apotex, Sanofi and BMS that would have given the big pharmas another five years of market exclusivity. The deal, which was to include a US$40-million payout to Apotex to keep its paws off Plavix until 2011, fell apart in late July after the U.S. Department of Justice launched a criminal investigation into the deal, following an announcement that it had also been struck down by U.S. antitrust authorities.
Sherman, by baiting his competitors with a settlement he insists he knew would never be approved by regulators, helped pave the way for the generic launch of Plavix — one that is estimated to have brought in some $350 million in sales for Apotex.
A gutsy move, no doubt. But considering that Apotex now faces the daunting prospect of months more of legal wrangling (a trial date has been set for Oct. 31, 2006) and the possibility of having to fork out millions of dollars in damages, was Sherman's bold gamble really worth it?
You better believe it.
Despite the injunction against Apotex, BMS and Sanofi have been rattled by the Plavix wars. BMS's stock (NYSE: BMY) dove more than 13%, to US$20.83 from US$24.04, in the two weeks after the company disclosed on July 27 that it was being investigated by the Justice Department. Sanofi's shares (NYSE: SNY), which traded around US$50 before the criminal investigation was launched, now trade at around US$43. And in the days before Apotex's rumoured generic Plavix launch on Aug. 8, both drug companies saw share prices drop.
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