Judge Says Lilly Patent on Zyprexa Is Valid

A federal judge Thursday turned away the claims of generic drug manufacturers and ruled valid a patent for Eli Lilly & Co.’s drug Zyprexa.

U.S. District Judge Richard Young in Indianapolis ruled in favor of Lilly on all of the matters in dispute in the case, Lilly said. However, appeals are likely.

The ruling is a huge relief to Lilly, Chief Executive Sidney Taurel said.

“There is no question that from the investment community standpoint, this was a distraction, this was a cloud that was hovering over the company,” Taurel said late Thursday.

Many Wall Street analysts had expected Lilly to prevail in the case and maintain exclusive U.S. rights to the treatment for schizophrenia and other disorders that brought in $4.42 billion for Lilly during 2004, or nearly a third of the Indianapolis-based company’s total revenue.

Three companies -- Zenith Goldline Pharmaceuticals, a unit of Ivax Corp. of Miami; Dr. Reddy’s Laboratories of India; and the U.S. arm of Israeli-based Teva Pharmaceutical Industries -- challenged a 1993 patent that granted Lilly exclusive U.S. rights to the drug until 2011.

The Lilly rivals argued during a three-week trial that concluded 14 months ago that the patent no longer was valid because discovery of the drug’s molecular structure was obvious and that a previous Lilly patent had covered it. The companies also claimed that Lilly misled the patent office and omitted certain test results when applying for the patent.

When Lilly lost the patent on the antidepressant Prozac five years ago, it set off a slide in the company’s fortunes.

Less expensive generic versions of the antidepressant hit the market in late 2001 and soon captured most of Prozac’s market share.

After Thursday’s announcement, Lilly shares rose $3.61 in after-hours trading to $59.85. They fell $1.96 to $55.16 on the New York Stock Exchange.