Pfizer Dealt Setback

A federal appeals court dealt Pfizer Inc. a legal setback Wednesday when it issued a ruling that threatens to cut 15 months from the patent life of its popular cholesterol fighter, Lipitor.

The U.S. Court of Appeals for the Federal Circuit invalidated one of two patents at issue in a legal fight with generic competitor Ranbaxy Laboratories Ltd., moving up Lipitor’s June 2011 patent expiration.

Branded drugs typically lose more than 80% of the market after cheaper generics become available. Lipitor, with annual sales of more than $12 billion, is the world’s biggest-selling drug.

“Essentially, this means that generics can enter the market March 2010, about 15 months earlier” than the lower court’s decision would have allowed, Morgan Stanley analyst Jami Rubin said in a research note.

Pfizer said in a statement that the court had invalidated the patent at issue because of a “technical defect.” It said it would seek to correct the defect at the U.S. Patent and Trademark Office.

In Wednesday’s ruling, the appeals court agreed with the lower court in upholding Pfizer’s basic patent on Lipitor, which runs until March 2010.

But the appeals court reversed the U.S. District Court for the District of Delaware and invalidated another patent on a calcium salt form of the active ingredient of Lipitor. It would have protected Lipitor from generic competitors until June 2011.

It sent the case back “so the district court can modify the permanent injunction [against Ranbaxy] in a manner consistent with this opinion.”

Pfizer had hoped to launch a new cholesterol product -- which combines the active ingredient of Lipitor in the same pill with an experimental drug called torcetrapib -- well before Lipitor’s U.S. patent lapses. The appeals’ court ruling will give Pfizer much less time to switch existing Lipitor users over to the new combination product, if it is approved, before cheaper copycat forms of Lipitor become available.

Pfizer’s shares fell 38 cents to close at $25.61.