Federal judge whacks generic Plavix
Ruling shoots down Apotex's version; Bristol's stock up 4%.
NEW YORK (CNNMoney.com) -- A federal judge in New York banned a generic version of the blood-thinner Plavix on Tuesday, said the drugmaker Bristol-Myers Squibb, whose stock rose more than 4 percent on the news.
The ruling makes permanent a temporary ban imposed against Apotex, the privately held Canadian drugmaker that produced generic versions of Plavix in 2006, taking a bite out of Bristol's (up $1.27 to $31.58, Charts, Fortune 500) earnings. The ruling is also a victory for Plavix partner Sanofi-Aventis (up $0.24 to $41.59, Charts).
The Food and Drug Administration had approved Apotex's generic version, but the company did not have legal clearance to produce it, because Bristol holds the patent until its 2011 expiration date.
Michael Krensavage, analyst for Raymond James & Associates, called the ruling "a major step for the company to emerge from its problems."
Apotex vowed to appeal the ruling. Dr. Barry Sherman, the company's chief executive, said in a press release that be believed the Plavix patent "will ultimately be held invalid."
Uncertainty over the blockbuster Plavix was considered the last big overhang on Bristol's stock prior to the Tuesday ruling. The company was swamped with problems in 2006, resulting in the forcing-out of chief executive Peter Dolan, who was replaced by James Cornelius.
Plavix is Bristol's top-selling drug, with $3.8 billion in sales in 2005, the most recent full year without generic competition. But Apotex flooded the market with generic Plavix in August of 2006, putting the squeeze on Bristol earnings until a New York judge blocked the generic version.
Bristol tried to settle with Apotex to hold off on generic production, but this attempt back-fired in a big way. Federal authorities investigated Bristol for its role in the settlement attempt, and on June 11 the company announced it had pleaded guilty to charges of trying to get another company to halt generic production.
Dolan was forced out in 2006 after a federal monitor recommended his ouster.
Wall Street has speculated about Bristol's chances of getting bought out by another drugmaker, such as its partner Sanofi. As Bristol wraps up its problems, the company might seem more attractive to potential buyers.
"I still think it's a buyout candidate," said Krensavage. "I think it's still in play."
As a heart disease drug, Plavix is a household name for many Americans. In fact, during "The Sopranos" denouement episode on HBO, "Plavix" was the last word uttered by mob boss Phil Leotardo before he was murdered.
Krensavage does not own stock in the companies mentioned here and Raymond James does not conduct business with them.