Pfizer loses latest round in Lipitor fight

NEW YORK (CNNMoney.com) -- Pfizer lost the latest round in a patent battle over the declining blockbuster Lipitor that could be worth $6 billion to the pharma giant.

The U.S. Patent and Trademark Office on Thursday rejected Pfizer Inc.'s (up $0.29 to $23.68, Charts, Fortune 500) application to reissue a patent on its cholesterol-cutting drug Lipitor that would extend legal protection to June 2011, said company spokesman Bryant Haskins.

New York-based Pfizer still holds its basic Lipitor patent, which protects the world's top-selling drug until March 2010. Haskins said an initial rejection from the patent office is "non-final" and "not uncommon," but Pfizer needs more information before the company can decide on its next move.

"At this point in the process, we would just hear what the patent office has to say and we would address the concerns to the best of our ability," said Haskins of Pfizer.

This is the latest step in an ongoing patent battle with Ranbaxy Laboratories (down $0.45 to $8.72, Charts), an Indian manufacturer of generic drugs. Ranbaxy challenged Pfizer's two Lipitor patents in 2006 in the federal appeals court. The court shot down Ranbaxy's attempt to toss out the Pfizer basic Lipitor patent, which lasts until 2010, but sided with the challenger in ruling the 2011 patent invalid.

As it stands now, Ranbaxy can start making generic versions of Lipitor in 2010. Ranbaxy will have 180-day exclusivity after the patent expires in March of that year, meaning that Ranbaxy will be the only generic drugmaker producing low-cost versions of Lipitor for that time.

After the exclusivity runs out, it's open season for generic drugmakers, and revenue is expected to plunge about 80 percent from name-brand levels.

The 15-month difference between the two patents means a potential $6 billion in U.S. sales for Pfizer, said James McKean, analyst for Atlantic Equities. And while $6 billion is a relatively small slice of Pfizer's overall sales ($48.4 billion in 2006,) McKean said it's still significant to the company, particularly since Lipitor is highly profitable, at "90 percent gross margin."

Lipitor is one of the most successful drugs ever. It was the first drug to attain $10 billion in annual sales, and hit its record annual tally of $12.8 billion in 2006.

But sales are declining from last year, with $6 billion during the first six months of 2007, compared to $6.2 billion during the same period in 2006. Generic pressure from Zocor, a cholesterol-cutting drug from Merck & Co., Inc. (down $0.17 to $49.29, Charts, Fortune 500) that lost patent pressure in June 2006, has been eroding sales.

Lipitor also competes directly with Vytorin, a combination cholesterol treatment from Merck and Schering-Plough (down $0.58 to $28.70, Charts, Fortune 500).

The impending loss of Lipitor and other blockbusters is cause for concern among investors, who fear that Pfizer has nothing in the pipeline good enough to replace them.