Bristol-Myers Suffers A Legal Setback - Analyst Blog

The U.S. court of appeals for the Federal Circuit dealt a legal blow to Bristol-Myers Squibb Company BMY. The court rejected the company's appeal against a verdict issued in Feb 2013 in a patent related case involving Bristol-Myers' hepatitis B virus drug, Baraclude.

The Story so Far

Teva Pharmaceutical Industries Ltd. TEVA is looking to manufacture and sell its generic version of Baraclude. To that end, Teva filed an Abbreviated New Drug Application ANDA with the FDA in Aug 2010. Bristol-Myers received a Paragraph IV certification notice from the generic player challenging the Orange Book-listed patent (5,206,244) covering Baraclude.

Bristol-Myers challenged the application in the U.S. District Court for the District of Delaware in Sep 2010, alleging patent infringement. The district court ruled against Bristol-Myers in Feb 2013 and Teva gained tentative approval to sell its generic version of Baraclude from the FDA in Oct 2013. Bristol-Myers appealed the Feb 2013 verdict only to end up on the losing side again.

Following the adverse verdict, Bristol-Myers is exploring all possible legal options. Baraclude is one of the most promising drugs at Bristol-Myers and its genericization would significantly hurt the biopharma major's top line.

Generic Threat to Key Drugs

Bristol-Myers saw a significant reduction in its revenues following the genericization of Plavix in 2012. The company is looking to combat the generic threat hanging over its key drugs through partnering deals and acquisitions and introducing new products to augment its product portfolio.

Bristol-Myers, like other major players in the healthcare sector, is focusing on the lucrative emerging markets like India to drive growth. In a bid to expand its footprint in India, the biopharmaceutical major extended its tie-up with Syngene International last week by five years. Financial details of the extended deal were not disclosed. Syngene, a unit of Biocon, is India's largest contract research organization.  

Bristol-Myers currently carries a Zacks Rank #3 (Hold). Better-ranked biopharma stocks include Gilead Sciences GILD and Regeneron Pharmaceuticals REGN. Both the stocks sport a Zacks Rank #1 (Strong Buy).