Novartis Settles Gleevec Patent Litigation - Analyst Blog

Novartis NVS settled its litigation with Sun Pharmaceutical Industries Ltd.'s subsidiary in the U.S.

The litigation primarily relates to patents covering the use of certain polymorphic forms of Novartis' oncology drug Gleevec (imatinib mesylate), which expires in 2019.

We note that the basic compound patent for Gleevec will expire in the U.S in Jul 2015 and in 2016 in the major EU countries.

The litigation settlement permits Sun Pharma's subsidiary to market a generic version of Gleevec in the U.S. in Feb 2016.

On the other hand, Sun Pharma's subsidiary has received tentative approval from the U.S. Food and Drug Administration (FDA) to launch the generic version of Gleevec.

We remind investors that Gleevec is approved in the U.S. and EU to treat Philadelphia chromosome-positive chronic myeloid leukemia (Ph+ CML). In addition, Gleevec is approved in the US and EU to treat certain rare blood disorders.

We note that Gleevec is one of the top-selling drugs of Novartis. Gleevec generated sales of $4.7 billion in 2013, up 1% year over year.  Of the total sales, approximately $1.9 billion were generated in the U.S.

Hence, the entry of generics for the drug in the U.S. market will negatively impact the top line.

Nevertheless, Novartis also had another drug, Tasigna, in its portfolio which is approved for the treatment of certain adult patients suffering from Ph+ CML in the U.S. and EU. Tasigna is also approved as a second-line treatment for patients suffering from Ph+ CML in chronic and/or accelerated phase who are resistant or intolerant to Gleevec.

Novartis currently carries a Zacks Rank #3 (Hold). Currently, stocks like Allergan AGN, Gilead Sciences GILD and Shire SHPG look attractive in the healthcare sector. While Allergan and Gilead Sciences carry a Zacks Rank #1 (Strong Buy), Shire is a Rank #2 (Buy) stock.

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