Genzyme’s Infringement Suit Against DRL: Will It Hurt The Company?

The shares of Dr Reddy’s Laboratories (DRL) fell more than 1% this morning over news that the US-based firm Genzyme Corporation has filed an infringement suit against the company pertaining to the drug Mozobil. Mozobil (Plerixafor injection) is a hematopoietic stem cell mobiliser indicated for patients with non-Hodgkin’s lymphoma (blood cancer) and multiple myeloma.

Genzyme is a subsidiary of the drug major Sanofi-Aventis. In a petition filed in the District Court of Delaware, Genzyme has alleged that DRL had intimated though a letter that it had submitted a filing with the FDA to seek approval for a generic version of Mobozil. However, Genzyme maintained that the three patents on the drug are yet to expire. Reports indicate that the first patent of this drug would expire on December, 10, 2018, while the remaining two would expire in July 2023. Clearly, this means the DRL has filed for approval for a copycat drug some 5-10 years ahead of its expiry.

Infringement cases against generics companies in the pharma sector are very common, as they make copycats of branded drugs. Recently, Sun Pharma paid USD 550 million to Pfizer to settle a case that included a branded drug of Pfizer called Protonix. In the same case, generics giant Teva paid USD 1.6 billion to Pfizer. Of course, generics companies are able to pay these penalties with the money they make by manufacturing copycat drugs by themselves.

DRL, having been able to establish itself as a generics manufacturer in US market, is now aiming to manufacture complex drugs which have superior margins and have limited competition. Recently, it announced USFDA approval for its version of the Azacitidine injection. After the initial decline when the news broke out, the shares of DRL are showing some recovery in today’s market.