Judge Rules Three Drug Firms Didn't Infringe on ICN Patents
By RHONDA L. RUNDLE and NORA DEVINE
Staff Reporters of THE WALL STREET JOURNAL
LOS ANGELES -- A federal judge here ruled that three generic-drug makers aren't infringing Ribapharm Inc.'s patents on ribavirin, a hepatitis C drug.
The decision rendered by Judge Mariana R. Pfaelzer creates uncertainty about Ribapharm's ribavirin royalty revenue, and is a blow to Ribapharm's parent, ICN Pharmaceuticals Inc.
ICN said Wednesday that it is reassessing its previously issued earnings guidance for the year and is considering the implications of the court decision for its pending tender offer for Ribapharm shares. ICN offered in June to buy back the 20% of Ribapharm's stock that it doesn't own for $5.60 a share.
The decision is a victory for Geneva Pharmaceuticals, an affiliate of Novartis AG of Switzerland; Israel's Teva Pharmaceutical Industries Ltd.; and Three Rivers Pharmaceuticals LLC, a closely held company in Cranberry Township, Pa. The companies all hope to sell copycat versions of Ribapharm's drug, ribavirin, after they receive approval from the U.S. Food and Drug Administration.
Ribapharm said it plans to appeal the judge's decision. "We note that the generics can't come to market until they have regulatory approval, and they would be entering the market at risk while court proceedings are ongoing," said Kim D. Lamon, Ribapharm's president and chief executive officer.
Royalties on ribavirin provide nearly all of Ribapharm's revenue, and a big chunk of revenue for ICN, both based in Costa Mesa, Calif. The drug is licensed by Schering-Plough Corp. and marketed as Rebetol for treatment of hepatitis C, a chronic liver disease. Rebetol had U.S. sales of about $865 million in 2002. Ribapharm reported revenue of $270.3 million for that year.
On March 6, ICN projected 2003 earnings from continuing operations of $1.20 to $1.25 a share, before unusual items, on revenue of $770 million to $780 million.
Earlier this year Schering-Plough granted U.S. licenses for ribavirin to the three generic-drug makers.
At 4 p.m. Wednesday, Ribapharm shares traded down 20%, or $1.37, to $5.47, while ICN's shares fell 53 cents to $16.10, in New York Stock Exchange composite trading. Shares of Teva Pharmaceutical rose $1.43 to $57.59 in Nasdaq Stock Market trading.
Shares of Pharmaceutical Resources Inc., whose Par Pharmaceutical subsidiary has exclusive marketing rights for the Three Rivers' ribavirin product, rose $4.24, or 8.4%, to $54.80 in Big Board composite trading.
Novartis shares fell 17 cents to $38.09 on the New York Stock Exchange.
Write to Rhonda L. Rundle at rhonda.rundle@wsj.com and Nora Devine at nora.devine@dowjones.com
Updated July 17, 2003 12:20 a.m.
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