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To: Frederick Langford who wrote (77427)	10/14/2002 5:29:37 AM
From: 2MAR$	Read Replies (1) \| Respond to of 208838

AstraZeneca<AZN.L> soars on Prilosec partial win (Adds Schwarz Pharma shares, analysts, background) By Ben Hirschler, European Pharmaceuticals Correspondent LONDON, Oct 14 (Reuters) - Shares in AstraZeneca Plc surged more than 14 percent on Monday after Europe's second biggest drugmaker won a surprise partial victory in a U.S. patent court case over its top-selling Prilosec ulcer pill. Judge Barbara Jones ruled late on Friday that key AstraZeneca formulation patents were valid until 2007 and three generic companies infringed these patents, although a fourth company did not. Most investors had expected AstraZeneca to lose the patent battle over the $6-billion-a-year medicine, sparking a fierce price war in the U.S. marketplace. In the event, it appears AstraZeneca will only have to contend with competition from KUDCo, a unit of small German drug group Schwarz Pharma AG <SRZG.DE>, which analysts expect to discount its generic version by a modest 25 percent or so. "The court ruling is a more positive outcome for AstraZeneca than the market was predicting and allows some breathing space, with higher-than-expected Prilosec revenues offsetting new product disappointment," said David Beadle, an industry analyst at UBS Warburg. Shares in AstraZeneca traded up 14.9 percent at 23.75 pounds by 0730 GMT, after ending last week at 20.68. The stock has plunged 43 percent since April following delays and setbacks to cholesterol fighter Crestor and cancer drug Iressa, two new medicines designed to plug a gap left by the demise of Prilosec. Schwarz, whose shares rocketed 62 percent higher to 16.80 euros in Frankfurt, still faces certain hurdles in bringing its product to market in the United States, since it does not yet have final Food and Drug Administration approval. The firm may need to negotiate a deal with Andrx Corp <ADRX.O>, which holds a 180-day market exclusivity as first filer of a generic version of Prilosec. SECTOR BOOST The patent battle over Prilosec, which is sold in Europe as Losec, was the biggest in the history of the pharmaceutical industry, and the better-than-expected result for AstraZeneca lifted share values across the sector. The pharmaceutical industry has been hit hard by the threat of generic competition. The Prilosec decision shows patent cases do not always go in favour of makers of copycat products. Shares in GlaxoSmithKline Plc <GSK.L>, Aventis SA <AVEP.PA> and Sanofi-Synthelabo <SASY.PA> -- all of which face generic challenges -- jumped by between three and five percent. Friday's long-awaited judgement is unlikely to be the end of the legal marathon surrounding Prilosec. AstraZeneca said it was reviewing the ruling and considering an appeal. If Schwarz's KUDCo unit decides to launch its copycat version, it risks being sued by AstraZeneca for huge damages if the Anglo-Swedish company wins an appeals court case. The other generic drug companies aiming to market copycat versions were Andrx; Cheminor, a unit of India's Dr Reddy's Laboratories <RDY.BO> and Genpharm Inc, a unit of Germany's Merck KGaA <MRCG.F>. Dr Reddy's said it would appeal. Every month's delay to the launch of generics allows AstraZeneca to switch patients to its newer medication Nexium, which has much longer U.S. marketing exclusivity than Prilosec. Premal Pajwani, analyst with JP Morgan, said the ruling was positive for AstraZeneca in many ways. "Only one generic means a less dramatic fall-off in Losec's sales, a boost to sales and EPS in 2002 and beyond, more time to switch patients to Nexium, and added cash-flows to support the launch of Crestor. "In addition, confirmation of the validity of the Losec patents reduces uncertainty surrounding the patent estate on Nexium given that the two drugs share similar patents." ((London newsroom, +44 20 7542 5082, fax +44 20 7542 9780, ben.hirschler@reuters.com)) REUTERS * end of story *