This is a problem for the big drugmaker. A federal judge ruled yesterday that Teva Pharmaceutical, the world’s biggest maker of generic drugs, can sell a low-cost version of Wyeth’s heartburn pill in the US.

Last month, Teva received FDA clearance to sell its version of Protonix, which generated $1.8 billion in sales last year for Wyeth, but agreed not to begin sales until the court hearing. Wyeth sought to ban the generic until a patent-infringement trial could be held, and clamed the copycat would infringe a patent that expires in 2010. But US District Judge Jose Linares refused to grant a preliminary injunction and temporary restraining order.

Although now expects to proceed to trial, the decision could pave the way for Teva to begin selling generic copies as soon as today. The generic drugmaker would only it’s contemplating its next move, Reuters reports.

In response, Citigroup downgraded Wyeth to hold from buy, because it’s unclear whether Teva will actually launch a generic version of Protonix, but noted it expects the drug to account for around 14% of Wyeth’s earnings in 2008. “A Teva launch would erode Wyeth’s base business and limit the company’s flexibility to substantially increase their dividend or share repurchase program,” Citigroup noted, according to MarketWatch.