A New Headache For Bayer: A Patent Loss

You know the old saying: Just when you think things can’t get worse…they do. The latest malady confronting the drugmaker is a ruling by a federal judge that invalidated a patent on its Yasmin contraceptive pill, which gives Barr Laboratories a chance to sell a generic before the patent was set to expire in 2020. For now, Bayer retains exclusive distribution rights in the US to the newer and different Yaz pill until March 2009, just one year from now.

The news sent Bayer stock tumbling more than 5 percent, because Yasmin generated nearly $490 million in sales last year. But this is only the latest problem. On Feb. 18, Bayer ended a late-stage trial for its Nexavar cancer med after it failed to improve survival rates in lung-cancer patients. Although already approved to treat liver and kidney cancer, lung cancer offered the biggest market potential. Two days later, Novartis and Novo Nordisk filed a patent lawsuit, claiming Bayer’s Kogenate hemophilia drug infringes on their patents.

Then two weeks ago, two new studies, including one funded by Bayer, found that heart surgery patients were more likely to die on Trasylol, which is supposed to prevent blood loss during heart bypass surgery. A 2006 study previously linked the drug to higher rates of heart attack, stroke, kidney failure and death, and sales were suspended in November following a scandal over undisclosed data and another trial yielding high death rates.

Ironically, these troubles occur after Bayer gambled by purchasing Schering AG in 2006 in hopes of boosting healthcare to offset declines in other businesses. The deal brought an MS treatment and you guessed it, Yasmin. “Bayer’s lacking a lot of positive news flow at the moment so the market is quite nervous,” Ulle Woerner, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart, Germany, tells Bloomberg News. “I don’t think the market expected this to happen at all. This is quite a hit for Bayer. This is a trigger to look closer at my `buy’ rating.”

Bayer may lose as much as half of Yasmin sales in the first year of generic competition, estimates Andreas Heine, an analyst at UniCredit Markets & Investment Banking in Munich, Bloomberg continues. “We expect that sales of Yasmin in the U.S. can fall by up to 50 percent in the first twelve months after the launch of a generic version,” Heine wrote in a note to clients today, according to the news service.

Yasmin is part of a group of contraceptives and the ruling may threaten the newer Yaz birth control pill, which is also protected by the patent. Bayer is trying to switch patients to Yaz from the older Yasmin to keep the family of birth-control treatments gaining sales. “With this decision, the patents for Yaz are also at risk. We see a 50 percent likelihood of a court decision against Yaz,” Heine wrote.