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 Lantus is the world's most prescribed insulin
product, with annual worldwide sales of about $7 billion, but is set
to lose patent protection in the United States, the world's largest
pharmaceutical market, in February 2015.
Sanofi's lawsuit, filed on Thursday, triggers an automatic 30-month
stay of approval by the U.S. Food and Drug Administration (FDA),
keeping Lilly's biosimilar drug off the U.S. market until mid-2016,
more than a year later than its previously expected launch date.
Sanofi's shares were up 0.7 percent at 73.87 euros by 0947 GMT.
Shares in Denmark's Novo Nordisk, whose own rival to Lantus, called
Levemir, accounts for 15 percent of group sales, were 3 percent
higher at 217.60 Danish crowns.
"Any delay provides Sanofi and Novo increased pricing power in the
$6bn U.S. basal insulin market," Citigroup analysts wrote.
Deutsche Bank analysts said the move also raised the possibility of
a further, multi-year extension of exclusivity for Lantus if, in the
end, the court found that Sanofi's patents had indeed been
infringed.
The lawsuit, filed in the U.S. District Court for the District of
Delaware, comes a month after Eli Lilly applied to the FDA for
permission to sell a biosimilar version of Lantus, known chemically
as insulin glargine.
Indianapolis-based Lilly, in its submission, challenged the validity
of several patents on Lantus. But it also said it would not launch
its product before Sanofi's patent on the active ingredient in
Lantus expires in February 2015.
Sanofi hit back on Thursday, alleging in its lawsuit that Lilly had
infringed on four of its patents.
EARNINGS BOOST
Lantus accounts for close to a fifth of Sanofi's total sales and
over a third of its operating profit. Analysts estimate U.S. sales
of the drug grew by 22 percent in 2013 to 3.8 billion euros ($5.15
billion).
Sanofi, which publishes full-year results next Thursday, is striving
to return to growth after a difficult 2013 that featured problems in
Brazil and several product setbacks.
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Chief Executive Chris Viehbacher told Reuters last month he was
confident its diabetes business could grow beyond 2015.
Sanford Bernstein analyst Tim Anderson said in a research note that
the 30-month delay would raise Sanofi's earnings per share (EPS)
from 2015 through 2020 by about 6 percent and reduce Lilly's EPS for
the period by about 3 percent.
Deutsche Bank analysts said the delay would likely increase forecast
EPS by close to 10 percent in 2016.
The delayed launch of Eli Lilly's biosimilar drug will also give
Sanofi more time, before cheap competition for Lantus hits the
market, to switch patients to a new long-acting follow-up product
known as U300, which is expected to get FDA approval in 2015.
"Time is important in any switching strategy, so any delay would be
supportive to the franchise's long-term growth," Jefferies analysts
wrote.
(Editing by Amanda Kwan and Greg
Mahlich)
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