Pfizer Cuts a Deal -- No Bid for Ranbaxy

(MoneyWatch)  So Pfizer apparently won't be playing the spoiler in the Daiichi-Ranbaxy merger after all. Instead, CEO Jeff Kindler cut a deal with the Indian generics maker that will delay the introduction of generic Lipitor by about 20 months.

Ranbaxy is now spared the cost and uncertainty involved in continuing to batter down Pfizer's patent defenses, while Pfizer is guaranteed an additional $10 billion to $15 billion in brand-name Lipitor revenue from March 2010 through Nov. 2011. Pfizer even has the gall to term the agreement "pro-patient, pro-competition and pro-intellectual property," which might be true in some alternate universe where Lipitor costs don't count against individuals' Medicare coverage limits and insurance deductibles and where essentially agreeing not to compete counts as competition.

The meat of the agreement is here:

The Lipitor patents involved in this agreement are the basic compound patent, which expires in the United States in 2010; the enantiomer patent, which expires in the United States in 2011; as well as various process and crystalline form patents, which expire in 2016 and 2017; and the combination patent for Caduet, which expires in 2018.

Without getting too deep into the details here, the compound patent -- which covers what is technically known as the "composition of matter" for Lipitor -- is the real prize here, and it expires in March 2010, when Ranbaxy initially planned to launch its generic.. The process and enantiomer patents are essentially smokescreens, since generic companies have lots of ways of getting around them, although doing so requires hauling wheelbarrows of cash to the lawyers. (Oddly enough, according to Ranbaxy, the deal doesn't settle the Lipitor cases in five nations -- Finland, Spain, Portugal, Denmark and Romania. It's unclear why.)

The agreement is definitely good for Pfizer, which among other things may now be able to quiet speculation that it's going to have to cut its dividend, at least for a while. And it's good for Daiichi, which now won't have to bankroll the patent fight for Ranbaxy. But for everyone else, it's much more of a mixed bag.

(Hat tip: Pharmalot )

Further reading:

• Ranbaxy statement
• WSJ Health Blog