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Bristol Goes Back to Drawing Board

Bristol-Myers Squibb (BMY) saw its shares sag Monday as a legal setback for the anticoagulant Plavix, the company's biggest drug, disheartened investors.

After the markets closed Friday, state attorneys general rejected a deal that Bristol-Myers and Plavix's developer, Sanofi-Aventis (SNY), had made with a Canadian generic-drug maker, Apotex. The agreement would have halted patent litigation and protected Plavix against generic competition until mid-2011.

When the companies announced the decision, they didn't say what their next step would be, but they did express uncertainty about the future of the anticoagulant.

At this time, it isn't possible "to assess the outcome of the Plavix litigation, including the Apotex matter, or the timing of potential generic competition for Plavix," they said. " We intend to vigorously pursue enforcement of their patent rights in Plavix."

Many analysts expect Bristol-Myers and Sanofi-Aventis to reactivate their patent infringement suit against Apotex. The drug had the sixth-highest sales of any U.S. drug last year, according to IMS Health, which tracks pharmaceutical trends. Last year, Plavix contributed $3.8 billion, or 20%, of Bristol-Myers' revenue. For Sanofi-Aventis, it produced $2.45 billion in sales, or 7.4% of the total. Sanofi-Aventis ranks eighth in U.S. drug sales, and Bristol-Myers is 10th, according to IMS.

Shares of Bristol-Myers were off 35 cents, or 1.4%, to $24.12. Sanofi-Aventis, which licenses the U.S. Plavix rights to Bristol-Myers, was up 65 cents, or 1.4%, to $47.93.

Legal Wrangling

The Plavix problem accelerated in January when Apotex received permission from the Food and Drug Administration to begin selling generic Plavix. The brand-name drug companies previously had sued Apotex, claiming patent infringement, but they reached a settlement in March . They suspended their lawsuit, which was scheduled for trial in June, contingent on the deal being approved by the states and the Federal Trade Commission.

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