Bristol-Myers Wins Plavix Ruling

Even though a federal judge prevented additional generic shipments by Apotex, he didn't order a recall of the product already held by wholesalers or retailers. As a result, sales and earnings for Bristol-Myers and Sanofi-Aventis took a hit.

Bristol-Myers had tried to dissuade Apotex from selling generic Plavix until mid-2011, but when an agreement fell apart, Apotex started selling generic versions. The botched deal led to investigations by the Justice Department and the Federal Trade Commission. After the Apotex deal blew up, Bristol-Myers' CEO Peter Dolan and General Counsel Richard Willard lost their jobs in September.

Bristol-Myers has since settled a Justice Department's complaint by pleading guilty to two counts of providing false statements to the FTC and paying a $1 million fine.

Apotex's sale of generic Plavix was considered an "at-risk" launch -- a legal term describing the sale of a generic product before a patent has expired. Companies that make at-risk launches and are later ruled to have infringed on patents could be hit with triple damages. Bristol-Myers's deal with Apotex waived the triple-damages requirement.

"We believe some damages are likely," says Joseph Tooley, of A.G. Edwards, in a note to clients. "This is a clear victory for Bristol-Myers Squibb and Sanofi-Aventis." He doesn't own shares, but his firm has had a non-investment banking relationship with Bristol-Myers.