China Pharma Industry Rises to the Occasion as Viagra Patent Expires

BEIJING (TheStreet) -- The thrill is back for Chinese pharmaceutical companies and their investors because Pfizer (PFE) is about to lose its China patent rights for the erectile dysfunction drug Viagra.

The U.S. drug giant's exclusive rights to sell the active ingredient sildenafil citrate under the trade name Viagra expires in China in July. That's expected to clear the way for at least 10 domestic drug makers said to be eagerly waiting to market their own versions of the famous blue pill.

Ironically, the Chinese drug companies preparing for a piece of the action include Shanghai-listed Lianhuan Pharmaceutical and others that fought against Pfizer's patent rights for years in Chinese courts but lost.

Pfizer initially filed for a drug patent in 1994 and eventually got it from the government's State Intellectual Property Office (SIPO) in 2001. But the patent was in legal limbo until 2007, the year an appeals court in Beijing finally ended the legal battle by refusing to let Chinese drug makers sell the medication or use Mandarin-language versions of the trademark name.

Pfizer went on to dominate the Chinese market for ED drugs, which analysts say is currently worth about 1 billion yuan a year. The market is said to have huge untapped potential that perhaps could be reached if pill prices were reduced. The government's health ministry estimates serious ED affects some 40 million men in China.

Viagra reportedly controls about 60% of the Chinese market for ED drugs, compared to a 20% share for the Eli Lilly (LLY) equivalent men's medication and 10% for the Bayer (BAYRY) drug for ED. There's also a big market for herbal treatments in China as well as a black market offering knockoffs. Last September, the government shut down 20 Web sites officials said were selling fake Viagra.

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