The U.S. federal court ruling last Thursday rejecting GlaxoSmithKline's (London:GSK) patents for the antibiotic Augmentin should boost sales by Israeli drug giant Teva Pharmaceuticals (Nasdaq:TEVA), Merrill Lynch wrote today.
Teva should have a generic rival ready to roll by year-end, wrote analyst Paul Woodhouse. He calculates that the early approval for sales should lift Teva's profit by $100 million a year. Augmentin is a combination of two medicines, a penicillin called amoxicillin and clavulanic acid, which prevents bacteria from becoming resistant to penicillin. It has global annual sales of $2 billion.
The court ruling was a surprise, and was not factored into predicted financials for Teva, Woodhouse wrote.
In early May Woodhouse granted Teva a price target of $80.
The battle isn't over, though. GlaxoSmithKline has said it will appeal, even though three rulings have already gone against the drug colussus. Generic drugmakers Geneva Pharmaceuticals, an affiliate of Novartis (NYSE:NVS), Teva Pharmaceutical Industries.(Nasdaq:TEVA) and Ranbaxy Laboratories (Bombay:RANB) had sued to invalidate Glaxo's patents so they could launch lower-cost versions of the antibiotic.