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Jay Deshmukh was on the phone one fall day in 2002 with his outside counsel. The trio-Deshmukh, vice president for intellectual property of Indian generic drug maker Ranbaxy Laboratories Ltd., plus William Zimmerman and Darrell Olson, partners at Knobbe Martens Olson & Bear-reviews patents and confers daily about their findings. But this wasn’t one of their ordinary conversations. The group thought that not only had they found a legal way to make a generic version of Pfizer Inc.’s Lipitor, but that they’d found a bonanza—a way to defeat the main patent of the world’s best-selling prescription drug. Excited, Deshmukh quickly called his CEO in India with the news. “We never expected to find what we saw,” Deshmukh said. Exactly what they saw, he won’t say. But after notifying the U.S. Food and Drug Administration, Ranbaxy sent a letter on Jan. 10, 2003, to New York-based Pfizer. The letter, which is required by federal law, was addressed to Peter Richardson, Pfizer’s general patent counsel. It laid out Ranbaxy’s arguments about the Lipitor patents, and notified him that the company planned to market a generic version of the cholesterol-fighting drug. In February 2003, Pfizer sued to stop Ranbaxy. The trial ended on Dec. 13 before U.S. District Judge Joseph Farnan in Wilmington, Del. Currently, lawyers are submitting post-trial briefs. The last brief is due on March 31. A decision is not expected before then. A key ingredient In court documents, Ranbaxy claims that the main Lipitor patent does not cover the form of a key ingredient, atorvastatin, used in the drug. Ranbaxy alleges that Pfizer misrepresented that fact to the U.S. Patent and Trademark Office when it won an extension on the patent until 2010; the patent was originally scheduled to expire in 2006. (Ranbaxy also argues noninfringement and invalidity of the two patents at issue.) Pfizer General Counsel Jeffrey Kindler, while declining to discuss the case in detail, said in an e-mailed response to questions for this story: “Pfizer believes strongly that both the patents to be litigated in the Lipitor case are valid and infringed. This is obviously an important case for the company because Lipitor is our biggest-selling product.” Kindler said that pharmaceutical companies like his take all the financial risks in researching and patenting new medicines. And, he contended in his e-mail, they “deserve to be rewarded when those risks pay off.” If Ranbaxy wins its assault on the world’s most lucrative drug, the case would have a wide-ranging impact. Lipitor is on track to rake in $10 billion in sales this year; it would be the first drug ever to break that mark. Moreover, Ranbaxy is challenging Lipitor’s primary patent-the basic patent on the ingredients that Pfizer uses in the medication. Generic firms usually challenge secondary patents, which cover things like manufacturing processes, said Trevor Polischuk, a drug industry analyst with New York medical investment firm OrbiMed Advisors. But if Ranbaxy prevails, Polischuk said, similar challenges could “shake the very foundation of the pharmaceutical and biotech industries [and] crack the system.” Also at stake, according to Peter Yu, director of the intellectual property program at Michigan State University College of Law, is whether Pfizer can slow down the accelerating trend of smaller generics taking on the big pharmaceutical companies. If Pfizer can’t protect its most prized patent from an upstart like Ranbaxy, then generic makers will push harder to challenge more patents, Yu predicts. Momentum seems to be on the generics’ side right now, as patents expire and health insurers and others struggle to curb escalating drug costs. Global sales of generic drugs grew by 20% in 2004, and will reach $50 billion by 2007, according to the Arlington, Va.-based Generic Pharmaceutical Association. Generics criticized Pfizer’s Kindler criticized the generics for their aggressive and early attacks on patents. He said the U.S. patent system encourages investment and innovation, and “it’s extremely important for the future development of lifesaving drugs that we preserve the current system, not weaken it.” A win would be a watershed moment for Ranbaxy. In the United States, once the patent on a brand-name drug expires, generic makers can begin to market their products. However, under the Hatch-Waxman Act of 1984, a generic company that defeats a brand-name drug patent is granted six months to sell its version of the drug exclusively before other companies can introduce their copies. If that happens for Ranbaxy as a result of the Lipitor trial, that could mean billions of dollars for the company. That cash would help finance Ranbaxy’s plan to develop its own name-brand drugs, along with generics. The suit also shines a spotlight on Deshmukh, an obscure, unassuming patent attorney who finds himself playing David to Pfizer’s Goliath. He’s a giant slayer with nerve to spare. Deshmukh has prodded his staid company-which was once content just to wait for patents on name-brand drugs to expire before it tried to sell generics-brashly to take on top-selling drugs like Lipitor and GlaxoSmithKline PLC’s Ceftin while they are still on patent. In fact, Deshmukh took Pfizer on while its bet-the-company litigation with Glaxo was still pending. Backed by new outside counsel-Deshmukh switched to Irvine, Calif.-based Knobbe Martens over the objections of Ranbaxy’s business side-the IP lawyer now sees himself as the architect of Ranbaxy’s current success. Deshmukh said of his IP team, “We are [Ranbaxy's] business model.”

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