"Teva Plunges After Two U.S. Copaxone Patents Invalidated", posted to Bloomberg by Susan Decker and Catherine Larkin, tells the tale of another stock price fluctuation in the wake of a patent invalidation decision. Whether the 3% drop in Teva's value constitutes a 'plunge' or something less dramatic -- or indeed whether a larger fall could have been expected, given Copaxone's predicted level of contribution to Teva's profits -- are questions for debate between headline writers and financial analysts, but any movement in stock value that follows a legal ruling on the validity of an intellectual property right is a topic that attracts the attention of this weblog.
The invalidation in this story was effected by the US Patent Trial and Appeal Board (PTAB), a body from which invalidation decisions can be appealed to the Court of Appeals for the Federal Circuit (CAFC). Even that is not necessarily the end of the line, since CAFC decisions also be reviewed on a discretionary basis by the United States Supreme Court -- the ultimate authority on establishing judicial standards for patentability. Where, as in the case of Teva's Copaxone patents, large sums of money are at stake, PTAB rulings are likely to be challenged (Teva has already signalled its intention to appeal).
Initially the PTAB was described as a "death squad" for challenged patents, with over 80% having their claims invalidated or being dropped in consequence of a legal challenge since it opened its doors to business almost four years ago to the day. The most recent data suggests that around 40% of patents are now surviving, and that much of the carnage has been in the area of software-related patents in the wake of the Supreme Court's ruling in Alice Corp v CLS Bank. Teva itself is an experienced and successful patent litigating pharma company, though it's fair to note that many of its most notable successes have been in the company's role as a generics manufacturer rather than in asserting their rights against others.
The report on the company's stock price drop gives us an excuse to do a little bit of patent analytics in order to take a look at Teva's general patent health in context, comparing Teva's patent holdings with those of its main competitors in those areas in which it trades as principally a proprietary pharma enterprise rather than as a generic manufacturer.
First, in terms of portfolio size, we can see that Teva has gradually augmented its holding of granted patent families over the past decade, a period during which other leading pharma companies have either thinned out their patent assets or, in the case of Bristol-Myers Squibb, have remained more or less static.
In terms of patent family applications, Teva has caught up with its rivals over the past decade and now leads the pack by a considerable distance.
In terms of estimated annual expenditure, Teva has however been largely outspent, with only Eli Lilly spending less.
Territorial coverage is also worth a look: Teva's geographical spread of patent protection is remarkably even. In contrast, Bristol-Myer Squibb is notably skewed in favour of the lucrative US market, while Pfizer has concentrated more on the growing Asia-Pacific zone, which is also favoured by AstraZeneca and Eli Lilly.
What does this all show? In general terms, not a great deal. Teva's patent portfolio is sufficiently extensive and robust to withstand the occasional loss of even an immensely profitable patent like those governing Copaxone. However, the value of individual patents is clearly greater in the pharma sector than in, for example, information technology and communications -- where successful commercialisation of a product or service may depend on the use of a large number of patents: there are few patents outside pharma that are analogous to the single patent that specifically protects a blockbuster drug formulation that is a blockbuster. But that's not news to anyone.
This weblog will be keeping an eye out for developments in the Copaxone saga and will comment as necessary on those aspects of it that seem most deserving of attention.