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Lilly Settles Patent Litigation on Cialis with Generic Firms

Eli Lilly & Company LLY announced that it has entered into an agreement with generic companies to settle a patent related to its erectile dysfunction drug Cialis (tadalafil).

The patent related to the unit dose of the drug is pending in the U.S. District Court for the Eastern District of Virginia.

The unit dose patent for Cialis was previously expected to expire on Apr 26, 2020. However, with the latest settlement, the patent is set to expire roughly a year and a half ahead on Sep 27, 2018, at the earliest.

Unit dose represents a sealed single-unit container which is designed in such a way so that the drug can be directly administered from the container as a single dose. Every single unit contains detailed label description of the drug.

Shares of Eli Lilly have outperformed the Zacks classified Large Cap Pharmaceuticals industry so far this year. While the stock gained 13.5% during this period, the industry increased 11.3%.

The company finds the patent as valid and believes it has been infringed by the generic companies. It also said that the settlement is a “royalty-bearing license agreement”, which assures the company of U.S. exclusivity.

Cialis generated revenues of $533.6 million in the first quarter of 2017,  accounting for 10% of Lilly’s top line.

It should be noted that the drug’s compound – tadalafil – is also sold under the trade name of Adcirca for the treatment of pulmonary arterial hypertension. The patent for Adcirca will still expire on Nov 21, 2017, as expected. The company believes that the agreement for Cialis will have no impact on Lilly’s financial guidance for 2017 and also there will be no change in mid-term expectation till 2020.

Zacks Rank

Lilly currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the healthcare sector include AstraZeneca PLC AZN, Sanofi SNY and Merck & Company, Inc. MRK. All the three companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

AstraZeneca’s earnings estimates have increased from $1.84 to $1.85 for 2017 and from $1.83 to $1.89 for 2018 over the last 30 days. The company came up with positive earnings surprise in the last four quarters, with an average beat of 142.6%. The share price of the company is up 20.5% so far this year.

Merck’s earnings estimates have moved up from $3.84 to $3.85 for 2017 and from $4.16 to $4.18 for 2018 over the last 60 days. The company came up with positive earnings surprise in the last four quarters, with an average beat of 4.36%. The share price of the company is up 9% so far this year.

Sanofi’s earnings estimates have moved up from $3.08 to $3.18 for 2017 and from $3.26 to $3.30 for 2018 over the last 60 days. The company came up with positive earnings surprise in two of the last four quarters, with an average beat of 5.10%. The share price of the company is up 18.3% so far this year.

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