In a victory for generic-drug makers, late Wednesday, U.S. Supreme Court Chief Justice John Roberts refused to block a ruling that would temporarily stop the clock on generic competition for Teva Pharmaceuticals’ (TEVA) multiple sclerosis drug, Copaxone.
The decision means that generic competition for Copaxone may hit the market as early as next May, even if the court decides to take up Teva’s appeal to reverse a lower court ruling. That ruling invalidated one of the company’s patents and shaved more than a year off Copaxone’s legal protection.
This is a victory for the generic-drug makers challenging Teva’s patents, including Mylan (MYL) and Momenta Pharmaceuticals (MNTA).
The decision also highlights whether Teva’s recently departed CEO, Jeremy Levin, was correct in his decision to cut sales and support for Copaxone. It appears that Levin wanted to adopt a worst-case approach to managing the pending drop in Copaxone sales, while Teva’s Chairman, Philip Frost still believes that the drug has more life in it.
The court decision puts additional pressure on Teva’s board to find a new CEO. Teva faces a number of challenges to attracting a new chief executive and it’s clear that the greatest challenge will be finding candidates who are capable of implementing significant change within a company where certain reasonable options appear to be “off the table.” At this point, we believe that the markets will take a “wait and see” approach to any new candidates. Internal candidates may seem capable of dealing with the culture, but they’ll likely face the same perception that they’ll simply will ‘do as Frost bids’. External candidates will be hard pressed to convince investors that real change can and will happen – especially as the company faces an expiring window of opportunity.
