Abbott Sevoflurane Patent Invalid In Baxter Case

A U.S. appeals court said Thursday that an Abbott Laboratories Inc. (ABT) patent covering the formulation of a inhaled anesthetic called sevoflurane is invalid, further protecting Baxter International Inc.'s (BAX) right to market a version of the drug.

Neither company sees a market impact from the ruling, as it maintains a situation that's been in place since earlier this year when Baxter started selling its generic version of the anesthetic.

Baxter developed sevoflurane in the 1970s, licensed patents to another company called Maruishi Pharmaceuticals Co., and that company later licensed the patents to Abbott. A legal battle has dragged on for years involving Abbott's allegation that Baxter infringed on an Abbott patient related to the combination of sevoflurane and water.

The U.S. District Court for the Northern District of Illinois ruled in September 2005 that the patent in question, owned by Abbott and a company called Central Glass Co., was not infringed by Baxter's generic product. Abbott appealed that ruling, and Baxter filed a cross-appeal on the patent's validity.

In a ruling released Thursday, the U.S. Court of Appeals for the Federal Circuit reversed the district court's validity judgment, arguing that an older patent related to the drug "anticipates the claims" in Abbott's patent.

Baxter spokeswoman Deb Spak said the ruling doesn't have an impact for the company, as it's already selling sevoflurane in the U.S. and other markets around the world.

Abbott spokesman Scott Stoffel said in a statement that the company does not agree with the court's decision, and that Abbott is also evaluating its legal options.

"However, a generic form of the product from Baxter has been available since the beginning of 2006 and accordingly, this decision, while disappointing, does not alter the market dynamic," Stoffel said.

Baxter has not projected sevoflurane sales and doesn't break out sales of individual drugs in its earnings releases.

Abbott sells sevoflurane under the names Ultane and Sevorane. Those products posted U.S. sales of $203 million through the first three quarters of 2006, down 17.4% from the same period last year amid generic competition. Overall sales through three quarters were $604 million, down 5.7%

Shares of Abbott recently traded 2.2% lower at $46.26. Baxter shares were recently down 1.4% to $45.19.