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Drugs

AstraZeneca Faces EU Investigation Over Patent Protection

Strategic Insights

— 1 min read

AstraZeneca, the world's largest seller of a single drug, is being investigated by the European Commission over allegations that it has broken competition rules in defending the patents on its best-selling ulcer treatment, Losec. The investigation came after the Commission raided the company's London and Swedish headquarters in February. If found guilty, AstraZeneca could face fines of up to 10% of its worldwide turnover, estimated at over $15 billion.

Key Takeaways:

  • The European Commission is investigating AstraZeneca for allegedly breaking competition rules in defending patents on Losec, the world's best-selling drug.
  • The investigation is focused on whether AstraZeneca has abused its dominant position in the market to stifle competition and gain an unfair advantage.
  • AstraZeneca's primary patents for Losec have begun to expire in Europe, but the company is fighting to extend secondary patents covering the production process until 2014.
  • The company is also facing challenges in the US, where manufacturers are seeking licenses to produce generic versions of Losec once the main patent expires.
  • AstraZeneca has denied any wrongdoing and claims to be fully cooperating with the investigation.
  • The company's shares fell 6% on news of the investigation, but have since recovered due to investor confidence in its ability to defend its patents and replace lost sales with its successor product, Nexium.

Statistics:

  • $15.1 billion: AstraZeneca's global drug sales in 1998.
  • $6 billion: AstraZeneca's Losec sales in 1998.
  • 10%: The maximum fine AstraZeneca could face if found guilty of breaching competition rules.
  • 174p: The drop in AstraZeneca's share price following the announcement of the investigation.
  • $61.4m: The fine imposed on VW in 1998 for price-rigging (in euros).
  • 2014: The estimated expiration date of AstraZeneca's secondary patents for Losec production.
  • 1998: The year AstraZeneca's primary patents for Losec began to expire in Europe.

Sources:

  • BBC News: "AstraZeneca facing EU probe over Losec patent" (February [no date mentioned])
  • Financial Times: "AstraZeneca shares fall after EU probe" (March 3, 1999)
  • London Times: "AstraZeneca attacked by EU over patent tactics" (February 16, 1999)
  • European Generic Medicines Association: "Statement on the accusation against AstraZeneca" (February 15, 1999)
  • AstraZeneca: "Company statement on EU investigation" (February 15, 1999)

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