Sandoz drops challenge over a drug patent

Novartis AG's Sandoz generic-drug unit said it's giving up its effort to market a low-cost version of Cephalon Inc.'s sleep-disorder drug Provigil until a patent on the medicine expires in 2014.

Sandoz spokeswoman Pamela McKinlay said the company will no longer challenge Cephalon's patent for modafinil, the main ingredient in Provigil.

The change in Sandoz's U.S. Food and Drug Administration application will keep the company from selling generic Provigil until 2014. McKinlay said the decision was based on "the cost and the financial opportunities."

"We're constantly weighing different factors and different strategies, and for us, this makes sense at this point," she said in an interview.

Cephalon said that as a result, it won't pursue a patent-infringement lawsuit against Sandoz.

Provigil is the biggest product for Cephalon, which is based in Frazer, Pa. The drug had U.S. sales of $406.2 million in 2004, about 40 percent of Cephalon's $1 billion in total revenue. Provigil sales are projected to reach as much as $600 million this year.

Cephalon, which makes its cancer-pain-relieving drug Actiq in Salt Lake City, also has sued Teva Pharmaceutical Industries Ltd., Mylan Laboratories Inc., Barr Laboratories Inc. and Ranbaxy Laboratories Ltd. in U.S. District Court in New Jersey to block a generic form of Provigil. A trial may be held later this year, Cephalon spokesman Robert W. Grupp said in an interview.

Cephalon shares rose 78 cents to close at $44.68 Monday in Nasdaq Stock Market composite trading.

Novartis American depositary receipts, each representing one ordinary share, rose 27 cents to $49 in New York Stock Exchange composite trading. Novartis, based in Basel, Switzerland, is that country's biggest drugmaker.