Glaxo faces losing exclusive rights to £5m-a-day blockbuster drug

GlaxoSmithKline admitted yesterday that it had been nudged a step closer to relinquishing exclusive rights to manufacture and market the best selling anti-depressant drug Paxil after a US judge ordered a trial to establish the validity of three of its patents on the product.

GSK has enjoyed almost 10 years of patent protection for Paxil, generating sales of £5m a day last year. Since 1998, the company has been fending off legal challenges from generic drugmakers, led by Canadian firm Apotex.

Yesterday, GSK played down the importance of the US court ruling. "We continue to believe there are significant hurdles that prevent launch of a generic Paxil product," it said.

The Philadelphia court hearing has cleared the way for a trial over three Paxil patent claims brought by Apotex. The judge dismissed a fourth patent challenge from Apotex, but at the same time he ruled that in his view one of the three patents proceeding to trial was invalid. GSK intends to appeal this decision.

In October, GSK chief executive Jean-Pierre Garnier said his forecast of underlying earnings per share growth of at least 10% in 2002, followed by a high single digit rise in 2003, was dependant on a successful defence of Paxil patents in the US. Yesterday, GSK said its forecast "remains as previously stated".

GSK is also defending a legal challenge over other Paxil patents, also brought by Apotex, in Chicago. Both the Chicago and Philadelphia lawsuits are awaiting a trial date.

Over the summer, GSK's best-selling antibiotic Augmentin faced competition from cut-price generic manufacturers for the first time after legal pressure.

GSK is also facing challenges to intellectual property rights surrounding its other blockbuster anti-depressant, Wellbutrin. In the meantime, GSK has been pushing its customers to take up its next-generation version of Paxil, Paxil CR which has a longer patent life.

Shares in GSK rose 21p to close at £11.41.