Will Teva Win its Court Case?

Teva Pharmaceuticals TEVA has been in the courtroom multiple times over generic drugs. In the past, they have been on the defensive, trying to protect their generic versions of Pfizer's drugs. Recently, Teva has been on the offensive, trying to protect its multiple sclerosis drug from four other pharmaceuticals.

To learn more about the trial, Benzinga reached out to Sanford Bernstein's Ronny Gal. Gal stated that Teva's drug, Copaxone, "comprises about 10% of its top-line and 30% of its profits."

The New York court decided today to accept all of Teva's relevant construction interpretations. It subsequently rejected all of the defendants' construction interpretations. The court needs to understand the drug's background and characteristics in order to be able to make a judgment regarding patent infringement. In other words, the court will be using Teva's explanation of the drug's fundamentals instead of the defendants' explanations.

According to Gal, "the pre-trial decision puts Teva in a better position to win its case. Using Teva's description of the drug is important for their argument's framework. The real dynamics between plaintiffs and defendants will be seen during the main trial, beginning on September 7."

If Teva Pharmaceuticals is successful in court, the company will maintain control over its patent until May 2014, allowing it more time to find ways to procure revenue streams. Currently, however, "Teva does not currently have anything that can mitigate the loss of Copaxone's exclusivity. While the firm has multiple things in the pipeline, it would be very helpful if Teva wins the lawsuit."

While Teva faces a serious risk of diminished profits, investors need to understand the entire court case further. There has been interesting outcomes in pharmaceutical patent infringement cases in the past, so investors will have to be wary of what may happen to the stock price in the event of an adverse outcome.

Currently, Teva Pharmaceuticals is trading at around $40 and is down about 22% for the year.