GILD Gilead Sciences Inc

www.rothmanresearch.com -- With a string of patent protections expiring in 2010 onwards, many large pharmaceutical and biotechnology companies focused on producing branded drugs had been on the edge in the first quarter of this year. The main reason for this industry-wide caution had been the viral uncertainty spreading throughout the industry prior to the historic healthcare reform that was passed into law in March. Nonetheless, the new law turned out to be a good bargain for big Pharmas and biotech players. On top of securing a 50% tax credit (applicable for small- to mid-cap biotech companies) which will be a key element to promote research in creating new drugs, the industry received a crucial allowance from lawmakers which approved the 12-year patent protection. This by itself takes away the overwhelming burden the branded-orientated companies have been facing from generic drugs producers, and also gave a boost of confidence to the big players in the space which would have otherwise been reluctant to invest in R&D.

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However, even with these new positives, the challenge remains colossal for many companies as their products' patent protection expires leaving the door wide open for cheaper generic versions to penetrate the market. Gilead Sciences Inc. (NASDAQ: GILD), for instance, has recently seen its Raxena drug, used by patients suffering from angina, challenged by India-based Lupin Ltd. Lupin, according to Gilead, has approached the FDA for approval of a generic version of Raxena. Another company in the biotech sphere that could potentially be target of generic competition in the near future is Biogen Idec Inc. (NASDAQ: BIIB) which will see a number of its products nearing expiration in the 2013 to 2018 time frame.

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Generic drug manufacturers, in contrast, believe that the 12-year patent protection clause in the healthcare overhaul defeats the purpose of why the law had been passed in the first place, that is to make healthcare affordable for all. Their belief stems from the fact that branded biotech and pharma will be selling their products at higher price unhindered by competition as there will none as long as they have patent protection.

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