Glaxo to sue Novartis, Ranbaxy

The world’s number 2 drug maker GlaxoSmithKline (GSK) said it is suing Ranbaxy and Novartis for allegedly using a stolen bacteria to produce a generic version of its antibiotic Augmentin. It is not accusing the companies of stealing, but of using its trade secrets.

GSK is also taking legal action against several other drug makers—Novartis and its units in Geneva and Germany, and the Israeli firm Teva Pharmaceuticals. In the lawsuit, GSK says the firms are using a strain of bacteria that it developed in the 1980s, to produce a main ingredient for Augmentin. It suspects a former GSK employee of stealing the bacteria in 1988. GSK has also asked the US government to bar No 3 European drug maker Novartis from importing generic versions of Augmentin into the US after they went on sale this summer. “We have reason to believe that they use the stolen strain of bacteria that is a trade secret owned by GSK,” a GSK spokesman said. The two companies have yet to launch their generic versions of Augmentin but GSK said it had evidence they also used the stolen bacteria. An official for Ranbaxy in the United States declined to comment on the GSK lawsuit. Officials for Teva in Israel and the United States were not immediately available for comment. The lawsuits are part of GSK’s fierce legal battle to fend off challenges to Augmentin, the company’s second-biggest selling product, which lost US patent protection in May.

The launch of a cheap generic form of Augmentin is expected to slice into profits and GSK shares have fallen over 20 per cent this year, partly on concerns about such competition. While legal battles over patents are commonplace in the drug industry, claims of stolen trade secrets are more unusual and more difficult to prove, industry analysts said.

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GSK compared its trade secret for one of the main ingredients of Augmentin to the secret formula for Coca-Cola. GSK said that while patents have a finite life, trade secrets go on forever. In its lawsuit GSK says the generic version of Augmentin sold by Geneva Pharmaceuticals, a unit of Novartis, uses a type of bacteria the company developed in the 1980s to produce a main ingredient for Augmentin. The bacteria was stolen by a former GSK employee. The GSK lawsuit does not accuse Novartis or any other maker of an Augmentin copy of being involved in the theft. In a statement, Novartis said: “We are confident that the lawsuit will show Novartis companies acted in a legally and ethically correct manner.”

GSK issued lawsuits in a district court in Broomfield, Colorado, against Novartis and its Geneva and Biochemie units. The company has asked the United States’ International Trade Commission to block imports of the drug…