Apotex, a Canadian Manufacturer of Generic Drugs

The case involved between two large manufacturers--Apotex, a Canadian manufacturer of generic drugs and Sanofi-Aventis represented by Bristol-Myers Squibb distributor in United Stated. To understand further about the case, the need of answering five case questions below.

Question 1: Why did Bristol-Myers Squibb and Sanofi- Aventis seek a settlement rather than let the patent infringement case go to trial?

Answer: Before answer the question, we need to understand "what is patent?" According to Baron (2010), patents are the driving force in the pharmaceutical industry, providing strong incentives for research, development, and testing of new chemical entities. A patent on a new drug and approval for marketing by the Food and Drug Administration gives the innovating company a monopoly on the sale of the drug. Reflecting this monopoly, the company appropriates returns by charging a high price. When a patent expires, generic versions of the drug can be marketed. This typically drives the price down significantly and widens the use of the drug. (Baron, 2010)

Beginning in 2005 the Supreme Court in a series of cases has made it more difficult for a patent holder to enforce its patent against infringement, including ordering royalties rather than imposing an injunction for infringement. (Baron, 2010) There was not many cases received damages awarded to owners of patents for infringement by competitors.

Bristol-Myers Squibb and Sanofi- Aventis seek a settlement rather than let the patent infringement case go to trial because Apotex had received approval from Food and Drug Administration. The approval allowed Apotex to market the generic version of Plavix at its own risk. Bristol-Myers also found out that the Federal Trade Commission (FTC) had expressed opposition to agreements that restricted the introduction of generic drugs which might become anti-competitive. With those reasons, Bristol-Myers Squibb and Sanofi- Aventis want to seek a settlement with Apotex due to FTC approval, delaying the launch of Apotex generic drug until its patent expire that could ensure a continued monopoly until expiration. In addition that, Plavix was the best selling of Bristol- Myers Squibb's drug and was crucial to the success of the company. Plavix was marketed in the United States by Bristol-Myers Squibb, and U.S. sales were $3.5 billion in 2005 with worldwide sales of over $6 billion (Baron, 2010)

The truth of seeking settlement rather than go to trial was the reaching a deferred-prosecution agreement in a case involving charges of conspiracy to commit securities fraud relating to an accounting scandal. Under the agreement Bristol- Myers Squibb agreed to exemplary conduct for two years and supervision by an independent federal monitor (Baron, 2010)

Question 2: Should Bristol- Myers Squibb and Sanofi- Aventis have attempted to pay Apotex to prevent it from launching a generic version of Plavix?

Answer: Bristol-Myers Squibb and Sanofi-Aventis should have attempted to pay Apotex to prevent it from launching a generic version of Plavix. My understanding that Bristol-Myers Squibb and Sanofi-Aventis entered into agreement with Apotex just frighten Apotex. The $60 million break-up fee that Bristol-Myers agreed to pay Apotex proved that something was hidden behind. The only explanation