CHICAGO (Dow Jones)--Abbott Laboratories (ABT) won an important battle Friday in the effort to protect its extended-release version of antibiotic drug Biaxin from generic competition.

A U.S. District Court judge granted Abbott's request for a preliminary injunction against Teva Pharmaceutical Industries Ltd. (TEVA) launching its generic version of Biaxin extended release, or XL. This could keep Teva from launching until the outcome of a patent trial, which could start late this year or early next year.

The decision was issued by Judge David Coar, of the U.S. District Court for the Northern District of Illinois in Chicago.

Coar in his opinion said, "The public's strong interest in creating adequate incentives to innovate outweighs its interest in allowing generic competition before patent expiration."

He also said Abbott had made a good argument that the company would suffer irreparable harm if Teva was allowed to launch its product.

An Abbott spokeswoman present at the hearing said, "We're obviously very pleased at the ruling," but didn't offer any further comments because she hadn't examined the full ruling.

Teva challenged several of Abbott's patents, and the judge ruled that Teva did not make its case in at least one of the patents, although he did preliminarily find one of Abbott's patents and a claim regarding another Abbott patent invalid.

"The court recognizes the public interest in competition in the pharmaceutical market," the judge wrote. "It also recognizes, however, the public interest in creating beneficial and useful products and the cost involved in that process. To the extent that this court has found that the patents in suit are valid, the public interest is best-served by enforcing them."

To gain a preliminary injunction against Teva and other potential competitors, Abbott needed to prove that launch of a generic would cause irreparable damage and that the company's Biaxin patents are likely to prevail in court.

A generic extended release form entering the market would trim about one percentage point from Abbott's top-line growth in 2005 and could mean a loss of 2 cents a share from its bottom line, said analyst Katherine Martinelli of Merrill Lynch.

Later this summer, the court will hear similar requests from Abbott for preliminary injunctions against Andrx Group (ADRX) and Ranbaxy Laboratories Ltd. (500359.BY). All three companies have U.S. Food and Drug Administration approval for extended release versions of the drug, which has the medical name Clarithromycin.

Global sales of Biaxin last year totaled $1.183 billion, or about 6% of Abbott's total sales, with $458 million coming from the U.S. At the moment, Biaxin XL constitutes about 65% of U.S. Biaxin sales. But analysts had expected sales to fall sharply with the entry of generic competitors.

Abbott had told the court that it predicts it will lose 40% of its Biaxin XL sales within one month of generic entry, 64% within two months and 78% after 11 months. Abbott also told the court it estimates it will suffer approximately $1.37 billion in lost profit over the remaining 12 years of its patents, will have to lay off several hundred members of its sales force, and that its loss of market share will be permanent.

Abbott introduced Biaxin XL several years ago. Many doctors switched their patients to the XL version, which can be taken once a day rather than twice, making it easier for patients to stick with the therapy.

The companies that make generic versions of the drug say that Abbott's patents are invalid and that their versions don't violate Abbott's patents.

Martinelli rates Abbott a buy and doesn't own shares, but her firm has an investment banking relationship with Abbott.

-By Daniel Rosenberg, Dow Jones Newswires; 312-750-4118; daniel.rosenberg@dowjones.com

(END) Dow Jones Newswires

June 06, 2005 07:32 ET (11:32 GMT)