Merck insists on buyout despite generic blow

Pharmaceutical company Merck has said it will press on with an $8.4 billion buyout of Cubist Pharmaceuticals despite a court ruling that could pave the way for a generic version of a lucrative Cubist drug.

Last week, New Jersey-based Merck revealed it was planning to buy Massachusetts-based Cubist.

But, its decision could have been cast into doubt following a decision at the US District Court for the District of Delaware on Monday (December 8) that invalidated key patents covering Cubist’s antibiotic drug Cubicin (daptomycin)

The court ruled that pharma company Hospira could launch a generic version of the drug—used to treat skin infections—in 2016, and invalidated four Cubist patents.

The invalidated patents would have given Cubist the exclusive right to the drug until November 2020. It paves the way for a generic to be launched in June 2016, the expiry date of a Cubist patent that was not declared invalid.

But, in a statement yesterday (December 9), Merck said that despite the court ruling it “continues to believe” the acquisition will create strong fundamental value.

“The combined strength of both companies will provide both incremental and long-term value, and Merck expects the transaction to add more than $1 billion of revenue to its 2015 base, with strong growth potential thereafter,” the company said.

In a statement, Cubist confirmed it would be appealing against the decision.

Michael Bonney, chief executive, said: “We believe we will be successful in the appeal process which we expect to conclude well before June 15, 2016.

“Our transaction announced with Merck is unaffected, and we will move forward toward its completion in the first quarter of 2015.”

Merck confirmed it plans to complete the acquisition in the first quarter of next year.

Hospira did not respond immediately to a request for comment on its plans to launch a generic version of the drug.