Pfizer 2010 Annual Report Download - page 101

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
payment of income taxes in another tax jurisdiction when we conclude that the potential recovery is more likely than not. We record
accruals for all other contingencies to the extent that we conclude their occurrence is probable and the related damages are
estimable, and we record anticipated recoveries under existing insurance contracts when assured of recovery. If a range of liability is
probable and estimable and some amount within the range appears to be a better estimate than any other amount within the range,
we accrue that amount. If a range of liability is probable and estimable and no amount within the range appears to be a better
estimate than any other amount within the range, we accrue the minimum of such probable range. Many claims involve highly
complex issues relating to causation, label warnings, scientific evidence, actual damages and other matters. Often these issues are
subject to substantial uncertainties and, therefore, the probability of loss and an estimation of damages are difficult to ascertain.
Consequently, we cannot reasonably estimate the maximum potential exposure or the range of possible loss in excess of amounts
accrued for these contingencies. These assessments can involve a series of complex judgments about future events and can rely
heavily on estimates and assumptions (see Note 1C. Significant Accounting Policies: Estimates and Assumptions). Our
assessments are based on estimates and assumptions that have been deemed reasonable by management. Litigation is inherently
unpredictable, and excessive verdicts do occur. Although we believe we have substantial defenses in these matters, we could in the
future incur judgments or enter into settlements of claims that could have a material adverse effect on our results of operations in
any particular period.
Patent claims include challenges to the coverage and/or validity of our patents on various products or processes. Although we
believe we have substantial defenses to these challenges with respect to all our material patents, there can be no assurance as to
the outcome of these matters, and a loss in any of these cases could result in a loss of patent protection for the drug at issue, which
could lead to a significant loss of sales of that drug and could materially affect future results of operations.
Among the principal matters pending to which we are a party are the following:
A. Patent Matters
Like other pharmaceutical companies, we are involved in numerous suits relating to our patents, including but not limited to those
discussed below. Most of the suits involve claims by generic drug manufacturers that patents covering our products, processes or
dosage forms are invalid and/or do not cover the product of the generic manufacturer. Also, counterclaims as well as various
independent actions have been filed claiming that our assertions of, or attempts to enforce, our patent rights with respect to certain
products constitute unfair competition and/or violations of the antitrust laws. In addition to the challenges to the U.S. patents on a
number of our products that are discussed below, we note that the patent rights to certain of our products, including without limitation
Lipitor, are being challenged in various other countries.
Lipitor (atorvastatin)
In November 2008, Apotex Inc. notified us that it had filed an abbreviated new drug application with the FDA seeking approval to
market a generic version of Lipitor. Apotex Inc. asserts the invalidity of our enantiomer patent, which (including the six-month
pediatric exclusivity period) expires in June 2011, and the non-infringement of certain later-expiring patents. In December 2008, we
filed suit against Apotex Inc. in the U.S. District Court for the District of Delaware and the U.S. District Court for the Northern District
of Illinois asserting the validity and infringement of the enantiomer patent. In August 2009, our action in the District of Delaware was
transferred to the Northern District of Illinois and consolidated with our pending action there.
In May 2009, Matrix Laboratories Limited (Matrix), a subsidiary of Mylan Inc., notified us that it had filed an abbreviated new drug
application with the FDA seeking approval to market a generic version of Lipitor. Matrix asserted the non-infringement of our patent
covering the crystalline form of atorvastatin, which (including the six-month pediatric exclusivity period) expires in 2017, and two
other Lipitor patents. Matrix did not challenge our enantiomer patent. In June 2009, we filed actions against Matrix, Mylan Inc. and
another Mylan subsidiary in the U.S. District Court for the District of Delaware and the U.S. District Court for the Northern District of
West Virginia asserting the infringement of the crystalline patent and two process patents that expire in 2016. In November 2009,
our action in the Northern District of West Virginia was transferred to the District of Delaware and consolidated with our pending
action there. In January 2011, we settled this action on terms that are confidential and not material to the Company.
In October 2009, Dr. Reddy's Laboratories Ltd. and Dr. Reddy’s Laboratories, Inc. (collectively, Dr. Reddy's) and KUDCO Ireland,
Ltd. and Kremers Urban LLC (collectively, KUDCO) notified us that they had filed abbreviated new drug applications with the FDA
seeking approval to market generic versions of Lipitor. Both of the abbreviated new drug applications cover the 10, 20 and 40 mg
dosage strengths, and KUDCO’s abbreviated new drug application also covers the 80 mg dosage strength. Dr. Reddy’s and
KUDCO assert the invalidity and/or non-infringement of our patent covering the crystalline form of atorvastatin and two other Lipitor
patents. They have not challenged our enantiomer patent. In December 2009, we filed actions against Dr. Reddy’s and KUDCO in
the U.S. District Court for the District of Delaware asserting the infringement of our crystalline patent. In addition, in December 2010,
we filed an action against Dr. Reddy’s in the same court asserting the infringement of the same patent in connection with
Dr. Reddy’s additional abbreviated new drug application seeking approval to market a generic version of the 80 mg dosage strength.
In July 2010, Actavis, Inc. and Actavis Pharma Manufacturing Pvt. Ltd. (collectively, Actavis) notified us that they had filed
an abbreviated new drug application with the FDA seeking approval to market a generic version of Lipitor. Actavis asserts the
non-infringement of our patent covering the crystalline form of atorvastatin and two other Lipitor patents. Actavis has not challenged
our enantiomer patent. In August 2010, we filed an action against Actavis in the U.S. District Court for the District of Delaware
asserting the infringement of our crystalline patent.
2010 Financial Report 99