SmithKline challenged on drug patent: Legal action seeks to rescind company's UK rights over top-selling antibiotic

SMITHKLINE Beecham, the drugs company, is facing a legal challenge to its UK patent on Augmentin, its best-selling antibiotic. The attack comes as it faces a sharp decline in sales of Tagamet, the ulcer drug whose US patent expires today.

The Augmentin challenge is being mounted by Norton Healthcare, the generic drug manufacturer owned by Ivax Corporation of the US.

Augmentin is SmithKline's biggest-selling prescription drug, with worldwide sales of pounds 760m in 1993. So far, only the UK patent is being challenged and only on the tablet form, although that is the one most commonly used.

The patent on one of the components of Augmentin expires next April, while the other expired some time ago. But SmithKline has patents on the process and formulation of the drug, which last until the end of the century, and it is these that Norton is challenging.

Patent challenges are becoming increasingly common as companies fight for a share of drug sales. Glaxo is fighting a number of challenges to its patent on Zantac, the ulcer treatment that is the world's biggest-selling drug.

There is some concern that sales of Zantac in the US may be hit by the patent expiry on Tagamet, a rival ulcer treatment. Yesterday, Glaxo announced that it was introducing a soft-gelatin capsule form of Zantac in the US in a bid to fight off competition from generic versions of Tagamet.

SmithKline is planning to make its own form of Tagamet in the US, which it hopes will allow it to keep some of its sales - albeit that the price is likely to be far lower. At least three other manufacturers will be producing generic formulations and some analysts expect that the rise to 10.

SmithKline has also doubled the rebate on prescriptions, available to those who have no medical insurance, to dollars 20. It said that was intended to make the price competitive for those who prefer to continue using the branded version.