Edwards Loses Round One In German Patent Lawsuit Against MedtronicEdwards Loses Round One In German Patent Lawsuit Against Medtronic

Medtronic can continue to sell its CoreValve family of transcatheter aortic valves in Germany, but Edwards Lifesciences has two more chances to argue that those valves infringe on its patents.

June 14, 2013

2 Min Read
Edwards Loses Round One In German Patent Lawsuit Against Medtronic

[Photo Credit: iStockPhoto/ConstantinosZ

Medtronic has a momentary respite, even though company executives may not be exhaling quite just yet.

The company had some good news Friday when a German court reportedly ruled that Medtronic's heart valves used in transcatheter aortic valve replacement (TAVR) procedures did not infringe on Edwards Lifesciences' patents.

But there are two more cases to go, according to analysts. This is especially important because in Germany, if a company does infringe on competitors' patents, there is an automatic and immediate injunction against selling that product, wrote Danielle Antalffy, an analyst with Leerink Swann, in a research note Friday.

So, what does this mean?

For Medtronic, Antalffy believes it is mainly a status quo, but for Edwards it is a "minor negative" because she believes that "some investors had started to factor in a potential infringement decision and injunction against [Medtronic]."

In other words, if Edwards won and Medtronic was forced to pull CoreValve and CoreValve Evolut products from the market, it would have meant a "significant windfall" to Edwards with a potential to add 25 to 30 cents to its annual earning per share, Antalffy noted. 

The same potential would carry forward if Edwards wins the next two patent lawsuits in Germany against Medtronic. The first lawsuit is expected to be decided this summer, while the third is scheduled to be heard in December, said RBC Capital Markets' senior analyst Glenn Novarro. 

Like Antalffy, Novarro also believes that Edwards will gain a lot if it wins the next two rounds while Medtronic would be able to absorb any hit to its sales by cost cutting. 

While Medtronic has the upper hand in Europe, having introduced CoreValve there first ahead of Edwards' competing product, in the U.S. the reverse is true. Edwards received FDA approval in late 2011 and after a quick ramp, Sapien sales have mainly disappointed in the past three quarters due to slow market adoption.  

-- By Arundhati Parmar, Senior Editor, MD+DI

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