Sandoz challenges Bayer’s Xarelto strategy in damages claim

UK High Court judge Michael Tappin has handed down a judgment in the claims for account of profits under cross-undertakings given by Bayer when obtaining interim injunctions against Sandoz. This is the start of a new stage in the disputes over Bayer’s most important blockbuster Xarelto.

The drug derives from a patent for the active ingredient rivaroxaban. This first judgment indicates that generic drug companies intend to leverage these proceedings to obtain greater compensation for the sales ban during the PIs.

The proceedings raise very fundamental questions about compensation during enforced PIs if the patent is later declared invalid. The case is particularly significant due to the economic importance of the drug: Bayer earns six-figure sums per day in the UK for Xarelto.

Compensation payments are normally based on the assumed market share of generics if they had been sold on the market. The fact that drug prices are much lower once generics enter the market plays a major role here.

No exceptional circumstances

This is where a central question behind the proceedings comes in: If Bayer must now only pay loss of profits as compensation then, from a financial perspective, it was worth the risk in enforcing the PIs against the generics.

Bayer fought hard throughout Europe to enforce its PIs and maintain its monopoly. The revenues secured high earnings for the company during a period of economic upheaval. According to Statista, sales of Xarelto alone amounted to around €4 billion in 2023.

In the pending UK proceedings, several generics are now attempting to enforce higher compensation than the conventional claim for loss of profits as a result of the interim injunctions. The judgement states that Sandoz would probably be entitled to £3.9m under this conventional calculation method. However, Sandoz demanded a share of Bayer’s profits.

Sandoz argued exceptional circumstances should apply based on how Bayer filed the patent at the EPO and was granted the patent in the UK. Judge Tappin did not follow Sandoz’s reasoning (case ID: [2025] EWHC 2201 (Pat)). Sandoz may appeal.

The judgment relates to bifurcated proceedings involving Sandoz, Hexal and Salutas Pharma. Parallel proceedings with Stada are ongoing.

Financially successful strategy

The damages suit does not solve the moral quandary of health insurance companies and their members having paid the price of the original product for months. Furthermore, the damages proceedings raise other questions concerning Bayer’s litigation strategy, namely that it was economically successful despite some countries such as the UK having declared the patent invalid.

However, other courts and the EPO have upheld the patent in many countries, which has further muddied the waters. Moreover, the case law regarding compensation payments during PIs varies greatly in individual European countries.

Nevertheless, the proceedings in the UK could have a signalling effect for other countries.

The UK case so far

Bayer’s EP 1 845 961 for rivaroxaban, sold under the brand Xarelto, treats thromboembolic disorders. The company also owned a related SPC, which expired on 1 April 2024. Bayer’s EP(UK) 1 845 961 covered the use of rivaroxaban once daily and was due to expire on 18 January 2026.

In October 2022 Sandoz launched a revocation action. Judge Richard Hacon heard the case together with claims from other generic companies in February 2024. Before the judge handed down a ruling, Sandoz and other companies indicated their intention to launch once-daily rivaroxaban in the UK on expiry of the SPC in April 2024. Bayer sought an interim injunction against Sandoz and the other companies, which judge Hacon granted in March (case ID: [2024] EWHC 711 (Pat)).

On 12 April 2024 judge Hacon handed down his trial judgment, finding the patent invalid (case ID: [2024] EWHC 796 (Pat). He also extended the injunctions until 29 April 2024 to allow Bayer time to seek permission to appeal from the Court of Appeal.

Judge Richard Arnold granted permission to appeal and extended the injunctions until the conclusion of the appeal. Following the hearing on 16 May 2024, the Court of Appeal dismissed the appeal.

Regular counsel fight on

Bayer relies on a team from A&O Shearman in the pan-European litigation. Rafi Allos had the lead in the UK proceedings. The team included Daniel Jowell KC, Miles Copeland, and Kyra Nezami.

Sandoz’s IP counsel Elijha Wong leads the litigation in the UK, Germany, Norway and France.

In the damages proceedings, Sandoz retained a Pinsent Masons team. Gareth Morgan has the lead, which includes Alasdhair McDonald, Nicole Boulis, and Vural Ergisi, as well as counsel Jeff Chapman KC and Gillian Hughes.

In the UK validity proceedings, Sandoz and Accord jointly relied on a Pinsent Masons team led by Catherine Drew, Alasdhair McDonald, and Gareth Morgan.