On April 16, 2025, shares of Indian pharmaceutical giants Lupin Ltd. and Zydus Lifesciences Ltd. experienced a significant downturn following a major legal setback in a U.S. Federal Court ruling. The court ruled in favor of Astellas Pharma, the original patent holder of Myrbetriq (mirabegron), a drug primarily used to treat overactive bladder. This decision mandated that Lupin and Zydus withdraw their generic versions of the drug from the U.S. market, leading to a sharp decline in investor confidence.
As of 2:10 PM IST on the same day, Zydus shares were trading at ₹826.85, down 6.36%, while Lupin shares slipped 3.77% to ₹1,936.10. The significant drop in stock prices placed both companies among the top losers on the National Stock Exchange (NSE) for the day.
Myrbetriq has been a crucial revenue stream for both companies, with Zydus estimated to generate nearly $35 million in quarterly revenue from the drug, while Lupin’s earnings from Myrbetriq were projected between $25 million and $30 million. The court's ruling not only affects their ability to market the drug but also opens the door for potential damages based on lost profits to Astellas Pharma.
The Delaware District Court upheld the validity of Astellas Pharma’s U.S. Patent No. 8,017,780, rejecting claims of patent invalidity put forth by Lupin and Zydus. Earlier in 2024, a district court had ruled in favor of the generics, but the appeals court reversed that decision, culminating in this latest legal setback.
Brokerages such as InCred Equities and JPMorgan have expressed cautious optimism, suggesting that the companies’ product strategies may not be immediately altered despite the ruling. However, the ruling is expected to stall incremental generic competition for Myrbetriq for six to nine months. In light of this uncertainty, Bank of America has revised its target prices downward, cutting Lupin’s target price to ₹1,560 from ₹1,660 and Zydus Life’s to ₹1,145 from ₹1,310.
Nomura has highlighted two possible outcomes: either the generics will be barred from sale, impacting earnings, or they may continue selling with risks of damages limited to upside earnings. The patent case accounts for approximately 8% of Lupin’s FY25 profits and 12% for Zydus Lifesciences, indicating a material impact if the ruling is enforced fully.
Vishal Manchanda, a pharma analyst at Systematix Group, warned that the ruling could dent the FY26 earnings of both companies. Speaking to CNBC-TV18, he stated, “This verdict could lead to substantial penalties payable to Astellas. If Lupin and Zydus are forced to pull their generics, the revenue loss will be significant.”
The ruling has prompted a flurry of analyst downgrades and stock target revisions. Some analysts have reduced their FY26 earnings per share forecasts for Lupin and Zydus by 5–7%. The U.S. is a key market for both drugmakers, and Myrbetriq had emerged as a high-potential product for their generics portfolios.
Market analysts have noted that the ruling could lead to financial penalties, recalls of existing stock, and blocked access to a high-value product in the U.S. pharmaceutical market. Myrbetriq, a prescription drug used to treat overactive bladder, is one of Astellas’ key products globally, with annual U.S. sales estimated at approximately $1.3 billion before the entry of generics.
Both Lupin and Zydus had launched their generic versions of Myrbetriq in the U.S. after receiving FDA approval but faced patent infringement lawsuits from Astellas. The court's decision follows a bench trial and marks a significant victory for Astellas.
Looking ahead, Lupin and Zydus may have to withdraw their products from the U.S. market in compliance with the order. A consolidated jury trial is scheduled for 2026 to determine the scale of infringement damages. Both companies may explore legal appeals or settlements, although no public statements have yet been issued regarding their next steps.
The ruling is being viewed as a material negative for both Lupin and Zydus, particularly since they were among the first to launch 25 mg versions of the drug in the U.S. and had plans to roll out the 50 mg dosage soon.
The stock market reacted swiftly to the court’s verdict, with Zydus Life dropping as much as 7.5% intraday to ₹818.65, while Lupin fell nearly 4% to a low of ₹1,930. In terms of recent performance, Zydus has declined 5.5% in the past year, with April alone accounting for a 7% drop after a marginal 1% gain in March. The stock had already shed 9.6% in February and 0.15% in January. Conversely, Lupin has had a stronger yearly run, gaining 25% in the past 12 months, although it has lost 4.5% so far in April, reversing part of its 6.5% gain from March.
The U.S. Federal Court ruling against Lupin and Zydus Life in the Myrbetriq patent case marks a significant challenge for both companies. The decision to uphold Astellas Pharma’s patent rights curtails their ability to market a key generic drug in the U.S., potentially denting revenues and inviting financial penalties. While appeals and legal strategies remain possible, the immediate market reaction underscores investor concerns over near-term earnings and growth prospects.
