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	England and Wales High Court (Patents Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Patents Court) Decisions >> Astrazeneca AB & Anor v Glenmark Pharmaceuticals Europe Ltd (Re Interim Injunction Application) [2025] EWHC 748 (Pat) (28 March 2025) URL: http://www.bailii.org/ew/cases/EWHC/Patents/2025/748.html Cite as: [2025] EWHC 748 (Pat)

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IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (ChD)
PATENTS COURT

		The Rolls Building 7 Rolls Buildings Fetter Lane, London EC4A 1NL
		28 March 2025

MICHAEL TAPPIN KC:

1. This is an application for an interim injunction by the Claimants against the Defendant ("Glenmark").
2. The First Claimant is the proprietor of SPC/GB13/021 ("the SPC") which relates to a compound called dapagliflozin, as well as another SPC relating to a combination of dapagliflozin with another active ingredient. The SPC is due to expire on 13 May 2028.
3. The Second Claimant holds a UK marketing authorisation ("MA") in respect of a product known as Forxiga which contains dapagliflozin as active ingredient, as well as MAs for products containing combinations of dapagliflozin with other active ingredients.
4. It is not necessary to distinguish between the Claimants for the purpose of this application. I will refer to them together as "AZ". I will also, for convenience, refer to dapagliflozin as "dapag".
5. Glenmark commenced proceedings for invalidity of the SPC and the combination SPC on 21 December 2023. The basis for the claim of invalidity is that the basic patent for both SPCs is invalid. Similar proceedings had already been issued by Generics (UK) on 6 October 2023 and by Teva on 24 November 2023.
6. On 26 January 2024 Meade J heard an application by Glenmark and the other claimants to list the trial in advance of the CMC. Glenmark was seeking a trial in January 2025. Meade J rejected that application and the claims were eventually listed for trial in March 2025. I heard the trial, starting on 10 March and concluding on 20 March, and have reserved judgment.
7. On 20 February 2025, Glenmark notified AZ that it intended to launch a product containing dapag as the active ingredient in the UK on 17 March 2025. On 28 February, AZ notified Glenmark that it intended to seek an interim injunction to prevent Glenmark from selling its dapag product in the UK pending the form of order hearing following the validity trial.
8. This application for such an injunction was issued and served on 6 March. It was accompanied by a witness statement from Chris Stothers of Freshfields, AZ's solicitors, and a witness statement from Oonagh McGill who is a Unit Director of the Cardiovascular, Renal & Metabolic Business of AZ and is responsible for development of AZ's strategy and operations for commercialisation of products including Forxiga.
9. On 10 March, Glenmark served its evidence in response. That included a statement from Tom Oliver of Powell Gilbert, Glenmark's solicitors, and a statement from Stuart Meanwell, who is Generics Business Unit Manager at Glenmark and has commercial responsibility for the planned sale of Glenmark's generic dapag product.
10. It also included an expert report from Andrew Farrant, who is the General Manager of the pharmaceutical company Luye Pharma and a director of Charlwood Pharma, an independent consultancy firm providing advice to the pharmaceutical industry. Mr Farrant explains his experience in the sales, marketing, prescribing and reimbursement of pharmaceutical products in the UK, including the launch of off-patent products and the defence of originator product markets in response to loss of exclusivity. He has acted as an expert (or assisted a fellow director who was acting as an expert) in a number of cases involving the modelling and forecasting of pharmaceutical market prices and volumes including in cases where interim injunctions were being sought.
11. AZ replied on 19 March by means of a second statement from Dr Stothers (supplemented on 21 March by a short third statement) and a report from Richard O'Toole. Mr O'Toole is the Head of Supply Chain and Commercial Manager of Partnerships at AZ. He has worked for AZ from 1998, save in the period 2020-2023 when he was working for Zentiva. He explains that he has thereby acquired expertise in the operation and dynamics of the UK pharmaceutical industry.
12. Finally, on 24 March, Glenmark responded to that evidence by means of a second report from Mr Farrant and a second statement from Mr Oliver. The parties sought permission for Glenmark to rely on the expert evidence of Mr Farrant and for AZ to rely on the expert evidence of Mr O'Toole and I grant that permission.
13. I also received a letter dated 20 March 2025 from Patrick Nolan of the Department of Health and Social Care Anti-Fraud Unit representing the relevant Health Authorities of England, Scotland, Wales and Northern Ireland. That letter made representations on behalf of those bodies on the question of whether an interim injunction should be granted, which I have taken into account. It also proposed wording for the cross-undertaking to be given by AZ if an interim injunction was granted, which it said would better account for the realities of the structural makeup of the NHS.  AZ has offered a cross-undertaking in that form.
14. AZ criticised Glenmark for the timing of its proposed launch and of the notification of that proposed launch, which coincided with the run-up to trial. It said that this caused disruption to AZ's trial preparations. It pointed out that Glenmark had not previously indicated there was any commercial urgency in its claim, either at the hearing before Meade J in January 2024 or subsequently. Glenmark explained that at that hearing it had sought a trial in January 2025, but in any event at that point it had not thought it would be ready to launch a product by March 2025.
15. Mr Oliver explained the history of Glenmark's attempts to obtain a UK MA on the basis of information from Chithra Jagdeo, the Head of European In-Licensing for Glenmark. The details are said to be confidential and it is not necessary to set them out in this judgment. Suffice it to say that I accept that evidence and it is apparent that Glenmark's expectation as to the date at which it would be ready to launch in the UK has fluctuated over time. For various reasons, it was only on 20 February 2025 that Glenmark became aware that it should be able to launch a dapag product in the UK as early as 17 March. It notified AZ on the same day. In those circumstances I do not see that Glenmark can be criticised for having taken the course that it did.
16. The parties also blamed each other for this application not having been heard sooner. The parties wished me to hear this application because I was also hearing the trial. Originally I was asked to hear the application on 17 March, which was a non-sitting day during the trial, but I had another commitment that day. The first date after the conclusion of the trial on which it proved to be feasible to hear this application was 27 March. In the event Glenmark gave undertakings and AZ gave cross-undertakings pending judgment on this application.
17. It does not seem to me that the fact that Glenmark's intended launch was during the trial with notification about four weeks before, or the fact that the application was heard on 27 March rather than a slightly earlier date, have any impact on the question I have to decide. The parties have been able to prepare evidence and submissions on the application as well as conducting the trial. In fact, the slight delay in hearing this application has allowed both parties to file a further round of evidence, which has been helpful.
18. I should explain that by the time the application came before me, these proceedings had not actually been issued. Glenmark was concerned to keep its commercial plans confidential and was concerned that if the claim form was issued, that might come to the attention of other generics. For similar reasons, Glenmark's evidence was designated "Highly Confidential" and its circulation was restricted to AZ's external legal team and named individuals who provided confidentiality undertakings.
19. Glenmark complained that information about its commercial plans had been passed to individuals within AZ who had not signed confidentiality undertakings. For its part, AZ complained that Glenmark's designation of its evidence as "Highly Confidential" had hampered its ability to respond to that evidence.  In particular, rather than showing Mr Farrant's report to Mr O'Toole (or indeed an external expert) AZ decided to take the course of asking Mr O'Toole to respond to some questions posed to him by AZ's solicitors arising from issues addressed by Mr Farrant, and to respond to other aspects of Mr Farrant's report through Dr Stothers. However, Glenmark pointed out that it had made clear to AZ that it was not limiting the named individuals who could see its evidence to internal lawyers. I do not see why AZ could not have included Mr O'Toole or indeed an external expert within the confidentiality club.
20. The court has the power to grant an interim injunction where it is just and convenient to do so. That is not an unfettered discretion, but one to be exercised according to settled principles. It was common ground that I should approach the exercise of my discretion by applying the guidelines set out by Lord Diplock in American Cyanamid v Ethicon [1975] AC 396.
21. The approach can be broken down into four stages:

(1) Is there a serious question to be tried?

(2) Are damages an adequate remedy for the claimant? If they are and the defendant would be in a position to pay those damages, then no injunction should normally be granted.

(3) If not, are damages on the cross-undertaking an adequate remedy for the defendant? If they are and the claimant would be in a position to pay those damages, then the injunction should normally be granted.

(4) If damages are not an adequate remedy for either side, where does the balance of convenience (or the balance of risk of injustice) lie? Where the facts appear evenly balanced, it is a counsel of prudence to preserve the status quo.

22. As Lord Hoffmann said in National Commercial Bank of Jamaica v Olint [2009] UKPC 16 at [17], the exercise involves:

"... trying to predict whether granting or withholding an injunction is more or less likely to cause irremediable prejudice (and to what extent) if it turns out the injunction should not have been granted or withheld, as the case may be. The basic principle is that the court should take whichever course seems likely to cause the least irremediable prejudice to one party or the other."

23. AZ referred me to the judgment of HHJ Hacon in Bayer v Aspire [2024] EWHC 711 (Pat) with its internal citations to a number of previous authorities, while Glenmark referred me to the judgment of Floyd LJ in Neurim v Generics UK [2020] EWCA Civ 793. While reference to previous cases can provide some guidance, as the authorities recognise, each case turns on its own facts. Further, as Floyd LJ said in Neurim at [51]: "Comparisons with other cases ... usually reveal differences on the facts which render them unhelpful." For example, as he said at [13]: "Whether a price spiral will occur in the period until trial in any given case is intensely fact sensitive."
24. However, there are two points which emerge from Neurim which are important to note. First, as Floyd LJ said at [16], when Lord Diplock spoke of damages being an 'adequate' remedy, he was not suggesting that damages must provide a perfect remedy. Floyd LJ went on to endorse the observation that there comes a point where damages as a remedy fall so far short of the perfect that the remedy can no longer be described as adequate and to say that:

"... the boundary between the adequate and the inadequate is not a precise one. It is a matter for judicial evaluation on the evidence in any given case whether or not the boundary is crossed."

25. Secondly, as Floyd LJ explained at [18], when tackling the questions which arise at stages 2-4 of American Cyanamid, the court must do the best it can on the available written evidence.
26. In the present case, Glenmark concedes that sale of its dapag product would infringe the SPC and both parties accept there is a serious question to be tried on validity.
27. Before I consider the second to fourth stages of the American Cyanamid approach, it is important to have in mind what relief AZ is seeking, which of course must condition my assessment of whether damages would be an adequate remedy for granting or refusing that relief. AZ's application is for an injunction pending the conclusion of the form of order hearing in the validity proceedings or further order of the court. In other words, the injunction sought is one which will expire at the hearing to determine the form of order consequential on my judgment on the validity of the SPC. The parties estimated that such a hearing would take place between one and three months from the original planned launch date of 17 March. At the moment, I am not in a position to say when I expect to hand down judgment on the trial and I cannot predict when a form of order hearing will be held following judgment, so I will adopt the parties' estimate.
28. Further, in my judgment, it is not possible to be confident about what relief will be granted at the form of order hearing on either possible outcome of the trial. Glenmark indicated in correspondence in early March and again at this hearing that if no interim injunction was granted, but the SPC was held valid in my judgment following trial, it would not resist the grant of a final injunction, subject to appeal, and for so long as there was no third party dapag product on the market, would not seek a stay of that injunction, provided that AZ gave a cross-undertaking in damages in the event that an appeal succeeded (which AZ confirmed at the hearing it would).
29. Mr Abrahams submitted that it was therefore very likely that if the SPC was held to be valid, there would be an injunction in place following the form of order hearing. However, Glenmark's position is expressly subject to the actions of third parties, which are not predictable. It may well be that Generics (UK) and Teva will contend there should be no injunction pending appeal and of course, if they were to prevail on that argument, Glenmark would adopt the same position. I believe it would be wrong for me to pre-judge what might happen at the form of order hearing in the event that I hold the SPC valid.
30. Conversely, Glenmark asked AZ in correspondence whether it would seek an injunction pending appeal if I held the SPC invalid. AZ responded by saying that it had not made a decision on that. Further, Dr Stothers said in his statements that it could not be assumed that such an injunction would be sought or granted and that would in part depend on the position of the other generics. He emphasised that AZ was only at present seeking an injunction until the form of order hearing.
31. Accordingly, the question I have to decide today is whether an injunction should be granted pending the form of order hearing following trial. I need first to consider whether damages would be an adequate remedy for AZ if I refuse that injunction. In my judgment, I should consider only the damage that would be caused to AZ if I were to refuse to grant that injunction, so today I am concerned only with damage that flows from events in the period between now and the form of order hearing, whether that damage manifests itself in that period or afterwards.
32. Similarly, when considering whether damages would be an adequate remedy to Glenmark, I should consider only the damage that would be caused to Glenmark if I injuncted it during the period until the form of order hearing, whether that damage manifests itself in that period or later.
33. I should add that AZ expressly agreed with this approach and, indeed, urged it upon me.
34. Before addressing stages 2-4 of American Cyanamid directly, I need to address the existing state of the market for dapag and consider, as best I can on the material before me, what is likely to happen in the period before the form of order hearing if the injunction is granted or refused.
35. As I have said, AZ's dapag product is sold under the trade name Forxiga. It is indicated for the treatment of type 2 diabetes, heart failure and chronic kidney disease.
36. Dr McGill explains that the UK market for Forxiga has expanded since 2022 following amendments to the MAs and NICE guidance, which mean that it is now more commonly used in first line treatment of type 2 diabetes and for patients with co-morbidities of heart failure and kidney disease. She provided a graph showing the cost of Forxiga to the NHS each year, which showed sales growing steadily from 2013 to £70 million in 2021, followed by a steeper increase to £235 million in 2023.
37. Mr Farrant provided IQVIA data which is confidential, but showed that sales have increased during 2024, on essentially the same trajectory as they followed during 2022 and 2023. There is no reason to think that trend will not continue over the period until the form of order hearing in the absence of generic competition.
38. The vast majority of prescriptions for Forxiga are written by GPs and dispensed in community pharmacies and approximately 90% of prescriptions are by INN with only about 10% being by brand name.
39. Dapag is currently in Category C of the Drug Tariff, with a reference price of £36.59 for a pack of 28 tablets. That means that pharmacists are reimbursed £36.59 for each pack of dapag which they dispense. While dapag remains in Category C the reference price will remain the same as AZ's list price and pharmacists will be reimbursed at that price, regardless of the price which they have to pay for the product.
40. AZ operates a reduced wholesaler model by which it distributes its products only to Phoenix and Alliance, from which pharmacists then buy products. Mr Farrant explained that originator companies often offer distributors modest rebates from the list price to encourage them to stock their products, some of which rebates the distributors may then pass on to pharmacists. However, there was no evidence as to whether AZ offers rebates to its wholesalers or, if so, what the rebate on Forxiga is.
41. Glenmark has not revealed the price at which it intends to sell its dapag product, but Mr Meanwell says that will not be at a significant discount to AZ's list price. Mr Farrant's evidence is that normally the first generic entrant to a market will price its product at a discount of about 10-20% to the reference price, which allows it to gain market share while maximising its profits. I see no reason to think Glenmark will do otherwise in the absence of any other generic entrant.
42. Glenmark has also not revealed the proportion of the dapag market (or that part not prescribed by brand name) that it expects to be able to capture in the period before the form of order hearing. Dr McGill said that she did not expect Glenmark to have sufficient volume to supply the whole market initially and I believe it would be appropriate to proceed on that basis. Dr McGill added that she expected that a second generic would capture a similar market share at AZ's expense while further generics would capture smaller shares and eat into the share of existing generics.
43. There was a substantial dispute between the parties about whether any other generics would enter the market before the form of order hearing. There was no direct evidence about that and the parties relied on inferences from the material available.
44. AZ pointed to the fact that a number of other generic companies had MAs for dapag: Generics (UK), Teva, Macleods, Ascend, KRKA, Cipla, Amaroz, Milpharm, Sandoz and, most recently, Wockhardt (though Mr Meanwell pointed out that the MAs held by KRKA and Cipla were for another form of dapag that was covered by another AZ patent).
45. Dr McGill said that if Glenmark was permitted to launch she expected other generics to launch rapidly, quite possibly within a few weeks, but she did not provide any basis for this expectation other than the existence of the MAs. In response, Mr Meanwell said that the fact that a generic company holds an MA does not mean that it has product ready to launch, nor that it would be prepared to launch at risk.
46. Further, he said that he had had conversations with wholesalers in early March about the Glenmark product. One had indicated that they had information about other potential suppliers of dapag, but had been told they did not expect to have stock until June at the earliest. Another said they had not been approached by any generic suppliers of dapag, while others did not mention having been approached by generic suppliers.
47. However, Mr O'Toole said that often wholesalers have discussions with generic companies in confidence and that in any event generic companies often only approach wholesalers about four weeks before they are able to commence supply. He also said that on 18 March he had been called by a wholesaler to say they were aware of the ongoing litigation and wanted to discuss how that might impact volume and pricing. However, it does not seem to me that that indicates that the wholesaler had been approached by a generic company offering dapag, let alone for supply in the period before the form of order hearing.
48. In his first statement, Dr Stothers had said that AZ was not aware of any other generic which had threatened to launch prior to determination of validity. However, in his second statement, Dr Stothers said that Freshfields had written to each of the companies holding MAs on 11 March asking whether they intended "to make in or import into the United Kingdom any medicinal product containing dapagliflozin for disposal in the United Kingdom prior to issuance of final judgment and conclusion of any appeal in the [validity] proceedings." He explained that five companies had responded and I was told that seven have now done so. While he did not provide the responses, he said that while none had indicated they intended to launch unilaterally at risk, two had already indicated that they may launch before the first instance judgment in the event that another generic launched and was not removed from the market, and three (now four) had not indicated what they would do in such circumstances. Further, I was told that one had now indicated that it would not launch until after appeal.
49. I should add that Mr Abrahams queried whether the use of the words "already indicated" meant that the indication had been given at some earlier point rather than recently in response to Freshfields' letters. That was not how I understood Dr Stothers' evidence and Mr Pritchard confirmed (on instructions) that my understanding was correct.
50. However, Glenmark asked forensically, given that no generic apart from Glenmark had shown itself to be willing to launch at risk as the first generic, why would one be willing to launch at risk as the second or subsequent generic? AZ's response was to say that the landscape would be changed by a launch by Glenmark and other generics that were ready might well launch to try to avoid losing the advantage of being one of the first entrants to the market while also limiting their exposure to damages by not being the only generic on the market.
51. Glenmark also pointed out that there was no evidence that any company had demanded a cross-undertaking from AZ. It said that any company which was ready to launch would have demanded a cross-undertaking so that it could claim for the period during which it was ready. Therefore, it said, no generic company could be ready for an imminent launch.
52. Mr Pritchard responded by saying that no generic company would have asked for a cross-undertaking to cover the period before judgment if its intention had been to launch after judgment, but that did not mean that it would not be ready to launch if the landscape was changed by Glenmark launching.
53. I was not convinced about that as a point of rebuttal, but the position remains that two generic companies have said they may launch before judgment in the event that another generic launched and was not removed from the market.
54. AZ also made the point that Glenmark had been concerned to keep its launch plans confidential. Why do that, AZ asked, if it genuinely did not think any other generic would be ready to launch? Mr Abrahams said that Glenmark's concern for confidentiality was principally because it did not want AZ's sales team to know, but he acknowledged there was also a concern about other generics finding out. After all, that is why Glenmark did not want AZ to issue the proceedings.
55. There was also debate about whether any of the generic companies holding MAs who had not planned to be ready for a UK launch in the next few weeks would be in a position to supply the UK market in the period before the form of order hearing. Mr O'Toole's evidence was that it would be possible for such companies to have stock with UK wholesalers within about two weeks. Mr Farrant disagreed and explained why. I can deal with this briefly as the point was not really pressed by Mr Pritchard. Suffice it to say I was not persuaded that any generic company that had not already planned a UK launch would be able to divert product to the UK within the next six to eight weeks for the reasons given by Mr Farrant.
56. I have to do the best I can with the material I have. It is entirely conceivable that one or more generic companies, in particular Generics (UK) and Teva, may have been planning to launch in the UK following the handing down of the first instance judgment. As Mr Farrant points out, that is what Sandoz, Teva and Glenmark did in the case of apixaban. If so, they would be expected to be in a position to accelerate that launch in response to Glenmark entering the market now.
57. Further, the fact that Mr Meanwell's contacts with wholesalers in early March did not reveal any contacts between those wholesalers and generic companies is not surprising given that the first instance judgment would then have been several weeks away. I recognise the force of the point about the absence of any evidence of generics asking for a cross-undertaking but, against that, two generic companies have said that they may launch before my judgment if Glenmark launches.
58. Overall, in my view, there is a real risk that one or more generic companies will enter the UK market following Glenmark and before the form of order hearing, though that entry may not be immediate.
59. The next question is whether, if that does happen, there will be a price spiral. Dr McGill said there would be and that the price would be driven down to the point at which it approaches the cost of production. However, her evidence appeared to be premised on numerous generics having entered the market, such that the market had become saturated. Mr O'Toole said that if multiple generics enter, it is extremely rare for a rapid price spiral not to ensue.
60. Mr Farrant responded by saying that was the case where launches were after exclusivity had ended but he was not aware of it occurring with 'at risk' launches, due to the incentive for generics to keep prices high in case they were ultimately held liable for damages, a point with which Mr Meanwell concurred.
61. In particular, Mr Farrant referred to the way in which the market behaved in the year between the first instance judgment and the appeal judgment in the apixaban case. His analysis relied on confidential data from IQVIA and WaveData, so I shall avoid going into the details. However, in outline, it showed that despite at least Sandoz, Teva and Glenmark being on the market for periods between the two judgments, there was no significant price depression. There was debate about how representative this example was, but it does show that generic competition is not necessarily accompanied by significant price depression, at least in an 'at risk' situation.
62. On the information I have, it is impossible to estimate the likelihood of there being a drop in generic prices over the period before the form of order hearing. That would depend on the number of generic entrants, the time of entry and the volume of products they were able to supply to the market. However, I cannot say there is no real risk of a degree of generic price depression taking place in that period.
63. More important though is how AZ will respond to that. Dr McGill did not say whether AZ would lower its price in response to a generic price spiral, let alone in response to a single generic entrant. Instead, she merely explained that if AZ chose not to reduce its price it would progressively lose market share as generics entered the market and, once they saturate the market, it would lose virtually all sales for prescriptions by INN, whereas if it did reduce its price it would reduce its profits on branded prescriptions and may see the reduced price impacting its prices in other markets, for instance through reference pricing.
64. Mr Farrant said he did not expect AZ to reduce its list price over the period before the form of order hearing. He gave a number of reasons. First, AZ would have in mind that if the patent was held valid at trial, its market share may be completely restored. Secondly, in the case of a single generic entrant, there would be no price spiral to respond to. Thirdly, to the extent that the whole of the INN prescription market was not satisfied by the generic supply capacity, AZ would retain its profit margin on that segment of the INN market. Fourthly, AZ would retain its profit margin on the branded prescription share of the market. Fifthly, dropping its list price could affect its prices elsewhere through the reference pricing mechanism. Sixthly, because AZ was a member of the VPAG scheme, once the list price had been reduced it was unlikely to be possible to increase it again. While the second reason did not apply if there was a price spiral, all the other reasons did. He added that the apixaban case provided a good example of an originator maintaining its list price while generics entered the market pending a final decision on patent validity.
65. Dr McGill did not respond to that evidence and neither did Mr O'Toole. For the reasons given by Mr Farrant, I think it is highly unlikely that AZ will decrease its list price over the period before the form of order hearing. That is the case whether other generics enter the market causing some degree of price reduction or not.
66. It is of course possible that AZ could decide to offer rebates or increased rebates to its wholesalers in response to generic entry. However, as Mr Abrahams pointed out, many of Mr Farrant's reasons for why AZ would not change its list price also applied to its actual price to wholesalers. He also observed that in the apixaban case, the originator had not reduced its list price or its actual price during the period of 'at risk' generic competition.
67. Further, neither Dr McGill nor Mr O'Toole said that AZ would be likely to change its actual price to wholesalers. Nor did they give evidence that if AZ decided to do so, it would not be possible to reverse the position once generics were removed from the market. Mr Pritchard told me, on instructions, that if AZ wanted to remove a discount it had given to wholesalers, it would need to speak to the NHS first. It was not satisfactory for a point as significant as AZ's ability to change its actual price in the market in such circumstances to be dealt with on instructions during the hearing, but in any event what Mr Pritchard said does not establish that AZ could not remove a discount or that it would face any serious obstacles to doing so.
68. Overall, there is no evidence that AZ would be likely to change its actual price to wholesalers in the period between now and the form of order hearing and no evidence that, if it did change its actual price, it would not be able to reverse that without obstacle.
69. I should add that there was debate as to whether dapag might be re-categorised from Category C of the Drug Tariff to Category A or M and, if so, what the consequences of that might be. There was no evidence of such a re-categorisation having taken place in the timescale under consideration here, i.e. within 1-3 months of first generic launch. Mr Farrant explained that the DHSC would be unlikely to be confident that the market could continue to be supplied by generics, especially given the uncertainties in the validity litigation, such as to justify a reclassification in the relevant period. This evidence was not effectively answered by Dr Stothers. In my view, there is no real prospect of such a re-categorisation before the form of order hearing.
70. Mr Pritchard also said that the NHS would take any step it could to keep prices down and suggested that it could use the threat of transitioning patients to other drugs in the same class as dapag. The evidence did not support that suggestion and one has to ask why the NHS has not taken that step already if it is concerned about the price of Forxiga.
71. With all that in mind, I can turn to consider stage 2 of the American Cyanamid guidelines: would damages be an adequate remedy to AZ?
72. I start by considering the position if Glenmark were the only generic to enter the market before the form of order hearing. In those circumstances, the quantity of products sold by Glenmark over that period would be known. Glenmark accepted that every sale by Glenmark would be a sale lost to AZ. AZ has an established profit margin per pack. Prima facie, the damages to AZ are the profit margin per pack multiplied by the number of packs sold by Glenmark.
73. For the reasons explained above, in my judgment, AZ will not reduce its list price in response to generic entry by Glenmark and there was no evidence that it would be likely to increase any rebates pending the form of order hearing, nor that it would not be able to reverse any such step thereafter without obstacle. There was therefore no basis for thinking there would be a continuing reduction in this price as a result of events taking place before the form of order hearing, but if AZ did decide to increase rebates to its wholesalers in the period leading up to the form of order hearing, then it would be possible to quantify its additional loss by multiplying the number of packs itself by the increased rebate on each pack.
74. I now consider the position if there were other generic entrants before the form of order hearing, which I have accepted is a real risk. I have also accepted that, if that happens, there is a real risk of a degree of generic price depression. However, in my judgment, the position as regards a potential change in AZ's price is the same as in the case of a single generic entrant.  Therefore, again, prima facie the damage to AZ is the number of packs sold by Glenmark, multiplied by AZ's profit margin. Again, if AZ were to increase rebates, then it will be possible to quantify the additional loss by multiplying the number of packs it sold by the increased rebate on each pack.
75. Dr McGill suggested that it might be necessary to make adjustments to AZ's supply chain in response to generic entry, which might be costly to reverse. I was not at all persuaded that AZ would decide to make such changes given the short period between now and the form of order hearing, especially if they would be costly to reverse.
76. She also referred to AZ's involvement in so-called Joint Workings, namely projects involving the pooling of skills, experience and resources between the NHS and the pharmaceutical industry with a view to improving patient outcomes. In particular, she said that AZ was looking to work on a project over the next two years to accelerate a model called LUCID. She said that over the next two years AZ hoped to invest significant sums through Joint Workings projects to support over 500,000 chronic kidney patients. She said that an early generic launch was likely to disrupt those programmes, which will reduce patient access to dapag and so reduce the growth of the market in an unpredictable way.
77. However, it was not at all clear from Dr McGill's evidence that AZ's decision in investment on Joint Workings would be affected by events in the period before the form of order hearing. The timescales she refers to are much longer than that and Mr Farrant's opinion was that it would be unlikely for any decisions to be taken until after the outcome of the validity trial was known.
78. There was no direct response to that. Dr Stothers merely said that AZ was aiming to enter into ten Joint Workings in 2025 and might not proceed with them if a generic company launches. He did not say that the presence of Glenmark on the market in the period before the form of order hearing would make a difference between the Joint Workings being entered into or abandoned or even delayed. In my judgment, there is no real prospect of a change in AZ's position in relation to the Joint Workings taking place between now and the form of order hearing.
79. In summary, in my view, the damages due to AZ as a result of refusal of an interim injunction pending the form of order hearing are calculable to a reasonably high degree of accuracy. Subject to the next point, in my view damages will be an adequate remedy for AZ.
80. No point had been taken by AZ about Glenmark's ability to pay an award of damages until Dr Stothers' second statement was served on 19 March.  In that statement he pointed out that in its latest filed accounts Glenmark's total assets were about £64 million and its current assets less current liabilities were about £18 million. He suggested that Glenmark would be unable to pay AZ's damages, even for the period between now and the form of order hearing, and said that no form of guarantee or security had been provided.
81. In response, Mr Oliver explained that Glenmark was a wholly-owned subsidiary of the Indian company Glenmark Pharmaceuticals Limited ("GPL"), which had a market capitalisation of about £3.8 billion. He explained that providing a formal guarantee would not be possible until a board meeting in May, but that Glenmark had obtained a letter of comfort from GPL. AZ pointed out correctly that the letter of comfort was just that and was not a guarantee or otherwise enforceable.
82. Mr Abrahams said that if GPL reneged on what it had said in the letter, it would suffer huge reputational damage, and said that it was inconceivable that it would allow Glenmark, as its European operation, to fail. I see the force of those points but I still believe that AZ is entitled to security for its damages if no injunction is to be granted. After all, the question is whether damages are an adequate remedy and the defendant would be in a position to pay them.
83. If the letter of comfort was not acceptable, Glenmark offered an undertaking to pay a sum per pack of its dapag product sold into a separate bank account pending the form of order hearing. Mr Oliver presented calculations leading to an estimate of AZ's profit per pack of Forxiga which he suggested as the appropriate sum.
84. Mr Pritchard did not suggest that the sum in question was insufficient to cover AZ's profit margin. Instead he said that Glenmark should instead offer to pay in its profit margin, as AZ would be entitled to elect for an account of profits instead of an inquiry as to damages. However, I believe Mr Abrahams was right to say that we are concerned with whether damages are an adequate remedy for the refusal of an injunction in circumstances where it later turns out that AZ should have been on the market undisturbed and would have made its profit margin on each pack.
85. I believe that Glenmark should provide an undertaking to pay the sum identified by Mr Oliver into a separate bank account for each pack sold between now and the form of order hearing. If it does then, in my judgment, damages will be an adequate remedy for AZ.
86. In case this matter goes further, I should address stage 3 of the American Cyanamid guidelines, which requires me to consider whether damages on the cross-undertaking would be an adequate remedy for Glenmark.
87. In support of the proposition that assessment of damages on a cross-undertaking was difficult, Glenmark referred me to a number of materials. First, it relied on Mr Farrant's evidence that in his experience assessments of damages due on a cross-undertaking were extremely complex, and indeed slow and expensive, because of the difficulty of constructing the counterfactual.
88. Secondly, Glenmark pointed me to instances in this jurisdiction to illustrate this point, including Napp v Sandoz (buprenorphine), Warner-Lambert (the pregabalin case) and Servier v Apotex. Mr Abrahams also took me to the judgment of Norris J in Servier v Apotex [2008] EWHC 2347 (Ch) to demonstrate that in that case it was held that, of the two possible counterfactual scenarios, Scenario 1 in which Apotex's damage would have been £22.5 million was 67% likely to have occurred, whilst Scenario 2 in which Apotex's damage would have been £7.9 million was 33% likely to have occurred. The result was that Apotex recovered about £17.7 million, but the probability was that that recovery was too low. Mr Abrahams submitted that this illustrated the real risk of under-recovery by a party claiming on a cross-undertaking where there were multiple different possible counterfactuals.
89. Glenmark also pointed me to various judgments of the Australian courts which recognised the difficulty of assessing damages under a cross-undertaking. In particular, I was referred to the observations of Jagot J in Sigma v Wyeth [2018] FCA 1556 about the difficulty which he had experienced in assessing damages on a cross-undertaking and saying that, knowing what he did now, it could never have been concluded that it would be easier for the generics to prove their loss if the injunctions were wrongly granted than for the patentee to prove its loss if the interlocutory injunctions were withheld and the patent was valid. Mr Abrahams pointed out that subsequent judgments in Australia had relied on these observations when refusing interim injunctions: see Sanofi-Aventis v Alphapharm [2018] FCA 2060 and Mylan v Sun Pharma [2019] FCA 505.
90. All these materials in their different ways illustrate the point that assessments of damages on a cross-undertaking can be difficult because of the need to construct the counterfactual, but that does not mean it will be difficult in every case.
91. Nevertheless, in my view, quantification of the damages to Glenmark on the cross-undertaking would be significantly more difficult than assessment of the damages due to AZ if no injunction is granted, which can be done on the basis of known facts.
92. In the present case, determination of the counterfactual, i.e. what would have happened if Glenmark had been on the market in the period between now and the form of order hearing, would require the court to determine how many sales Glenmark would have made and at what price. If one assumes that Glenmark would have been the only generic on the market, then Mr Pritchard submits it would be possible just to look at how much product Glenmark would have sold and at what price. However, as Mr Abrahams said, one can expect that there will be a significant dispute about those matters.
93. Further, I have concluded that there is a real risk that other generics would have entered the market and that there would have been a degree of price depression. The assessment of damages would require the court to decide how many sales Glenmark would have made and at what price in the face of an unknown level of competition from other generics at unknown prices. Again, one can expect a substantial dispute about whether any other generics would have entered the market and when, at what price and with what volumes. It may turn out that the relevant information is in the hands of generics who are not claimants on the inquiry.
94. Further, if Glenmark is injuncted now, it is likely to lose a first-mover advantage. Mr Farrant and Mr Meanwell explain that the first generic to enter a market tends to retain market share even after further generics enter the market. Wholesalers who have been purchasing from one generic but are approached by a second offering a different price, tend to give the original supplier the opportunity to reduce their price to retain the business. Glenmark may not be in the same position by the time of the form of order hearing because by then other generics may be in a position to enter the market simultaneously with Glenmark. Mr Meanwell also said that Glenmark would achieve a reputational benefit from being, for the first time, the first generic to market in the UK. However, the extent of any first-mover advantage will depend on whether other generics would have been ready to enter the market before the form of order hearing and, if so, when and with what quantities of product.
95. I agree with Mr Abrahams that it will be difficult to assess the extent of any first-mover advantage that Glenmark would have obtained if it had not been injuncted and one can again expect a substantial dispute about that.
96. While the court will do its best to assess all these matters, dealing with the unknown counterfactual will be significantly more difficult than dealing with known facts.
97. Another complication is raised by the fact that AZ has patent applications for use of dapag in treatment of heart failure and chronic kidney disease. Dr Stothers notes that AZ is not aware of any attempt by Glenmark to avoid infringement of claims for dapag for such uses by mean of a skinny label. That plainly amounts to an indication that, on any inquiry as to damages on the cross-undertaking, AZ reserves the right to contend that Glenmark's sales would have infringed its rights and hence no damages are payable, which would add another layer of complexity. For example, there would be a debate about the extent to which Glenmark's sales were for indications covered by the patent applications rather than for type 2 diabetes. Further, if the applications have not been granted by the time of the inquiry on the cross-undertaking, the court may have to assess the chances that they would have been and the chances that they would be valid.
98. I should add that the letter I received from the DHSC Anti-Fraud Unit made a similar point as that made by Glenmark in respect of the calculation of damages recoverable by the NHS on a cross-undertaking. It said as follows:

"… even if NHS entities are included within any cross-undertaking in damages, the process of enforcing that cross-undertaking, including calculating the losses attributable to the delay in a generic entering the market, is not straightforward. In particular, arriving at a sensible estimation of the loss suffered by NHS entities requires careful consideration of what would have happened in the counterfactual situation where no injunction existed, including when generic suppliers in addition to the Respondent would have entered the market, at what time, with what volumes of product, and the likely price path of the generic drug. In attempting to enforce any cross-undertaking, and address the kinds of factual issues just mentioned, NHS entities tend to be in a relatively weaker position than the Applicant and Respondent. The Applicant and Respondent, as actual or potential suppliers of the drug, have first-hand knowledge of and/or access to more information regarding such issues than do NHS entities. The challenges posed by this asymmetry are liable to require the dedication of additional time and resources by NHS entities, and there is a real risk that it will be impossible or impractical for them to obtain a full measure of compensation for the damage they have in fact suffered."

99. The first part of this echoes what Mr Farrant says and Glenmark's submissions based on the cases. The second part makes an additional point, namely that the NHS is in a weaker position than Glenmark when it comes to trying to enforce any claim it may have on the cross-undertaking. As Mr Abrahams pointed out, that problem would be increased if AZ were to come to a settlement with Glenmark. How then would the NHS realistically enforce its claim? Mr Pritchard said the NHS would be able to obtain third party disclosure, but that would not be a substitute for evidence from Glenmark.
100. Overall, in my view, damages on the cross-undertaking would not be an adequate remedy for Glenmark nor for the NHS because of the difficulty in this case in establishing the counterfactual with any degree of accuracy.
101. It will be apparent from what I have said that, had it been necessary to consider stage 4 of the American Cyanamid guidelines, I would have held that the balance of risk of injustice lay against the injunction sought.
102. Mr Pritchard emphasised the importance of maintaining the status quo and referred me to what Birss J said in Neurim v Generics UK [2022] EWCA Civ 370 at 370 at [37]. That was a case where Birss LJ regarded the uncertainties on either side as being very significant. Here the uncertainties involved in assessing damages under the cross-undertaking are in my view significantly greater than those involved in assessing damages to AZ. I acknowledge that status quo would favour the grant of an injunction had other factors been evenly balanced but, in my judgment, they are nowhere near being evenly balanced.
103. Mr Pritchard also contended that Glenmark had failed to clear the way in time to launch the product now. However, Glenmark did ask for a January 2025 trial back in January 2024. In my judgment this is not a case in which the fact that Glenmark is ready to launch shortly before the court has managed to produce a judgment on the validity trial is a factor of any significance in the balance of convenience.
104. I therefore refuse AZ's application for an interim injunction pending the Form of Order in the validity proceedings. Mr Pritchard said that if I did that, I would be doing something which was very unusual. What I have done is to apply the guidelines in American Cyanamid to the facts as they appear to me from the evidence, doing the best I can on the material before me. I cannot see what is unusual about that.
(For Proceedings after Judgment: please see separate transcript) - - - - - - - - - -