Barry Sherman knows a weak patent when he sees one. Since the early 1970's when he launched Toronto based drug maker Apotex Inc., Mr. Sherman has waged a running legal battle with many of the world's pharmaceutical giants, winning the right for Apotex to sell its own versions of dozens of brand name medicines, often at a fraction of the cost to consumers of the original pill.

Along the way, Mr. Sherman has acquired a reputation as a scrapper who does not shy away from throwing his weight around. He has also become rich, with an estimated fortune of $2.5 billion. Ironically, however, Apotex is only a bit player in Mr. Sherman's most recent legal victory; In August 2001, the first generic version of the blockbuster anti depression treatment Prozac went on sale in the United States. Already, analysts are calling it the most successful launch of a generic, with revenues for the first six months estimated at US$500 million. The product is owned by a generic drug maker Barr Laboratories Inc., which is based in Pomona, NY.

Mr. Sherman owns a substantial equity stake in Barr, worth about $1.5 billion. Over the past three years, he has been selling off his Barr shares (partly to subsidize Apotex, he explains) but for nearly two decades he has played a key role in determining Barr's strategy. It was, he says, his decision to challenge the Prozac patent.

Last year, Prozac had sales of US$2.7 billion in the United States. The US launch of generic is expected to land Barr with a profit in the first six months of more than US$400 million.

Prozac quickly became one of the most successful drugs of all time, when finally approved from the FDA in December 1987, thus Prozac was launched. It stirred up enormous controversy when it entered the market. A revolutionary antidepressant that seemed to be custom made for the late 20th century, generated record sales, in 2000, it was the world fifth biggest selling medicine.

Under US law, drug companies are entitled to patent protection of as long as 22 years, during which time only they have the right to manufacture a particular pill. But generic companies are also encouraged to break those patents. Under a unique piece of legislation called the Waxmanhatch Act, generics that successfully challenge a patent on a brand name medicine win the right to market their version of the drug for a six month period during which time no other generic can enter the market. During that period, at least half of the market typically goes to the generic company's lower priced product.

Lilly, which discovered in the early 1970s by Eli Lilly & Co., spent nearly two decades at the development stage as Lilly scientists sought to allay the concerns of the US FDA by performing batteries of test and clinical trials. Lilly had four patents on Prozac, one claiming ownership of the fluoxetine compound, others claiming ownership of the way it worked.

In 1955, Barr, at the urging of Mr. Sherman, filed an application to sell its generic Prozac. Lilly promptly filed a lawsuit against Barr. When the case went to court, Barr argued that one of the key patents on Prozac claimed the same thing as another patent, which was set to expire. But the judge sided with Lilly and Bar took its case to the court of appeals. Says Mr. Sherman: "In the US, all appeals go to Washington, where judges are familiar with drug patent law" In August of 2000, the court of appeals handed down its decision. Barr had won. The following day, the markets lopped US 36 billion off Lilly's market cap as stunned investors reacted to the decision.

Meanwhile, Barr is looking at a windfall of around US$400 million from its six-month period of exclusivity. "Basically it will double their revenues," says Angela Larson, an analyst at Salomon Smith Barney in New York.

In Canada, there are no such enticements for generic companies to do business. Indeed, through an unusual arrangement the brand name companies are major players in the generic market. When a patent on a brand name medicine expires, the company often pre-empts competition from true generics such as Apotex and others with cut-price version of its own branded product. Thus it is not uncommon for two identical drugs to be sold, but with different names and sometimes starkly contrasting prices. According to Jim Keon, head of the Canadian Drug Manufacturers Association, which represents the generic industry, such "pseudo-generics" now account for 20% of the entire market for generic drugs in this country