By Tova Cohen and Ari Rabinovitch

(Reuters) - A bitter defeat in a U.S. patents case sent shares in Teva Pharmaceutical Industries plummeting on Tuesday, the latest in a series of setbacks that has investors calling for major changes at the world's largest generic drugmaker.

A U.S. District Court on Monday rejected four out of five of Israel-based Teva's claims of patent infringement on its top-selling multiple sclerosis treatment Copaxone, potentially opening the door for generic competition.

Chief Executive Erez Vigodman promised an "immediate appeal" and to "vigorously protect" the drug against further challenges.

The patents cover a 40-mg injection of Copaxone that patients administer three times a week.

The rejection comes four months after U.S. patent officials invalidated three patents on Copaxone, in response to challenges by Mylan NV, which has been trying to market a generic version of the drug. Mylan welcomed the court ruling as a "positive step" and said it has already filed a drug application for its product.

Momenta and Novartis unit Sandoz, which already sell a generic version of 20 mg Copaxone, are also working on a copycat for the 40 mg dosage.

"Today’s favorable ruling further bolsters our confidence in the potential for us to offer multiple sclerosis patients a more affordable generic version of Copaxone 40 mg following regulatory approval,” Momenta said after Monday's ruling.

Though Teva primarily produces generic drugs, it also makes branded drugs, led by Copaxone, which accounted for 19 percent of the company's revenue in 2016.

Teva's shares were down 7.6 percent in Tel Aviv at a 12-month low of 121 shekels ($32), continuing a months-long slump that has unnerved investors, and a number of analysts cut their price targets further.

U.S.-listed shares of Teva, which have lost 44 percent in the past year, wiping out over $20 billion from its market value, were down 6.4 percent to $32.30 in pre-market trade on Tuesday.

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INVESTORS CALL FOR CHANGE

A price fixing scandal and increasing public pressure to lower drug costs has taken a toll on the generics industry.

Teva has been hit particularly hard due to a series of questionable and costly acquisitions, along with delayed drug launches, prompting big stakeholders in recent weeks to call for a shakeup in management -- the head of its generics business and a board member have already stepped down -- as well as more sweeping structural changes.

"They depend on just a few drugs, not only Copaxone, but also on the generic side. They need to become more diversified," said Joshua Schachter, senior portfolio manager at Pennsylvania-based Snow Capital, which as of Sept. 30, 2016 had a $44 million stake in Teva.

Teva's poor timing in its $40.5 billion purchase of Actavis, announced in July 2015 when generic stock prices were at a peak, and a botched $2.3 billion acquisition of Mexican drugmaker Rimsa, which has resulted in lawsuits, were "self-inflicted" woes, Schachter said.

Some investors have told Reuters they would like to see Teva spin off its specialty drug business.

"They should split up the company into two separate companies: a generics company and a branded specialty company. That would allow for greater management focus and improved capital allocation," said Andy Summers, a pharmaceutical specialist for Janus Capital Management, which as of Sept. 30 had a $215 million stake.

Schachter said the move makes sense, but Teva should first strengthen its specialty drug pipeline, which would require it to reduce debt.

Israeli investment house Halman-Aldubi said it has been slowly increasing its stake in Teva in the past month on the belief that the bad news has been priced into the shares.

"The most important thing that Teva has to do is to win back the market's confidence. The market doesn't buy the company's forecast and that's not healthy," buyside analyst Tal Levi said.

Earlier this month Teva provided a disappointing forecast for 2017, saying it expects earnings per share of $4.90-$5.30 on revenue of $23.8 billion-$24.5 billion. But the company also provided a "bear case" of two generic competitors in February that could cut revenues by $1 billion-$1.2 billion, and hurt adjusted profit by 65 cents-80 cents.

It also agreed in December to pay more than $519 million to settle U.S. criminal and civil allegations that the company bribed overseas officials to gain business for its medications.

Following Monday's court ruling, analysts see generic competition for at least one dosage of Copaxone coming in the second quarter of 2017.

"This could raise questions around the sustainability of its dividend ... and this will also now likely push back any potential M&A or share buybacks," said RBC analyst Randall Stanicky.

(Additional reporting by Steven Scheer in Jerusalem and Sruthi Shankar and Sangameswaran S in Bengaluru; Editing by Bill Rigby and Susan Fenton)