AstraZeneca settles row with Ranbaxy

AstraZeneca, UK's second largest drug maker, on Tuesday announced an out-of -court settlement with Ranbaxy Laboratories on a pending patent infringement litigation on its heartburn drug esomeprazole.

Sold under the brand name Nexium, esomeprazole is the second largest selling drug in the US with total annual market sales of $5.5 billion.

The agreement will permit Ranbaxy to commence exclusive sales of a low-cost version of esomeorazole for 180 days from May 27, 2014, the date on which AstraZeneca's key patent on Nexium expires.

The deal, which could bring in revenues worth $1.25 million to $1.5 million for Ranbaxy over a period of six years, allows Ranbaxy to supply raw materials (bulk drugs) for the manufacture of Nexium, a stomach ulcer medicine, to AstraZeneca from May 2009.

It also permit Ranbaxy to manufacture a portion of AstraZeneca's US supply of Nexium from May 2010.

The firms have also entered into agreements designating Ranbaxy as the US distributor for authorised generic versions of Plendil (felodipine) and 40mg Prilosec (omeprazole).

In return, Ranbaxy has acknowledged that all six patents on Nexium asserted by AstraZeneca in the patent litigation are valid and enforceable. AstraZeneca has stated that Nexium have expiration dates that range from 2014 to 2019.

"This agreement has provided certainty to the launch of our generic version of Nexium in the US market. This is the second out-of-court settlement for Ranbaxy in 2008 and the fifth such settlement in last two years," Malvinder Mohan Singh, CEO and managing director, Ranbaxy, said.

Ranbaxy and AstraZeneca have filed a Consent Judgment with the US District Court for the District of New Jersey reflecting the terms of the settlement agreement.

Though the litigation with Ranbaxy has been settled, AstraZeneca will continue Nexium patent infringement litigations against other generic players, Teva / IVAX and Dr Reddy's Laboratories.

Ranbaxy had on February 7, 2008, said that it had received tentative approval from the US Food and Drug Administration (USFDA) for marketing esomeprazole magnesium delayed-release capsules, 20 mg (base) and 40 mg (base).

The agreement settled a three-year old patent infringement litigation filed by AstraZeneca following Ranbaxy's submission to the USFDA for marketing approval of a low cost version of Nexium. Shares of Ranbaxy rose 8.62 per cent, or Rs 38.25, to close at Rs 481.80 on the BSE on Tuesday.