European multinational AstraZeneca today announced an out-of-court settlement with Ranbaxy on a pending patent infringement litigation on its heartburn medicine esomeprazole. Sold under the brand name Nexium, esomeprazole is the second largest selling drug in USA 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 to AstraZeneca from May 2009 and 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 through 2019."The 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 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 settles a three year old the patent infringement litigation filed by AstraZeneca following Ranbaxy's submission to the USFDA for marketing approval of a low cost version of Nexium.Ranbaxy stock prices at BSE rose 8.62 per cent or Rs 38.25 to close at Rs 481.8 today.
