AstraZeneca has settled US patent litigation against India's Ranbaxy Laboratories Ltd over its top-selling drug, ulcer pill Nexium, securing future sales and sending its shares soaring.
Under the deal Ranbaxy will be allowed to start selling a cheap, copycat version of Nexium on May 27th, 2014, which marks the expiry of the earliest patents on the medicine, the two companies said today.
Ranbaxy, however, will benefit before that date via an agreement that means it can formulate a portion of AstraZeneca's US supply of Nexium from May 2010, with the active ingredient in the drug, esomeprazole magnesium, being made from May 2009.
Ranbaxy also has rights to distribute authorized generic versions of two older AstraZeneca products - the heart drug Plendil, or felodipine, and the 40mg version of ulcer pill Prilosec, or omeprazole.
The deal is a relief for AstraZeneca investors, who had feared revenues from Nexium could fall off a cliff in the face of generics.
Shares in the Anglo-Swedish drugmaker jumped 8.5 per cent to £21.50 sterling by 8.25am trade while Ranbaxy gained 9.6 per cent in Mumbai on the profitable arrangements for the Indian group.
Nexium is the second-biggest prescription medicine globally, with sales of $5.2 billion in 2007. Only Pfizer Inc's blockbuster cholesterol medicine Lipitor, on $12 billion, sells more.
But its future has been under cloud with the expiry this week of a 30-month stay period blocking regulatory approval of a generic version.