AstraZeneca settles with Ranbaxy to stave off generic Nexium launch

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AstraZeneca settled a patent dispute with Ranbaxy, which had threatened an “at risk” early generic launch against AstraZeneca's $5.5 billion drug Nexium. The settlement allows Ranbaxy to launch a generic version of the drug in 2014 – three years earlier than the currently listed patent expiration date. Ranbaxy will also manufacture the active ingredient in the drug, esomeprazole magnesium, starting in May 2009, and Ranbaxy becomes the US distributor for authorized generic versions of Plendil and 40 mg Prilosec. 

Merck, which collects royalties on the drug, was also a party to the settlement. 

The move mitigates a serious near-term threat to AstraZeneca and, to a lesser degree, Merck. But AstraZeneca still faces a “substantial generic cliff” over the next decade, said Bernstein analyst Tim Anderson, who flagged the risk of an early generic launch against Nexium in February.

Nexium is AstraZeneca's top-selling drug, accounting for a tenth of the company's revenues, as well as one of the most visible and best-supported brands in consumer advertising.  

Patent infringement litigation between AstraZeneca and other generics-makers, including Teva/IVAX and Dr. Reddy's, is ongoing.
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