AstraZeneca, like much of the global pharmaceutical sector, is struggling with fierce competition from generic drugmakers that are based in low-cost economies such as India.
Ranbaxy and AstraZeneca have been embroiled in legal action since 2005 over Ranbaxy’s intention to market a generic version of Nexium. Ranbaxy received a tentative approval from the US Food and Drug Administration in February.
Under the terms of the agreement, Ranbaxy will be allowed to start selling a generic version of Nexium, under a license from AstraZeneca, from May 2014.
“AstraZeneca today announced it has entered into a settlement agreement in its Nexium patent infringement litigation against Ranbaxy Laboratories Ltd. and its affiliates,” AstraZeneca said in a statement on Tuesday.
“The agreement settles the patent infringement litigation filed by AstraZeneca following Ranbaxy’s submission to the United States Food and Drug Administration of an Abbreviated New Drug Application for a generic version of Nexium.”
Separately, Ranbaxy will also be allowed to produce some of Astrazeneca’s Nexium supplies for the US market from May 2010. That will include the manufacture of esomeprazole magnesium, the active pharmaceutical ingredient in Nexium, from May 2009.
Nexium, which treats stomach ulcers and heartburn, is one of the world’s biggest-selling prescription medicines with annual sales of around $5.1 billion, with much of this generated in the US market.