Ranbaxy Pharmaceuticals Inc, a wholly owned subsidiary of Ranbaxy Laboratories Ltd, has reached an agreement with pharmaceutical major AstraZeneca that would allow Ranbaxy to start exclusive sales of a generic version of ulcer drug Nexium in 2014 in the US. 

Ranbaxy Laboratories has entered into a series of out-of-court settlements with AstraZeneca, covering patent disputes as well as manufacturing and distribution arrangements for Nexium, the world’s second-largest selling drug. Ranbaxy estimates a revenue upside of $1.25-1.5 billion from these settlements. Ranbaxy will now be able to market generic versions of AstraZeneca’s acidity drug, Nexium, from May 2014 with a 180-day marketing exclusivity.   Ranbaxy will also manufacture “a significant portion” of Nexium for AstraZeneca from May 2010 and its active pharmaceutical ingredient (API), esomeprazole magnesium, from May 2009.

The agreement settles the patent infringement litigation filed by AstraZeneca following Ranbaxy's submission to the United States Food & Drug Administration of an Abbreviated New Drug Application for esomeprazole magnesium's generic version.

AstraZeneca had filed patent infringement litigation against Ranbaxy after the Ranbaxy had received the US FDA’s approval to manufacture and market generic copies of Nexium earlier this year. Under the settlement, Ranbaxy has conceded that all six patents asserted by AstraZeneca in the patent litigation are valid and enforceable. The New Jersey district court has accepted the terms of the arrangement and the patent infringement litigation against Ranbaxy has been dismissed.

Ranbaxy has around 15 para IV applications with the US regulators. Though Merck also entered into a settlement agreement in 1998 for Nexium with AstraZeneca, Ranbaxy will be the only company selling the generic version of the drug in the US market for six months. AstraZeneca has made Ranbaxy the US distributor for the authorised generic versions of Felodipine Capsules and Omeprazole 40mg tablets.

Nexium is the world’s second-largest selling drug behind Pfizer’s Lipitor with annual sales of $5.5 million and growing at 8-10% annually in the US market alone. Nexium is brand name used by AstraZeneca and is the second largest selling drug in the US. Ranbaxy would be able to start sales from May 27, 2014 under license from AstraZeneca. During the 180 period following that date, Ranbaxy will distribute the only generic esomeprazole magnesium product in the US market. In another pact signed by the two companies, Ranbaxy will formulate a significant portion of AstraZenecas US supply of Nexium from May 2010. Ranbaxy will also start supplying raw material for manufacture of Esomeprazole magnesium to Astrazeneca from 2009.