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In a significant development, 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.

The Indian company 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. 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.

“This is the biggest settlement in the pharmaceutical space, and the company expects revenues of $1.25-1.5 billion from the settlements between 2008 and 2014. We are pleased with the agreement, which will provide certainty to the launch of a generic formulation of esomeprazole magnesium in the US market,” Ranbaxy CEO & MD Malvinder Singh said.

While Ranbaxy has not specified the annual break-up of the settlement, it is expected that a significant portion of the settlement revenue will come in from 2014 during the 180-day exclusivity period.

A Mumbai-based pharma analyst said Teva has also filed applications to sell generic copies of Nexium but has not received US FDA approval.

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