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AstraZeneca soars on Nexium drug patent settlement

Tue Apr 15, 2008 3:35pm IST
 
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By Ben Hirschler

LONDON (Reuters) - AstraZeneca Plc (AZN.L: Quote, Profile, Research) has settled a U.S. patent dispute with India's Ranbaxy Laboratories Ltd (RANB.BO: Quote, Profile, Research) over its top-selling drug, ulcer pill Nexium, securing future sales and boosting its shares 10 percent.

Under the deal Ranbaxy will be allowed to start selling a cheap, copycat version of Nexium on May 27, 2014, which marks the expiry of the earliest patents on the medicine, the two companies said on Tuesday.

Ranbaxy will have 180 days of exclusivity as the only distributor for generic Nexium.

The deal is a relief for AstraZeneca investors, who had feared revenues from Nexium could fall off a cliff in the face of generic drugs. Morgan Stanley analysts said U.S. Nexium sales were worth around 2 pounds ($3.95) per share and accounted for approximately 15 percent of near-term earnings forecasts.

A AstraZeneca spokesman said the settlement would not of itself lead to any changes to its 2008 earnings outlook.

Shares in the Anglo-Swedish drugmaker staged their biggest gain in six years, jumping more than 10 percent before settling 9.4 percent higher at 21.67 pounds by 0830 GMT, while Ranbaxy gained 11 percent in Mumbai on the profitable arrangements for the Indian group.

Ranbaxy will also benefit before 2014 from an agreement allowing it to formulate a portion of AstraZeneca's U.S. supply of Nexium from May 2010, with the active ingredient in the drug, esomeprazole magnesium, being made from May 2009.

Ranbaxy has additional rights to distribute authorized generic versions of two older AstraZeneca products -- heart drug Plendil, or felodipine, and the 40 mg version of ulcer pill Prilosec, or omeprazole.  Continued...

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