Ranbaxy settles patent dispute with Pfizer over Lipitor, other drugs

Earlier this year, Ranbaxy said it won the right to launch its own low-cost version of the world's largest selling drug from March 2010 when the US Patent and Trademark Office (USPTO) rejected Pfizer's appeal to re-issue patent for Lipitor.

Subsequently, market analysts claimed Pfizer might launch a hostile bid on Ranbaxy as it might not want it to fall into another drugmaker's hands. Though Daiichi had agreed with Ranbaxy that it would acquire the promoters' 34.8 percent stake and also launch an open offer for 20 percent more, rumors began spreading that Pfizer has a special interest in the non-promoter's stake.

This had greatly unnerved Daiichi, which was forced to announce that it would revise its open offer in the event of such an outcome (hostile bid).

However, the matter did not come to that stage as Ranbaxy entered into frantic negotiations with Pfizer on Wednesday, subsequently announcing that they have reached an out-of-court settlement over Lipitor and have ended their long and costly legal battle.

According to the terms of the settlement, Ranbaxy said, it would launch its generic version of Lipitor and Caduet (a Pfizer combination drug of Lipitor and hypertension drug Norvasc) not in 2010 but in November 2011 in the US market with exclusive marketing rights for 180 days. During this period, analysts claim, Ranbaxy stands to earn as much as $1-1.5 billion before other generic drugmakers such as Israel-based Teva enters the US market.

Though the settlement pushes back Ranbaxy's plan by 20 months, yet, it brings a certain amount of certainty to Ranabaxy's launch plan and also has saved it a considerable amount of litigation cost.

The settlement also makes Ranbaxy "risk free" as Daiichi, being an innovator drugmaker, was clearly not very keen on pursuing a legal battle with another innovator drugmaker Pfizer over Lipitor. The settlement with Pfizer also means Daiichi will not be facing any challenge from Pfizer over the acquisition of Ranbaxy.

Pfizer also gains from the deal as it will earn additional revenue of around $20 billion by selling Lipitor during the extended period. Besides, the settlement also allows Pfizer to pursue its own course of finding new drugs that would replace Lipitor.

According to Ranbaxy CEO Malvinder Mohan Singh, the settlement is applicable only within the US territory. "This is the largest and the most comprehensive out-of-court settlement ever in the pharmaceutical industry covering a total revenue of over $13 billion. It's a win-win situation for all. The revenues will start kicking in from this year as we will be launching generic version of Lipitor in Canada this calendar year," he said.

In addition to the US and Canada, Ranbaxy confirmed that it has acquired the licence to sell the generic version of Lipitor in six more countries - Belgium, Netherlands, Germany, Sweden, Italy and Australia - and can launch the generic drug 2-4 months ahead of patent expiry in these countries.

"We could have launched [the generic version of Lipitor] in March 2010 [in the US] but there were always risks and uncertainties. Now we will be launching this product absolutely risk-free in all these markets," Singh said.

The Indian drugmaker also said it has resolved its dispute with Pfizer regarding sale of the generic drug in Malaysia, Brunei, Peru and Vietnam.

The two companies have also settled the dispute over other branded drugs like Accupril (in the US) and Viagra (in Ecuador) and generic formulation of Quinapril Hydrochloride in the US and Sildenafil in Ecuador, Singh said.

"This comprehensively settles outstanding issues between Ranbaxy and Pfizer bringing to closure a number of ongoing patent disputes. It bring certainty for both organizations. This will make the world's largest selling drug more accessible to patients who will gain from the timely availability of an affordable quality option," he said.

However, patent disputes still remain unresolved concerning Finland, Spain, Portugal, Denmark and Romania. "There are certain issues that needs to be settled in these countries," Singh said, adding the settlement pertains solely to Ranbaxy and its affiliates and does not cover legal challenges to Lipitor patents involving other generic manufacturers.

Singh also said the settlement will not attract any anti-trust law since Ranbaxy has not received any payment from Pfizer to settle the dispute.

"The agreement provides patients with access to a generic product much earlier than if Ranbaxy were unsuccessful in obtaining approval for its product and overcoming the relevant patents. It provides substantial certainty regarding the timing of the entry of a generic version of Lipitor," said Ian Read, global president (pharmaceutical operations), Pfizer.

"Finally, the agreement clearly reaffirms the value and importance of intellectual property and this country's (US) well-balanced system of creating incentives to develop innovative medicines while at the same time establishing a strong generic drug business," Read said.

This is the fourth out-of-court settlement of a patent dispute by Ranbaxy in the last one year. It had earlier struck similar deals with AstraZeneca (over heartburn drug Nexium), Astellas Boehringer (over prostrate drug Flomax) and GlaxoSmithKline (over anti-herpes drug Valtrex and migraine medicine Imitrex).