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Ranbaxy, Glaxo end anti-herpes drug row

Ranbaxy, Glaxo end anti-herpes drug row
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First Published: Fri, Jul 27 2007. 01 36 AM IST
Updated: Fri, Jul 27 2007. 01 36 AM IST
New Delhi: Ranbaxy Laboratories Ltd has settled its patent lawsuit with UK-based GlaxoSmithKline Plc. on the $1.3 billion (Rs5,200 crore) anti-herpes drug, Valtrex, a move that assures the Indian company of a late-2009 launch of a copycat version of the drug with six months of limited competition.
The news triggered a near 10% rise in Ranbaxy shares on the Bombay Stock Exchange, driven in part by managing director Malvinder Mohan Singh’s view that Ranbaxy is open to more such out-of-court settlements. Ranbaxy’s challenge to GSK’s patent on valacyclovir hydrochloride tablets, sold as Valtrex, in a New Jersey District Court will stand dismissed after this settlement.
Ranbaxy will save on legal costs and be assured of its launch of a generic version of Valtrex, while GSK gets assured sales from the product for two years and fends off generic competition following a patent defeat.
“This is definitely a positive development for the company (Ranbaxy) as it has certainty of launch date in the US and exclusivity benefits in the six months following the launch. This should mean an upside of Rs20-30 per share,” said Saion Mukherjee, an analyst with Mumbai equity firm Brics Securities Ltd.
“In litigation, there is always uncertainty and a settlement gives certainty to both sides,” said Ranbaxy’s Singh who has earlier spoken of the company’s target of launching one drug with exclusivity benefit in US every year.
“We have 20 first-to-file (FTF) opportunities with a market value of $26 billion. As a company, we are open to settlements as way of monetizing the value of these opportunities,” he added. Ranbaxy shares closed at Rs373.40, up 9.5%.
Thursday’s settlement is part of Ranbaxy’s strategy of having FTF generic drugs in the market at regular intervals. If Simvastatin pulled up Ranbaxy’s profits in 2006, Pravastatin is expected to do so in 2007. Pfizer’s $12 billion atorvastatin is lined up for 2010. Ranbaxy will enjoy a launch headstart of 180 days on Valtrex-equivalents over its rivals as it is the FTF non-patented drugmaker on the drug.
As part of the GSK deal, Ranbaxy has also obtained a licence to GSK’s two other patents on Valtrex. It is common practice in drug business to create a ‘patent estate’ around a drug by fencing it with a series of patents that cover each and every aspect of the drug. While the settlement is on one patent, licensing will take care of the other two, paving way for Ranbaxy to enter the US market in late 2009.In 2005, Ranbaxy settled its patent row with Cephalon, Inc. on Modafinil, sold as Provigil, and Dr Reddy’s Laboratories Ltd did the same with GSK on latter’s pain drug Imitrex, last year.
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First Published: Fri, Jul 27 2007. 01 36 AM IST