New Delhi: The US Food and Drug Administration (FDA) has permitted Teva Pharmaceuticals Industries Ltd to sell a generic version of AstraZeneca’s blockbuster heartburn drug Nexium in the US for an exclusive six-month period. The indirect beneficiary: Cipla Ltd, which will manufacture the drug for Teva under an existing agreement.

The revenue expected from exclusive sales of the Nexium generic in US is estimated at around $170 million.

AstraZeneca’s Nexium patent expired in May 2014. Under an incentive scheme for generic drug makers called market exclusivity, the FDA allowed Ranbaxy Laboratories Ltd to sell the generic version. However, the company failed to introduce the generic, forfeiting the opportunity.

Nexium, a slow-release capsule for treating acidic heartburn or gastro esophageal reflux disease, is a blockbuster brand of British drug giant AstraZeneca. This drug, with esomeprazole magnesium as main ingredient, had a global sales of $6 billion in 2014 for AstraZeneca.

“Cipla is expected to supply the drug to Teva, which will significantly benefit the company (Cipla) and it will fully reflect in financial year 2016. Thus, we enhance our projection for sales and earnings-per-share for the company for the year by 5.9% and 10.4% respectively," said Sarabjit Nangra, an analyst with Angel Broking Ltd.

Cipla shares rose 4.62% to close at 705.95 on the BSE, while the benchmark index, Sensex gained 1% to close at 29571.04 points and the BSE healthcare index gained 0.34% to close at 15559.93 points.

Market exclusivity is an incentive for a generic drug maker which was first given the approval for a low-cost version of a branded or patented drug in the US.

As Ranbaxy failed to introduce the drug, Mint reported in September that the company was likely to miss out on the windfall. There has been steady pressure on the US drug regulator from citizen forums to consider other generic applicants due to the delay. This intensified in September when the attorney general of the state of Connecticut, George Jespen, wrote to the FDA seeking immediate action to either expedite Ranbaxy’s launch or approve other drug companies that have also applied for the generic launch in the US market.

Ranbaxy informed stock exchanges on Tuesday that it has received a communication from the FDA that it has forfeited the company’s market exclusivity on Nexium generic.

Despite the lucrative opportunity, Ranbaxy could not introduce the product in US since it had to move the manufacturing site for this product twice in the last six years after the original sites—Poanta Sahib in Himachal Pradesh and Mohali in Punjab—came under an FDA ban.

The company, which will be merged with Sun Pharmaceutical Industries Ltd in February, was in the process of moving the product registration and manufacturing site to its US factory in New Jersey, but this has not been cleared by the FDA yet.

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