Ranbaxy, GSK settle Valtrex patent row

New Delhi: Ranbaxy Laboratories Ltd and GlaxoSmithKline (GSK) have decided to settle out of court their patent row over GSK’s registered drug Valtrex.

The two companies have entered into an agreement by which Gurgaon-based Ranbaxy will launch the generic version, Valacyclovir Hydrochloride, of the drug in the US in late 2009 with an 180-day exclusivity. The company expects a huge upside from the drug, whose annual market Valtrex is estimated at around $1.3 billion.

The suit was related to GSK’s US Patent Number 4,957,924 covering Valacyclovir Hydrochloride and its use in the treatment of herpes virus infection. In a statement, Ranbaxy has said that it has also obtained a license to GSK’s US Patent Numbers 5,879,706 and 6,107,302, listed in the Orange Book for Valacyclovir.

In February this year, Ranbaxy had received a final approval from the US Food and Drug Administration for the drug. The company said it will continue with its strategy to effectively leverage and monetise its pipeline of First-to-File opportunities; it has approximately 20 Para IV Abbreviated New Drug Application (ANDA) filings representing a market size of $26 billion valued as per the sales of the patented drugs.

The company is expecting a successful first-to-file application every year from 2008 onwards.

Blockbusters like Lipitor, US Plavix, Symbicort, and Lovenox are to expire in the next five years, and leading pharmaceutical companies such as GSK, Novartis and Pfizer are expected to lose between 14 per cent per cent and 41 per cent of their existing revenues as a result of patent expiries, according to PricewaterhouseCoopers report.

Shares of Ranbaxy saw a near 10 per cent jump (9.49 per cent) closing at Rs 373.40 per share against a previous close of Rs 341.05 per share

“These are risk-adjusted out of court settlements that tend to capture the upside while mitigating the huge loss that could have been incurred through legal expenses,” said Mr Sanjeev Kaul, Managing Director, Chrys Capital, pointing out that the markets seem to have seen this favourably.

Earlier in the year, the two companies also expanded their four-year-old R&D agreement for drug development in the areas of anti-infectives, metabolic, respiratory and oncology products.