As per the settlement, Cephalon will grant the Ranbaxy a non-exclusive royalty-bearing right to market and sell a generic version of provigil in the US, a company statement said.
The company's license will become effective in October 2011 in the absence of a paediatric extension for provigil, which would delay the entry date by six months (to April, 2012), it added.
Ranbaxy said an earlier entry might occur based upon the entry of another generic version of Provigil. The two companies have agreed to a series of business arrangements related to modafinil.
Ranbaxy has agreed to grant to Cephalon an immediate non-exclusive license to certain of its worldwide intellectual property rights related to modafinil in exchange for milestone payments.
Cephalon also has agreed to enter into certain arrangements with Ranbaxy regarding supply of the active pharmaceutical ingredient modafinil, it added.
The two parties would promptly file for dismissal of their litigation in the US District Court of New Jersey, it said, adding, however, the out of court settlement would be subject to the approval of US Federal Trade Commission.