Ranbaxy Laboratories has reached an agreement with GlaxoSmithKline on the litigation over the patent validity of GSK's anti-viral drug Valtrex (Valacyclovir Hydrochloride).
Following this, Ranbaxy, which had received marketing and manufacturing approval from the US for a low cost version of Valtrex in February 2007, will not market this product in the US till late 2009. This will allow GSK to enjoy its market monopoly for the drug until its patent expires in June 2009. Annual market sales of Valtrex is $ 1. 3 billion.
A Ranbaxy spokesperson refused to give details of the agreement, citing confidentiality clauses. However, he termed the deal as a "win-win situation". While GSK has the advantage to enjoy the full patent term, analysts are confused over Ranbaxy's immediate gains. GSK could not be contacted for comments.
According to patent experts, out-of- court settlements are common in the world of generic drug business.
"Often, innovator companies resort to out-of- court settlements in fear of losing the litigation and to escape the expenses," they said.
Asked about the immediate benefit out of the agreement, company spokesperson said that it has brought in a "certainty" into the whole issue. Interestingly, Ranbaxy has long terms research tie-ups with GSK.
Ranbaxy's shares on the BSE shot up by 9.49 per cent from Rs 341.05 to 373.4 at close on Thursday.