AstraZeneca settles generics problem

Generics war

At the end of 2009, one word summed up one of the biggest challenges set to face the pharmaceutical industry in the coming years: generics. Now, as more and more blockbuster drugs face patent expires, the generics market looks set to grow.

But today there is some good news facing Big Pharma: or, at least, AstraZeneca. That's because the leading pharmaceutical company has today announced it has successfully settled a patent dispute with Israeli group Teva Pharmaceutical Industries over the latter's proposed generic version of Nexium, Astra's best-selling blockbuster drug.

Teva, which is the world's biggest generic drug maker, is considered to be one of the biggest threats to Big Pharma - at least in terms of the generics market. However, according to reports on PharmaTimes.com, as part of the deal, Astra will grant a licence to Teva that prevents them from entering their generic equivalent to the US market until May 2014, when the first Nexium patent expires. As such, this holds back competition for another few years.

In addition, reports also show that the deal has settled litigation relating to a second drug, heartburn and ulcer treatment Prilosec, with the Israeli drug maker set to make a one-off payment for past infringements.

Reducing risk

The deal has also helped to put Astra's shares up, to GBP£29.07, and analysts are already heralding the settlement as a "welcomed move." Panmure Gordon analyst Savvas Neophytou, for instance, told British newspaper The Guardian, "AstraZeneca's announcement reduces risk to earnings in 2011 because Teva could have been prepared to launch generic Nexium at risk after a lower court case which was scheduled to start in January."

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