Ahead of Daiichi Sanko's mandatory open offer for 20-per cent shares that opens on 8 August, Ranbaxy and Pfizer today said in seperate announcements that that they had entered into an agreement to settle substantially all their patent litigation worldwide involving Atorvastatin (Lipitor), the world's largest selling drug with worldwide sales in 2007 of $12.7 billion. 

The agreement between the two pharmaceutical leaders, the biggest and most comprehensive settlement of global pharmaceutical marketing rights,  also resolves the litigation over Caduet (which also contains crystalline form I Atorvastatin) and Accupril in the US and will allow for an earlier introduction of a generic formulation that will benefit patients and many healthcare systems throughout the world.

The agreement pertains solely to Ranbaxy and its affiliates and does not cover legal challenges to the Lipitor patents involving other generic manufacturers. 

The settlement provides Ranbaxy with licenses to all the patents it needs to make the generic product and enables Ranbaxy to manufacture and launch a generic version of Lipitor prior to the expiration of the crystalline and amorphous patents. Howevern under the terms of the agreement, Ranbaxy will will delay marketing the generic versions of Atorvastatin and the fixed-dose combination of Atorvastatin-Amlodipine besylate (Caduet) in the United States till 30 November 2011, instead of launching it between March 2010 and June 2011.

According to the agreement, there will be no upfront payments from Pfizer and all revenues will be only through sales. Ranbaxy will get early mover advantage on Lipitor in other countries of two to four months. It will also get an authorised generic status on Caduet from Pfizer for Canada. All the launches post patent settlement will be absolutely risk-free. All back-end patents running upto 2016 for Lipitor have been settled.

As Ranbaxy was the first generic challenger to the listed Lipitor patents, it retains the right to the marketing exclusivity of 180 days from 30 November 2011 in the United States, along with exclusivity in Canada two months before Lipitor patent expiry and exclusivity in Australia 105 days before Lipitor patent expiry.

The delay in the generic introduction will enable Pfizer to continue to generate revenues for lipitor in the US market till the end of November 2011, after its attempt to get the US Patent and Trademark Office to reissue a patent expiring in June 2011 was rejected. The rights to an earlier introduction of the product in other markets will enable Ranbaxy additional revenues of up to $1.5 billion.

Ranbaxy will also have a license to sell Atorvastatin on varying dates in an additional seven countries, including:  Canada, Belgium, Netherlands, Germany, Sweden, Italy and Australia.  Ranbaxy and Pfizer have also resolved their disputes regarding Atorvastatin in Malaysia, Brunei, Peru and Vietnam.

In addition, the lawsuits between Pfizer and Ranbaxy regarding Atorvastatin will be dismissed in select countries and the lawsuits between Pfizer and Ranbaxy regarding the fixed dose combination product containing Atorvastatin and amlodipine will be dismissed in the US and Ranbaxy will no longer contest the validity of Pfizer's patents in such countries. 

Patent challenges by Ranbaxy regarding Lipitor have been underway in numerous markets since 2003.

The Atorvastatin patents involved in this agreement are the basic compound patent, which expires in the United States in 2010; the enantiomer patent, which expires in the United States in 2011; and various process and crystalline form patents, which expire in 2016 and 2017; and the combination patent for fixed-dose combination product which expires in 2018.

The agreement also covers the fixed-dose combination of Atorvastatin-Amlodipine besylate (presently marketed under the brand Caduet, which also contains crystalline Form I Atorvastatin), a fixed-dose combination product indicated for patients suffering from both high blood pressure and high levels of cholesterol. Caduet combines the active ingredients of Lipitor and Norvasc and treats both high blood pressure and high cholesterol.   The patent for the fixed-dose combination expires in 2018. 

The settlement also resolves additional patent litigation between the companies involving the branded drugs Accupril (in the US) and Viagra (in Ecuador) and all patent litigation with Ranbaxy relating to generic formulation of Quinapril hydrochloride in the United States and Sildenafil in Ecuador.

Litigation between Ranbaxy and Pfizer relating to Lipitor will continue in five other European countries - Finland, Spain, Portugal, Denmark and Romania.

The settlement provides shareholders of Pfizer and Ranbaxy, as well as patients, with substantial certainty regarding the potential date - November 30, 2011 - for entry of a generic version of Lipitor in the United States. In addition, the agreement provides a license for Ranbaxy to sell generic versions of Lipitor on varying dates in seven additional countries: Canada, Belgium, Netherlands, Germany, Sweden, Italy and Australia. Pfizer and Ranbaxy have also resolved their disputes regarding Lipitor in Malaysia, Brunei, Peru and Vietnam.