AstraZeneca makes deal with generic challenger

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WILMINGTON, Del. (AP) — Britain’s AstraZeneca PLC said Thursday it reached a deal with the world’s biggest generic drugmaker to delay for three years generic competition to its top-selling drug, the extended-release heartburn treatment Nexium.

Teva Pharmaceutical Industries Ltd. of Israel has agreed to keep generic versions of Nexium, the world’s third-best-selling drug by revenue, out of the U.S. market until 2014. Financial terms were not disclosed.

Nexium is heavily advertised, touted in TV commercials as “the purple pill” that stops heartburn for 24 hours. Its net sales totaled $7.84 billion in 2008, according to health data firm IMS Health, with roughly $500 million of that going to Merck & Co. under a long-standing marketing partnership.

The deal ends a long-running dispute between the two companies. It averts a court case that was due to begin this month and reduces the likely impact of sales from competitive generic drugs on AstraZeneca’s revenue from 2011.

Other generic drugmakers could still try to challenge AstraZeneca’s patents for Nexium.

Under the deal, AstraZeneca, which has its U.S. headquarters in Wilmington, Del., has granted Teva a license to enter the U.S. market on May 27, 2014, subject to regulatory approval.

Teva has conceded that all patents-at-issue in U.S. litigations are “valid and enforceable.” It also conceded that six Nexium patents would be infringed by the manufacture or sale of Teva’s U.S. generic esomeprazole.

The pair also settled patent litigation over AstraZeneca’s older heartburn drug Prilosec, also known as omeprazole, with Teva agreeing to make a one-time payment to AstraZeneca relating to past sales. Prilosec, which now is available in a nonprescription version, brought AstraZeneca nearly $1.1 billion in sales in 2008.

Teva will continue to market omeprazole in the United States.

AstraZeneca is under increasing pressure to fill out its thin pipeline of future drugs as generic competition increases, particularly in the United States where it does the bulk of its business.

In afternoon trading in New York, AstraZeneca shares were up 49 cents at $46.57.