Teva Pharmaceutical Industries will pay Pfizer Inc. and Nycomed (now a unit of Japan's Takeda Pharmaceutical Co) $1.6 billion to settle the patent infringement suit over its "at risk" launch of the generic version of Pfizer's Protonix, for the treatment of reflux, in the US ten years ago.
When a generic company makes an at-risk launch of a drug, before the legal proceedings are completed, the compensation can reach three times the lost profits of the maker of the brand drug.
In addition, India's Sun Pharmaceutical Industries Ltd. (which controls Taro Pharmaceutical Industries Ltd.) will also pay $550 million to Pfizer and Takeda. Pfizer and Takeda will divide the proceeds of the settlement 64%/36%.
Under the settlement, Teva will pay $800 million this year, and the rest through October 2014. Teva has already made a $670 million write-off on Protonix, and it estimated the maximum write-off at $1.4 billion.
The settlement came after the US District Court for the District of New Jersey ruled in Pfizer favor in the case in April 2010, and just after the start of the trial to determine damages. As part of the settlement, both Teva and Sun Pharmaceuticals have admitted that their sales of generic pantoprazole infringed the patent that was held valid by the court.
Protonix had $1.9 billion in annual sales before the launch of the generic versions, after which sales plummeted. Teva said that in the 12 months through January 2011 sales of its generic Protonix totaled $1.1 billion.