Pfizer Inc. (PFE) Wednesday said a $2.15 billion settlement has been reached with Teva Pharmaceuticals Industries Limited (TEVA) and Sun Pharmaceutical Industries Limited for patent-infringement damages resulting from their "at-risk" launches of generic Protonix in the U.S.
Teva said separately that it expects to incur a charge of $930 million in the second quarter due to this settlement.
The settlement comes after a nearly 10-year legal battle in which Pfizer and Nycomed, now part of Takeda Pharmaceutical Company Limited (TKPYY.PK), sought to enforce the patent for its blockbuster acid reflux medicine.
Teva and Sun launched "at-risk" versions of Protonix before the January 2011 expiry of the patent for pantoprazole, the active ingredient in Protonix.
As per the settlement, they will pay a total of $2.15 billion to compensate Pfizer's subsidiary Wyeth and Takeda for the damages suffered by this launch.
These "at-risk" launches were determined by a jury in New Jersey federal court to violate United States Patent No. 4,758,579, which is owned by Takeda and was licensed exclusively to Wyeth in the U.S.
The parties reached the settlement shortly after a trial began to determine damages in the same New Jersey federal court. Pfizer and Takeda will divide the proceeds of the settlement with Pfizer receiving 64 percent of the amount.
Teva will pay Pfizer and Takeda $1.6 billion and Sun will pay $550 million. Teva will pay $800 million in 2013 and the remaining $800 million will be paid by October 2014. Sun will make the entire payment in 2013.
As part of the settlement, Teva and Sun have admitted that their sales of generic pantoprazole infringed the patent that was held valid by the court.
Amy Schulman, executive vice president and general counsel of Pfizer, said, "We are pleased with today's settlement, which recognizes the validity and value of the innovation that led to Protonix. Protecting intellectual property is vital as we develop new medicines that save and enhance patients' lives."
Meanwhile, Teva said in a separate statement that it has entered into a settlement agreement with Wyeth/Pfizer and Altana/Nycomed to resolve all claims relating to Teva's sales from December 2007 of its 20 mg and 40 mg generic Protonix tablets.
As a result of this settlement, Teva expects to incur a charge of $930 million in the second quarter of 2013 in addition to the $670 million provision previously recorded in its financial statements for 2012.
The company believes it may have up to $560 million of net insurance coverage in connection with this settlement, subject to recovery from the insurance carriers.
PFE is up 1.5 percent in early morning trade at $28.84.
TEVA is sliding 0.3 percent at $39.73.
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