AstraZeneca investors were jumping for joy this morning when the drugmaker announced it had played Let's Make a Deal with Indian generics maker Ranbaxy. The copycat company agreed to wait till 2014 to sell its version of the heartburn med Nexium, AstraZeneca's top selling drug with $5.22 billion in revenues.
That's a huge coup for AstraZeneca, which has been fighting off the generic challenge since 2005. But it's also a good deal for Ranbaxy: the Indian drugmaker gets U.S. distribution rights to two off-patent AstraZeneca meds, Prilosec and Plendil, and will start supplying the active ingredient in Nexium to AstraZeneca beginning in 2009.
AstraZeneca still faces patent challenges on Nexium from Teva Pharmaceutical Industries and India's Dr Reddy's, but analysts said that Ranbaxy's willingness to settle may signal the strength of AstraZeneca's case. Market watchers also upped AstraZeneca's target share price.
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