Merck will pay royalties on next-gen pneumococcal shot to settle Pfizer patent fight

Even before Merck and Pfizer won back-to-back FDA nods for their rival pneumococcal conjugate vaccines this summer, the companies were fighting it out in court over patents on the lucrative shots. With a new settlement, the pharma rivals are putting that dispute to rest.

In a settlement this week in the U.S. federal court in Delaware, Merck and Pfizer agreed to dismiss patent claims against one another. Under the deal, Merck will pay Pfizer 7.25% of its net sales from pneumococcal conjugate shots worldwide through the end of 2026, Bloomberg reports.

After that, the company will owe a 2.5% royalty to its New York rival through the end of 2035, according to the news service.

The patent settlement arises from a January 2021 lawsuit Merck filed in pursuit of a declaratory judgment stating that its new vaccine, Vaxneuvance, doesn't infringe Pfizer patents on its Prevnar portfolio, Reuters reports. The companies have been embroiled in legal battles for years over vaccine patents in several countries, the news service notes.

RELATED: Merck's next-gen pneumococcal shot scores FDA nod, setting up high-stakes clash with rival Pfizer 

A Pfizer spokesperson confirmed that the companies "agreed to resolve and dismiss all worldwide pending claims between the companies involving our pneumococcal conjugate vaccines patents." The company "granted a royalty-bearing license" to Merck, she added. Merck's representative didn't immediately respond to a request for comment.

The deal comes after FDA approvals for Pfizer and Merck's next-gen pneumococcal vaccines in June and July, respectively. Pfizer's shot, a follow-up to the massively successful Prevnar 13, helps protect against 20 different pneumococcal serotypes. Merck's next-gen vaccine targets 15 serotypes. 

RELATED: On a vaccine roll, Pfizer scores FDA nod for Prevnar 13 follow-up ahead of rival Merck

While Pfizer has an edge in the market with its Prevnar 13 experience, Merck's vaccine could be the first next-gen program to gain FDA authorization in children. Market watchers expect Merck to file for approval in children by the end of the year, with Pfizer following in 2022. 

As Merck and Pfizer each gear up for their big vaccine launches, analysts expect blockbuster revenues from the programs down the line.