Drug-maker Sun Pharma will fork out about Rs 3,190 crore ($550 million), as part of its settlement in the case involving pantoprazole, used to treat gastro-intestinal ulcers and hyperacidity.
Sun said that it had settled its ongoing litigation in the US District Court of New Jersey, where Sun Pharma, Wyeth (now a division of Pfizer) and Altana Pharma (now known as Takeda) “dismissed all their claims”. As part of the same case, Israeli drug-maker Teva Pharma will pay $1.6 billion to Pfizer.
Wyeth Pharmaceuticals sells pantoprazole under the registered trademark Protonix, and Sun had launched “at risk” its generically-similar version in the US, even as the two were locked in litigation.
The settlement puts an end to the uncertainty over the issue and the company.
Adverse impact
Sun’s $550-million settlement is, however, lower than the $960 million estimate submitted early last year to the court by Wyeth.
Nevertheless, the payment will hit Sun’s financial performance in the present quarter (April to June), in which the company could post a loss, an official familiar with the development said.
The company had made a provision for about $107 million (Rs 620 crore) last year. But the remaining over Rs 2,500 crore ($443 million) to be paid will impact the present quarter, the official said. However, he added, it is a one-time, non-recurring cost.
In 2005, Wyeth and Altana had filed a patent infringement suit against Sun Pharma after the latter filed its abbreviated new drug application for pantoprazole, to be able to sell it in the US. Sun Pharma launched its generic pantoprazole in the US on January 30, 2008.
In April 2010, a jury had determined that Altana’s patent is not invalid. On June 3, 2013, the Court began a jury trial to assess the amount of damages Sun Pharma owed for infringing Altana’s now expired patent.
This settlement now ends the ongoing litigation, a Sun statement said. Sun Pharma can continue to sell its generic pantoprazole in the US, it added.
Sun shares were marginally down on the BSE, at Rs 981 on Wednesday.
Our Research Bureau adds : With Sun Pharma agreeing to pay a higher penalty to US-based drug majors Wyeth and Altana to settle the Protonix case, its stock may trade weak on Thursday.
Sun Pharma’s additional payout of in 2013-14 works out to 19 per cent of the company’s estimated revenues for this fiscal.
Though the impact is one-time, the additional provision is a whopping 64 per cent of Sun Pharma’s expected consolidated profits for 2013-14. The company had cash of over Rs 4,058 crore in its books at the end of March 2013.