UPDATE 1-Japan's Astellas settles with Impax on prostate drug

* Impax to sell generic Flomax 1 mth ahead of patent expiry

* Further terms of the settlement not disclosed

* Astellas shares drop 0.8 pct vs 1.1 pct rise for Nikkei

TOKYO, Oct 7 (Reuters) - U.S. firm Impax Laboratories Inc (IPXL.O) will be able to sell a generic version of Astellas Pharma's (4503.T) Flomax prostate drug one month ahead of its U.S. patent expiry under a settlement agreement.

Japan's second-largest drugmaker and its partner Boehringer Ingelheim had sued Impax for infringing on their patent for Flomax, which is used to treat frequent urination and is Astellas' second-biggest selling drug.

The settlement confirmed that the patent had been infringed but further terms of the agreement, including possible compensation to Astellas and Boehringer, would not be disclosed, Astellas said in a statement.

Under the agreement, Impax will be able to launch its generic drug on March 2. Last month, Astellas won a six month extension of patent protection for Flomax under U.S. pediatric exclusivity rules.

Flomax's worldwide sales came in at 117 billion yen ($1.3 billion) for the year that ended in March.

Shares in Astellas fell 0.8 percent to 3,560 yen, underperforming the Nikkei average's .N225 1.1 percent rise. (Reporting by Mayumi Negishi; Editing by Edwina Gibbs)