UPDATE 1-AstraZeneca settles Crestor patent row

Mon Mar 25, 2013 5:24am EDT

* Agreement with Watson and Egis over U.S. generic challenge

* Astra to get fee on generic sales from May to July 2016

* Generic threat to top-selling drug Crestor dissipating

By Ben Hirschler

LONDON, March 25 (Reuters) - AstraZeneca has seen off a remaining threat to its top-selling cholesterol drug Crestor by settling a U.S. legal case with generic firms Watson Laboratories, a unit of Actavis, and Egis.

The settlement follows a U.S. appeal court ruling in December involving other firms upholding the patent on the medicine, which AstraZeneca is relying on as sales of other products tumble.

AstraZeneca said on Monday that Watson and Egis had both conceded the Crestor substance patent was valid under the latest deal. The two companies had been trying to skirt round the patent by developing an alternative chemical version of Crestor.

The agreement allows Watson to begin selling a generic form of Crestor on May 2, 2016, at a fee to AstraZeneca of 39 percent of net sales, until the end of paediatric exclusivity on the drug on July 8, 2016. Egis, Watson's partner, will also benefit from sales of the product.

The entry date may be earlier, and the fee eliminated, under certain circumstances, details of which were not given.

Crestor had worldwide sales of $6.25 billion in 2012, making it AstraZeneca's biggest seller, and $3.16 billion of that was generated in the United States.

AstraZeneca said the deal with Watson and Egis would now be filed with the U.S. Federal Trade Commission and the Department of Justice.

AstraZeneca's partner Shionogi is also a party to the latest settlement agreement.

Such agreements, under which big drug companies settle patent litigation with generic rivals by making deals to keep cheaper products off the market, are commonplace in the drugs industry but they are gaining greater scrutiny from governments.

The U.S. Supreme Court will hear arguments on Monday over the legal basis of such so-called "pay for delay" deals, which have been criticised for pushing up drug bills.

While generic competition to Crestor is unavoidable from mid-2016, protecting the brand up until then in the all-important U.S. marketplace is crucial to AstraZeneca.

It is already struggling with falling sales of other blockbuster medicines that have lost patent protection or will do so soon, posing a major challenge to new CEO Pascal Soriot.

Soriot last week laid out his strategy for turning the company around by cutting jobs and overhauling its research operations, while at the same time seeking bolt-on deals.

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