Generic drugmaker Watson Pharmaceuticals Inc WPI.N said U.S. health regulators approved its copycat version of ViroPharma Inc's VPHM.O antibiotic Vancocin.
Separately, ViroPharma said the U.S. Food and Drug Administration declined its citizen petition, which was filed to prevent Watson from launching the generic version.
Shares of ViroPharma were trading down 18 percent at $23.40 in premarket.
Watson said it has started shipping the drug, which recorded sales of $332 million for the 12 months ended February 29, 2012.
ViroPharma shares closed at $28.61 on Monday on the Nasdaq.
(Reporting by Anand Basu in Bangalore; Editing by Sriraj Kalluvila)