Teva must pay $1.6 billion in patent lawsuit settlement

New Jersey court rules that generic drug giant violated patent held by Pfizer Inc. and Takeda Pharmaceutical of Japan

Pills at the Teva factory in Har Hotzvim, Jerusalem (illustrative photo; credit: Nati Shohat/Flash90)
Pills at the Teva factory in Har Hotzvim, Jerusalem (illustrative photo; credit: Nati Shohat/Flash90)

Leading Israeli company Teva Pharmaceutical Industries Ltd., one of the world’s largest generic drugmakers, will pay $1.6 billion to Pfizer and Takeda Pharmaceutical to settle a patent fight over the heartburn treatment Protonix.

India’s Sun Pharmaceutical Industries Ltd., another generic drug manufactured named in the suit, will pay $550 million for selling its versions of Protonix before the patent protecting the drug expired.

Pfizer Inc., based in New York, said Wednesday that it will receive 64 percent of the settlement proceeds.

A jury decided in 2010 that the patent protecting Protonix was valid, and the US District Court for the District of New Jersey then upheld that decision. The companies reached their settlement shortly after the start of a federal trial to determine damages.

Its lawsuit aimed to recover some of the money lost after Protonix started competing with cheaper generic drugs. Drugmaker Nycomed had developed Protonix before that company was purchased by Japan’s Takeda Pharmaceutical Co. Nycomed had licensed Protonix to Wyeth, which Pfizer has since purchased.

Nycomed had said US sales for the drug reached $1.9 billion in 2007 but tumbled significantly afterward.

Teva had started selling its generic version of Protonix in December 2007. Sun then launched its own version in early 2008 before the drug’s US patent expired in 2011.

Teva and Sun had used a tactic called an “at-risk launch,” meaning they started selling their versions before the patents on the original expired. They hoped to either get the patents overturned in court or reach a settlement that would allow them to start selling their products before the patents ran out.

Teva said it expects to incur a second-quarter charge of about $930 million tied to the settlement.

Shares of Pfizer rose 34 cents to $28.76 in Wednesday morning trading, while US-traded shares of Teva fell 27 cents to $39.56.

Teva’s colossal settlement fine, larger than the $1 billion deal agreed Tuesday for Google to buy Israel’s Waze crowdsourced navigation app, caps a difficult period for the leading Israeli company. Three patients in France have died in recent days after taking Teva pharmaceuticals, in what reports Wednesday suggested was a deliberate tampering with the products by alleged criminal elements in a factory in France.

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