Pfizer shares rise as Lipitor patent dispute ends

Shares of Pfizer gained more than 5 percent earlier in the session, peaking at $18.54 on heavy volume. In afternoon trading, shares were up 13 cents to $17.85.

Lipitor is the world's best-selling drug, generating nearly $12.7 billion in 2007 sales and representing a quarter of Pfizer's total $48.61 billion revenue. The patent litigation was one of several issues hanging over Pfizer shares, which hit an 11-year low of $17.50 earlier this month.

The settlement with Ranbaxy allows the Indian drug maker to launch a generic version in November 2011, much later than the March 2010 date some analysts had predicted. The settlement provides Ranbaxy with licenses to all the patents it needs to make the generic version, even those that wouldn't expire until 2016 and 2017.

As the first generic challenger to Lipitor patents, Ranbaxy wins six months of marketing exclusivity in the U.S. Ranbaxy also gets to launch a generic version of Pfizer's Caduet, which combines Lipitor and the blood pressure drug Norvasc, in November 2011. Norvasc is already available as a generic.

Under terms of the deal, Ranbaxy will be able to sell generic versions of Lipitor in the U.S., Canada, Belgium, the Netherlands, Germany, Sweden, Italy and Australia. Pfizer and Ranbaxy also have resolved their disputes regarding Lipitor in Malaysia, Brunei, Peru and Vietnam, and regarding hypertension drug Accupril in the U.S. and Viagra in Ecuador.

Litigation between Pfizer and Ranbaxy over Lipitor will continue in Finland, Spain, Portugal, Denmark and Romania as the companies could not reach agreement, a Pfizer spokesman told The Associated Press. However, Pfizer has won preliminary injunctions barring generic launches in Finland, Spain and Denmark, he added.

During a Wednesday morning conference call, Pfizer General Counsel David Reid said he expects the settlement will gain Federal Trade Commission and Justice Department approval because it does not include any payments to Ranbaxy for delaying the release of Lipitor generics. The practice, known as "reverse payment," has been discouraged by the FTC.

Analysts largely lauded the deal as a positive for Pfizer.

Deutsche Bank North America analyst Barbara Ryan, who expected Lipitor generics to hit the market in March 2010, said the extra 20 months of exclusivity will add $5 billion to Pfizer's revenue in both 2010 and 2011.