Mumbai-based global generic drug maker Sun Pharmaceutical Industries Limited (BOM:524715) said it will fork out the rest of its $550 million settlement with two pharmaceutical companies over its marketing in the U.S. of a drug used to treat acid reflux disease.
"We have a made a provision of 2,517.41 crore rupees [about $415 million] payable in terms of the settlement agreement and the amount will be paid soon,” Dilip Shanghvi, Sun Pharma managing director, told Press Trust of India in a report published Sunday.
The payment was charged to the company’s first fiscal quarter ended June 30, resulting in a loss for the period of about $210 million, according to its earnings report released on Friday. The Indian stock exchange was closed Friday for the Muslim Eid holiday, but on Thursday the company’s stock price shed more than 3 percent, ahead of the earnings release.
Rajesh Agarwal, head of research at Eastern Financiers Limited, told CNBC on Friday that with the patent suit settled Sun’s stock could be headed toward a 23 percent gain in three to six months thanks in to the weak rupee.
Sun Pharma announced in June it would pay $550 million to settle a dispute with Wyeth, a subsidiary of New York-based drug giant Pfizer Inc. (NYSE:PFE), and Germany’s Altana Pharma AG, now known as Takeda GmbH, over selling a generic version of pantoprazole, which Pfizer sells under the brand name Protonix.
Altana had owned the patent on the drug, which is now expired. Pfizer and Altana filed suit in New Jersey claiming Sun had violated the patent while it was still active. The two companies filed suit against Sun Pharma in 2005 after it filed an application to sell the generic in the U.S. Despite the legal challenge, Sun Pharma began selling the drug in the U.S. in 2008.