AstraZeneca makes peace with Teva to protect Nexium sales

AstraZeneca has settled a row with the Israeli generics drugs maker Teva, which will protect its blockbuster heartburn drug Nexium from competition for at least the next four years.

It is the second time the Anglo-Swedish group has reached an accord with a generics company over Nexium. Two years ago, it did a similar deal with the Indian company Ranbaxy Laboratories. Both Teva and Ranbaxy will now be able to start marketing a copy of Nexium in May 2014, the date on which AstraZeneca's first patent is due to expire.

US sales of the drug reached $2.1bn (£1.3bn) in the first nine months of last year. Although the deal does not cover other generics firms, analysts said the agreement with Teva has afforded AstraZeneca some breathing space.

"AstraZeneca's announcement this morning of settlement with Teva on Nexium is welcome and reduces risk to earnings in 2011 because Teva could have been prepared to launch generic Nexium," said Savvas Neophytou, a pharmaceuticals analyst at Panmure Gordon.

"Although not all generic threat has been removed (Dr Reddy's, Lupin and Sandoz are still there), the court case [which had been set for this month] will now need to be rescheduled... and pushes out further generic risk."

Pharmaceutical giants have struggled in recent years as the generics groups have moved to aggressively challenge their intellectual property rights over blockbuster earners. Several have responded by drastically cutting research and development spending and concentrating efforts in areas such as niche medicines and consumer healthcare.