Shares of Sun Pharmaceutical Industries climbed 2 percent on settlement agreement between Ranbaxy Labs (along with Cipher & Galephar) and Actavis for generic version of Absorica.

“Ranbaxy Pharmaceuticals Inc, a wholly-owned subsidiary of Sun Pharma, along with its partners Cipher Pharmaceuticals Inc and Galephar Pharmaceutical Research Inc have entered into a settlement agreement with Actavis Group,” said the country’s largest drug maker said in its filing.

Actavis Group dismisses the patent litigation suit relating to Actavis’ abbreviated new drug application (ANDA) for a generic version of Absorica (isotretinoin capsules), it added.

As part of the settlement agreement, Ranbaxy, Cipher, and Galephar have entered into a non-exclusive license agreement with Actavis. Under this agreement, Actavis may begin selling its generic version of Absorica in the US on December 27, 2020 (approximately nine months prior to expiration of patents in September 2021) or earlier under certain circumstances.

The settlement agreement is subject to review by the US Federal Trade Commission and the US Department of Justice.

Absorica is an oral retinoid indicated for treatment of severe recalcitrant nodular acne in patients 12 years of age and older.

US-based Cipher’s novel, patented brand formulation was approved by USFDA in May 2012. Cipher has been marketing Absorica in the United States through partnership with Sun Pharmaceuticals (Ranbaxy Labs).

In September 2014, Sun Pharmaceuticals began offering Absorica capsules in 25 milligram and 35 milligram dosage strengths in the US. Ranbaxy (Sun Pharma) pays some royalty on sales to Cipher. In 2013, Actavis (then Watson) had filed for a generic version of Absorica, challenging the patent.

Cipher’s Isotretinoin is patent protected until September-2021 and Ranbaxy’s 3 marketing year’s exclusivity expired in May 2015.

Actavis’ entry was expected in April 2016 post which the market becomes a 5 player one. However, with this settlement, Actavis will now launch Absorica in Dec-2020 (9 months prior to patent expiry). This gives Sun (Ranbaxy) enough time to gain market share, Reliance Securities said.

At 11:04 hours IST, the scrip of Sun Pharmaceutical Industries was quoting at Rs 914.85, up Rs 16.65, or 1.85 percent on the BSE.